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How to Know if Your Restaurant Needs Liquor Liability Insurance

May 20, 2019

4 min read

Do you know if your restaurant needs liquor liability insurance?


It makes sense to pair food with alcoholic drinks. Beer matches up with burgers, and red wine is the perfect mate for pasta with red sauce.

Your staff needs to exercise caution when serving alcohol, though. Servers, bartenders, and your restaurant could be sued if an intoxicated customer causes damages or injuries.

With all that being said, do you know if your restaurant needs liquor liability insurance? Read on to find out more about this crucial business coverage.



  1. Who Needs Liquor Liability Insurance?

  2. What Are Dram Shop Laws?

  3. What Does Host Liquor Insurance Cover?

  4. Are There Ways to Prevent Liquor Liability Damages?


1. Who Needs Liquor Liability Insurance?

You need liquor liability insurance if your restaurant:

  • Sells alcohol
  • Distributes alcohol
  • Serves alcohol at an event
  • Allows customers to bring alcohol and drink it

Liquor liability insurance is there to help you cover legal fees, medical costs, and settlements after an intoxicated customer:

  • Fights with customers at your restaurant
  • Causes damages while driving drunk
  • Sexually harasses other customers
  • Slips, trips, or falls on your premises
  • Suffers from alcohol poisoning

You didn’t misread that list. You and your staff could be held responsible when an intoxicated customer gets in an accident or does terrible things.


2. What Are Dram Shop Laws?

Dram shop laws hold establishments liable when a drunk customer causes injuries, destruction of property, and even death. These “establishments” include bars, breweries, nightclubs, restaurants, and more.

This is who could also be sued:

  • Bartenders, the waitstaff, and anyone who serves alcohol at a restaurant
  • Restaurants that host social events and company parties
  • Organizations, including nonprofits, that host parties

The plaintiff in a dram shop case needs to prove
a restaurant employee was negligent by serving someone:

  • Who was clearly intoxicated
  • Who could reasonably become intoxicated from the amount served
  • Without asking for identification or proof of age
  • After the establishment closed

Dram shop laws vary from state to state, so you should talk to a legal professional and your insurance agent for more details.

3. What Does Host Liquor Insurance Cover?

Host liquor insurance and liquor liability insurance cover similar damages.

There’s a major difference between the two, though. Host liquor insurance covers potential damages from serving alcohol at parties, corporate events, weddings, and more. Host liquor insurance is short-term coverage for an event, and liquor liability insurance is a long-term coverage for your main location.


4. Are There Ways to Prevent Liquor Liability Damages?

Thankfully, you have plenty of tools to educate your staff and help protect your restaurant from liquor liability damages.

1. Provide your waitstaff and bartenders with alcohol server training.
Some states require restaurant employees to earn a license before they're allowed to serve alcohol.

There are several alcohol server programs available, and most of them review these topics:

  • Knowing how and when to refuse sales
  • Recognizing when a customer has had too much to drink
  • State laws that affect alcohol sales and service
  • Knowing how and when to check IDs

2. Follow a defined pour policy.
You have a variety of pour spouts to pick from, including a digital version that measures how much is poured. It’s a great way to control inventory and prevent potential losses.

No matter what tools you use, overpouring is a threat to your bottom line. It reduces your per-drink profit and could cause customers to become intoxicated more quickly. As we’ve discussed, that could lead to bad outcomes.

3. Discourage intoxication.
You might think you’ll drive customers away if you limit how much they’re allowed to drink.

There are tasteful ways to tell customers they’ve had enough. You’re looking out for their well-being and the long-term success of your restaurant.

4. Encourage customers to use Uber, Lyft, or a taxi company.
Ridesharing services are everywhere, so there’s no excuse for drinking and driving. Post signs encouraging customers to use Uber, Lyft, or a local taxi company.

Your local Pekin Insurance agent will show you how liquor liability insurance fits into your restaurant's business plan.

Contact A1 Insurance and Financial Services LLC today!

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