Understanding Liquor Liability Coverage BY: CHRIS BOGGS
Liquor liability insurance is designed to defend the insured against charges of negligent conduct related to the service of alcohol; and to indemnify or pay on behalf of the insured if they are ultimately found legally liable for the injury or damage. Operations serving or supplying alcohol can be subject to charges of negligent conduct when, for example, a patron or third party is injured as a result of the negligent service of alcohol or negligence in not preventing an individual from injuring a third party. Legal liability can also arise out of other negligent actions or inactions. Charges of assault and battery account for a high percentage of liquor liability claims so any liquor liability policy should include coverage for this exposure. Attorneys typically seek a connection to as many pockets as possible. Lawsuits often name the establishment, the liquor manufacturer, the distributor and any others that seem to make sense (or even those that do not make
sense). Any entity making, selling or serving alcoholic beverages needs this protection because the unendorsed commercial general liability (CGL) policy excludes coverage for liability arising out of one of these activities. Here is helpful advice, if you can smell the alcohol, write the coverage. The cost defense and the ultimate claim cost is based on the individual jurisdiction's definition of legally liable. Forty-three states and the District of Columbia apply a codified or judicially interpreted liquor or dram shop law. Some states allow every bar in which the intoxicated person drank to be pulled into the lawsuit; the establishment has to prove that the patron was not or did not appear intoxicated while there. Each bar or restaurant in these states can be held jointly and severally liable. At least one state holds the establishment liable if the patron appears intoxicated even if they came in that way and didn't imbibe there.
