Owners typically can’t be there every day to ensure bartenders stop serving visibly intoxicated patrons and call a cab for them, and they have little control if an inebriated patron decides to start a fight on their property and injures bystanders. Many owners of bars or breweries choose to save money on premiums in the hopes they won’t be reeled into a lawsuit or that their standard insurance will cover their claims. But all it takes is one suit to kill a business. And if you have to go out of pocket for tens of thousands of dollars paying attorney’s fees, that can bankrupt any small business.
Alcohol service is almost a universal feature of the hospitality industry and one that can leave bars and restaurants exposed to a world of risks. The largest bars and restaurants often carry what is known as liquor liability insurance, coverage that protects a business against damages claimed as a result of a patron becoming intoxicated and injuring themselves or others.
In the past, this type of coverage typically was packaged with general liability coverage for restaurants and bars. However, most large insurers that write packaged policies, such as Travelers, left the local markets in large numbers. Now, businesses often have to request a separate liquor liability line.
Local insurance experts note many small businesses forgo liquor liability coverage to save money on premiums or are unaware of the coverage. Those that do have it may not know exactly what they are purchasing because what it covers varies from policy to policy.
Harold Howell, Chief Operations Officer at American Brewery Insurance, said many of the small bars and restaurants he works with assume that their general liability policy, often known as “slip and fall” coverage, will cover legal fees and other costs if they are sued for a liquor-related damage. But a general liability policy typically will not cover liquor-related claims. Howell said businesses need to make sure legal defense costs are covered – otherwise the insurance is worthless. He also noted bartenders and other employees will inevitably drink on the clock, so they should also be covered as patrons.
Brewery and tap room owners should make sure they have an adequate level of assault and battery coverage under their policy. Assault and battery is the sublimit that kicks in when there is a fight on premises or a bouncer is accused of injuring an intoxicated patron, for example.
One gray area is coverage of restaurants that do not sell alcohol but allow customers to bring their own alcohol to drink with a meal. Its important to remember that everyone does crazy things when they drink and as a brewery or tap room owner you just have to understand the business you’re in and make sure you’re covered.