Why Do Small Businesses Need Liquor Liability Insurance?

May, 12 2022

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Why Do Small Businesses Need Liquor Liability Insurance?

Bars and restaurants are places where people can relax and enjoy a great time with their friends and loved ones. However, there are some instances where an issue may arise. Serving liquor and alcohol could lead to a potential disaster. That's why many businesses are starting to add liquor liability insurance to their commercial insurance policies. 

Liquor liability insurance can protect your business against potential liability issues, including bodily injuries and property damage resulting from serving a patron alcohol. If your business is sued, liquor liability insurance covers related settlements, as well as your legal fees. The policy also assists with covering an injured party's medical bills and any repair costs to fix property damage. 

Businesses That Should Obtain Liquor Liability Insurance 

Liquor liability insurance is essential for businesses that sell, serve, or distribute alcohol. Common examples of businesses that need liquor liability insurance include bars, taverns, breweries, grocery stores, liquor stores, and restaurants. In some states, you are required to purchase liquor liability coverage to receive a liquor license that is mandatory for selling alcohol legally at your store/bar

Kansas, Delaware, Nevada, Maryland, and South Dakota are among the places that do not impose a strict liquor liability insurance law. You must check with your insurer to learn more about the liquor liability guidelines in your state. 

Purchasing Liquor Liability Insurance 

You can add liquor liability insurance as an endorsement on your liability policy or buy it as standalone coverage. You must look over your general liability insurance policy to check whether host liquor liability coverage is included in it. This type of coverage is recommended if your business does not sell alcohol traditionally, but you allow people to drink on the premises. 

Perhaps your business is hosting an alcohol party and one of the guests gets intoxicated, but decides to drive home. However, unfortunately, they cause an accident on the way home, which results in multiple people suffering severe injuries. If one of the injured drivers decides to sue your business for allowing the person at the party to consume too much alcohol, your general liability coverage would step in to cover your legal fees and any fallout from the lawsuit. 

The cost of your liquor liability insurance policy depends on multiple factors. The total amount of liquor sales your business has every year and the type of industry your business is involved are among the two most important factors. If you are involved in a high-risk industry or have filed multiple liquor liability claims in the past, you will likely pay higher premiums. The coverage limit on your policy also impacts your premiums. 

More: 5 Critical Liabilities Faced by Your Bar or Restaurant Business

Comprehensive Liquor Liability Insurance Policies Available

Purchasing liquor liability insurance can protect your investment during a crisis. If you have questions about figuring out which policy is the right fit, contact our experts here at GrayStone Insurance Group today for assistance.