(WE LOVE) Liquor Liability Insurance

Liquor Liability Insurance (also known as Dram Shop Insurance):  As an owner of a business that sells alcohol, you know you need it, but why?

On the glorious day of December 5, 1933, prohibition was repealed via the 21st Amendment, and Americans were again allowed to imbibe in their favorite alcoholic beverages without fear of being labeled a scofflaw.  But with the repeal of prohibition came a patchwork of laws enacted on the state level that, to this day, govern the business of alcohol sales and alcohol consumption. Simply put, even though Americans wanted their booze, they also acknowledged the fact that alcohol did have some rather nasty effects on society.  So, then began the implementation of Liquor Liability (or Dram Shop) Statutes.

 

The history of Liquor Liability Laws

Liquor Liability Laws are designed to hold businesses (liquor license holders) accountable for the actions of their intoxicated patrons.  Liquor Liability Insurance is designed to specifically address this unique exposure that all eating & drinking establishments that serve or sell alcohol face.

Guild Insurance is your liquor liability expert and has been offering insurance products to the hospitality industry since 1946.  Our intimate knowledge of state dram shop laws allows us to offer the best possible coverage for your business.

Currently, we offer insurance products in 12 states and figured now would be a great time to break down liquor liability requirements in each state that we are licensed.  It is important to have a knowledgeable insurance expert in liquor liability that will make sure you have the right coverage BEFORE a claim happens.

We offer liquor liability insurance (as well as general liability, property & workers compensation insurance) in the following states.  Each has its own statutes governing the sale and consumption of alcohol:

 

ARIZONA

Is Liquor Liability Insurance mandatory in Arizona?

No

The Arizona Dram Shop Law states that an establishment licensed to sell alcoholic beverages may be liable for the actions of intoxicated patrons if that sale is made to an “obviously intoxicated” individual or minor.

NEED TO KNOW: 

A liquor licensee may not be liable for the acts of an intoxicated patron if said patron became intoxicated at another establishment and the patron IS NOT obviously intoxicated.

Arizona has a 2-year statutory limit on filing a liquor liability lawsuit (two years from the date of the alleged incident).

Arizona does not mandate liability against social hosts.

 

COLORADO

Is Liquor Liability Insurance mandatory in Colorado?

No.

The Colorado Dram Shop Law states that an establishment licensed to sell alcoholic beverages may be liable for the actions of intoxicated patrons if that sale is made to an “obviously intoxicated” individual or minor.

NEED TO KNOW: 

Colorado has relatively high statutory limits ($150,000), but the threshold for determining liability is if the liquor license holder served an obviously or visibly intoxicated patron.

Colorado has a 1-year statutory limit on filing a liquor liability lawsuit (one year from the date of the alleged incident).

Colorado does not mandate social host liability for adults over the age of 21.  A social host may be liable if they knowingly served alcohol to a minor.

 

ILLINOIS

Is Liquor Liability Insurance mandatory in Illinois?

Yes.

NEED TO KNOW: 

Illinois imposes nearly strict liability but also caps liability limits on counts of bodily injury, property damage, and loss of means of support/society.

Illinois has a 1-year statutory limit on filing a liquor liability lawsuit (one year from the date of the alleged incident).

Illinois has limited social host liability which only applies to provide alcohol to a person under the age of 21.

 

INDIANA

Is Liquor Liability Insurance mandatory in Indiana?

No.

The State of Indiana liquor liability statute indicates that a person who furnishes alcohol to a person who injures another is liable if the provider of the alcohol was aware the person was intoxicated at the time of service.

NEED TO KNOW:

Indiana does not separate liability from liquor license holders and social hosts.

Indiana has a 2-year statutory limit on filing a liquor liability lawsuit (two years from the date of the alleged incident).

Indiana does extend liability to social hosts.

 

IOWA

Is Liquor Liability Insurance mandatory in Iowa?

Yes.

The State of Iowa liquor liability statute indicates that a liquor license holder may be held liable for the injuries caused by intoxicated patrons if the licensee served alcohol to the patron who caused injuries to a 3rd party.

NEED TO KNOW: 

The Iowa Dram Shop Statute requires sales and on-premises service.  There is no liability for package liquor sales.

The liquor license holder may be held liable even if they had no previous knowledge of the intoxication of the patron.

The liquor license holder (or vendor) must be served notice of a claim within 6-months of an alleged incident and the lawsuit must be filed within 2 years of said notice.

Iowa does not mandate social host liability.

 

KANSAS

Is Liquor Liability Insurance mandatory in Kansas?

No.

The State of Kansas does not have a specific liquor liability statute that assigns strict liability to a liquor license holder.

NEED TO KNOW: 

The State of Kansas does not have a statute that specifically assigns liability to liquor license holders whose clients cause harm to others or damage to the property of others, however, there has been a recent legal activity that is attempting to set precedent for liability.

Criminal liability may exist for the service of alcohol to a person who is noticeably intoxicated.

 

MICHIGAN

Is Liquor Liability Insurance mandatory in Michigan?

Yes.

The State of Michigan liquor liability statute indicates that a liquor license holder may be held liable for an alcohol-related incident if the alcohol service by the licensee was the proximate cause of the accident or incident.  Liability is triggered if alcohol is served to a visibly intoxicated patron or minor under the age of 21.

NEED TO KNOW: 

The State of Michigan requires $50,000 proof of financial liability which can be satisfied with a bond or an insurance policy.  It is advisable to obtain an insurance policy to a) satisfy the state requirements and b) afford legal defense and indemnification if you are named in a liquor liability lawsuit.

Michigan has a 3-year statutory limit on filing a liquor liability lawsuit (three years from the date of the alleged incident).

Michigan does not mandate social host liability.

 

MINNESOTA

Is Liquor Liability Insurance mandatory in Minnesota?

Yes.

The State of Minnesota liquor liability statute indicates that an establishment licensed to sell alcoholic beverages may be liable for the actions of intoxicated patrons if that sale is made to an “obviously intoxicated” individual or minor.

NEED TO KNOW:

Minnesota has a 2-year statutory limit on filing a liquor liability lawsuit (two years from the date of the alleged incident).

Social host liability is limited to providing alcohol to minors under the age of 21.

 

MISSOURI

Is Liquor Liability Insurance mandatory in Missouri?

No.

The State of Missouri liquor liability statute indicates that an establishment licensed to sell alcoholic beverages may be liable for the actions of intoxicated patrons if that sale is made to a “visibly intoxicated” individual or minor.

NEED TO KNOW: 

Liquor liability is limited to sale & service, therefore no liability exists for package liquor sales

Missouri has a 5-year statutory limit filing a liquor liability lawsuit (five years from the date of the alleged incident).

Missouri does not mandate social host liability.

 

OHIO

Is Liquor Liability Insurance mandatory in Ohio?

No.

The State of Ohio liquor liability statute indicates that an establishment licensed to sell alcoholic beverages may be liable for the actions of intoxicated patrons if the licensee was negligent in their on-premises alcohol service, or if an incident occurs off-premises resultant from a sale to a noticeably intoxicated person or a person under the age of 21.

NEED TO KNOW:

Ohio has a 2-year statutory limit on filing a liquor liability lawsuit (two years from the date of the alleged incident).

Social host liability is limited to providing alcohol to minors under the age of 21.

 

PENNSYLVANIA

Is Liquor Liability Insurance mandatory in Pennsylvania?

No.

The State of Pennsylvania liquor liability statute indicates that an establishment licensed to sell alcoholic beverages may be liable for the actions of intoxicated patrons if that sale is made to a “visibly intoxicated” individual.

NEED TO KNOW:

Pennsylvania does not require negligence to be proven in the service or sale of alcohol for liability to exist.

Pennsylvania has a 2-year statutory limit on filing a liquor liability lawsuit (two years from the date of the alleged incident).

Social host liability is limited to providing alcohol to minors under the age of 21.

 

WISCONSIN

Is Liquor Liability Insurance mandatory in Wisconsin?

No.

The State of Wisconsin explicitly states a person is immune from civil liability resulting from the sale, service of gifting of alcohol except for two very specific cases:  1) Alcohol is served by deception 2) Alcohol is provided to a minor.

NEED TO KNOW: 

Wisconsin has a 3-year statutory limit on filing a liquor liability lawsuit (three years from the date of the alleged incident).

Social host liability is not mandated in Wisconsin.

 

Protect your business from liquor liability

As you can see, liquor liability laws vary widely from state to state.   Nearly all states provide guidelines for liability against the liquor license holder in the event a patron becomes intoxicated and injures another or damages another’s property.   Even in states where no liability is explicitly stated, you are not immune to liquor liability lawsuits being filed against your business.

In zero liability states, your insurance policy will respond with the legal defense of your business with the intent of having the lawsuit dismissed.

At Guild Insurance, we KNOW hospitality (and liquor liability) insurance, it’s ALL we do!  Get in touch with us for a competitive insurance quote for your hospitality business.

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