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What you should know about liquor liability insurance

What you should know about liquor liability insurance

Any business that serves or sells alcohol needs to do so responsibly. They have an obligation to stop serving patrons who become inebriated. If not, they can be held liable for incidents caused by such patrons.

If an establishment over-serves a customer who then hurts another person or damages their property, you might assume that it’s that customer who would be held accountable. In reality, it’s usually the establishment that served them that’s held largely liable.

What if this happens to your business? One way you can protect your business is by having a Liquor Liability Insurance policy. It can be sold as a stand-alone policy or bundled with other commercial insurance policies (typically “commercial liability”).

What Is Liquor Liability Insurance?

Simply stated, it covers the cost of claims arising from third-party damages or injuries caused by inebriated patrons. If your business does not have liquor liability insurance and happens to get sued, it could be held liable for civil and criminal damages.

Liquor Liability Coverage Has Some Limitations

  • It Does Not Cover
    • Claims involving underage drinking
    • Damages to your property (You can protect your property with a Commercial Property Insurance policy)
    • Defamation, Libel or Slander

Liquor Liability Insurance Policies Are Not The Same (So Shop Around)

  • Coverage And Coverage Amounts Vary Between Carriers.

Policies may or may not include the following:

    • Assault & Battery: Alcohol-fueled fights are common
    • Legal Fees: Defending your business in court can be expensive.
    • Employee Drinking: Employees drink too and may become inebriated

Keep Your Liquor Liability Costs Down By Not Having Any Claims

Here are some tips on how to reduce your insurance costs and serve alcohol responsibly:

  • Train Your Employees: Many alcohol-related issues can be avoided with training
    • Require employees to pass RAMP (Responsible Alcohol Mgt Program) training
      • The Pennsylvania Liquor Code (ACT 141) requires anyone hired after 8/8/16, who serves or sells alcoholic beverages or who checks IDs to complete RAMP training within 6mo’s of being hired
  • Create Strong Alcohol Control Policies:

           To serve or not to serve, that is the question! Here are some suggestions:

    • Hire professional bartenders (most are trained to spot intoxicated patrons)
    • Do not serve anyone who arrives intoxicated
    • Check ID’s for everyone you serve and post signs to let patrons know this is policy
    • Don’t serve drinks to someone who is not present
    • Require that a drink must be cleared before another is served
    • Place a limit on total drinks served to one person over a given timeframe
    • When in doubt about a person’s intoxication, don’t serve them!
  • Post Phone Numbers of Reputable Taxi Services Near Your Phones
    • They will come in handy to your staff if someone is intoxicated and needs a ride home
  • How To Handle an Intoxicated Patron
    • Be tactful when cutting off a patron and try not to embarrass them
    • Ask if you can call a family member or friend to give them a ride
    • Offer water or other complimentary non-alcoholic drink to help them hydrate

To Recap:

Restaurants and other venues that serve alcohol need to do so responsibly. Failure to stop serving a patron before they become intoxicated can have severe consequences.

Protect your business with a comprehensive liquor liability insurance policy.

Finally, there are other types of insurance that compliment liquor liability, such as General Liability, Workers Comp, Umbrella Insurance and a Business Owners Policy (BOP). Talk to Arbor Insurance Group to see if your business could benefit from this additional protection.


Arbor Insurance Group provides liquor liability insurance, commercial liability insurance, workers’ compensation insurance, life insurance, disability insurance and other personal and business insurance products throughout the Lehigh Valley, including Allentown, Bethlehem, Easton, Emmaus, Macungie and surrounding areas.