Serving Alcohol, “Dram Shop Laws”, and Insurance Coverage
About 30 states have the so-called “Dram Shop Laws” that hold bars, restaurants, taverns, and lounge owners liable if they are selling or serving alcohol to individuals or minors causes death or injury to themselves or to others resulting from their intoxication. For minors, these laws have lower thresholds for liability.
The standard general liability policies to satisfy the landlord’s lease requirement does not cover claims arising out of serving alcohol, and many owners of bars and restaurants do not know about this.
In light of the fact that around 30% of traffic fatalities each year are caused by drunk drivers with blood alcohol content level higher than 0.08, owners of bars can be held liable for overservice of alcohol to patrons who drive an automobile, snowmobile, or a boat after drinking, even if it is just one drink.
Adding a liquor liability policy with high enough limits to a general liability policy can transfer the risk for a bar owner in an “over-service” related claim.
When patrons get injured from falls, bar fights, from falling off a mechanical bull or out of a shot chair, or get burned from bartender’s flaming alcohol tricks, insurance coverage for these activities may be excluded from a general liability and/or a liquor liability policies, unless these activities are endorsed with additional premiums after insurance agent has prior notice about these risks from the insured in a policy application.
For decoration, if flames and flammable are used, it is a wise thing to have the local fire department come to check for fire safety and compliance with on-location fire hose, fire retardant, and exit signs’ effectiveness. It is always better to take preventive steps proactively on a regular basis. A standard $2 million policy can be easily exceeded if patrons cannot escape a fire thus resulting in bodily injuries and/or property damages.
There are always other risks, such as in situations where underaged drinkers carrying fake ID cards, that a general liability policy will not cover, yet the liability remains with the bar even after an underaged drinker leaves the premise. In this case, customized insurance policy can protect the insured with adequate coverage and sufficient limits. Call and make an appointment for a free initial consultation with the Rick Callaway Team at the Pacific Diversified, we are always protecting businesses, extra miles.
(Abbreviated from “5 liability issues restaurant, bar, and tavern owners need to watch out for,” by Kenneth King. Feb. 18, 2016.)