It might seem obvious that if you own a drinking establishment like a bar or nightclub, that you should have liquor liability insurance. Despite this, it is estimated that only about one in three bars and nightclubs actually have this vitally important coverage that can literally save their businesses from the kind of legal problems that can sink an average bar without such protections.
There are several reasons why an owner might fail to include liquor liability insurance as part of his or her bar or tavern insurance. The bar owner might, for example, falsely believe that liquor liability insurance is covered in his or her overall bar or nightclub insurance policy even though it is quite common for the Commercial Insurance for a Bar or Nightclub to exclude coverages contained in a liquor liability insurance. Some, of course, either don’t understand what liquor liability insurance covers or may never have realized that such a bar and tavern insurance policy existed.
More often than not, however, the real reason the policy remains neglected is because of the prohibitive cost. It simply costs too much to carry such a policy, so bar owners cross their fingers and hope that through careful training of their employees they can avoid the issues that result from selling liquor.
Such magical thinking, however, will not save owners from their liability requirements.
What is Liquor Liability Insurance?
Liquor liability insurance covers legal problems that may occur from customers legally drinking at your establishment. For example, your bar liquor policy would cover the possible legal problems arising from two or more of your patrons getting into a fight in your establishment if one of them claimed you were responsible because you let them get drunk.
It would also cover you if one of your customers left your bar and got involved in a crash later in the night, should one of the participants in the crash hold you responsible for the customer’s inebriation. It would also cover alcohol poisoning should it occur.
Liquor liability insurance does not cover the illegal sale of alcoholic beverages, such as if you knowingly give alcohol to minors.
In some states in the US, liquor liability insurance is no longer optional. States require it for the legal operation of a bar or nightclub. You should be sure to check with your state to find out if you are in compliance.
How do you find a bar or nightclub insurance policy?
Another problem when it comes to liquor liability insurance is that in many cases a bar or tavern insurance policy will simply be ineffective in actually preventing you from incurring onerous liability requirements. What do I mean?
- Limits to Bar Liquor Policy do not Cover Legal Defense
One of the tricks many a nightclub insurance policy includes is an exclusion of defense fees from the policy limits. (Or even worse, from the policy itself.) This is a problem because as anyone knows who has ever been sued, often the defense fee will cost you more than the actual damages. If you have to get your own lawyer and pay him or her out of pocket, it might not matter who wins the lawsuit.
Make sure the liquor liability insurance includes legal defense fees above and beyond the policy limit or make sure you take this into account when considering the value of the policy.
- Assault and Battery Included
Some really sneaky policies will exclude assault and battery from their liquor liability policy. Your bar or tavern insurance policy is virtually worthless if it doesn’t cover assault and battery charges since this is such a common feature of most lawsuits related to liability claims.
- Employee Liquor Liability Requirements
Regardless of how unlikely it may seem to you that your employees will get drunk and do something foolish, you want to make sure that employees are covered in your bar liquor policy. Percentages suggest this is a must.
- Mental Damages
Many policies also try to avoid paying out for mental damages. Given our litigious society it is important that you bar or nightclub insurance policy includes a liability requirements that the insurance company pay for mental damages as well as physical.
Of course, having liquor liability insurance doesn’t give you a free ride in terms of alcohol. It is still important to train your staff to recognize inebriated individuals, keep them off your premises and make sure they get home safely if they have already set foot in your establishment.
In addition, your security should be trained to take proactive action with customers who are clearly becoming belligerent.
Many insurers actually have training programs in this regard and will knock down the cost of your liquor liability insurance if you enroll your employees in their problems. It is definitely worth taking advantage of such programs.
Want to find out more about insurance polices for your establishment check out: Types of Insurance for Bars and Nightclubs.
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