Liquor Liability Insurance Coverage


How much coverage do I need…

Liquor Liability Insurance Coverage in each State is different. Each has there own requirements that the alcohol industry must conform too. Although some State policy-limit requirements are as low as $50,000, it is most common to see a $1,000,000 Liquor Liability limit. Some municipalities also have their own requirements that can differ from what your State requires as well. We recommend carrying limits no lower than $1,000,000 and potentially higher depending on your business and the exposure it presents.

The additional coverage can be included on an umbrella policy. Your State’s interpretation of the law on what is and isn’t covered is also important when determining what coverage is sufficient. For instance, Illinois has some of the strictest statutes of any State. Under Illinois law those people or organizations owning, renting, leasing or permitting occupation of any building or premises for sale of alcoholic beverages, and having knowledge of doing so can be held liable for alcohol-related accidents. Thus, if you rent your building it is important that you also list your landlord as an additional insured on the Liquor Liability policy. Furthermore, if you own the building under a separate entity than the establishment, you may also have a potential gap in coverage. Other coverages you may need that will be discussed in more detail are Assault & Battery and Common Law.

Split Limits vs. Single Limits…

A Liquor Liability policy can be written with two types of limits, a “Split Limit” or a Single Limit”. With a Split Limit you are reducing the amount of coverage available for a single accident. Whereas a Single Limit allows you to apply the entire amount of coverage toward one single claim. Split Limits are a lower cost alternative because of the reduced per-occurrence limit for any single claim. A Split limit consists of an “Occurrence Limit” and an Aggregate Limit”. An Occurrence Limit is the most your policy will pay for any one claim. Traditionally, this is half the amount of your policy’s Aggregate Limit. The Aggregate Limit is the most your policy will pay during the entire policy period. Thus, a Split Limit policy reduces the amount of coverage your policy will pay for a single claim. A Single Limit offers much more flexibility and coverage compared to a Split Limit policy. With a Single Limit you can apply the entire amount of coverage towards one single occurrence. There is no occurrence limit with a Single Limit policy. When the accident is severe, a Single Limit is the recommended coverage.

Common Law…

Common Law provides coverage for a business when an intoxicated driver crosses state lines. You may have met the statutes of your state, but if the accident happens across state lines the statutes may differ significantly from your state. Thus, Common Law coverage will expand your Liquor Liability policy to protect you under bordering state’s laws. This is an extremely important coverage that is often excluded under Liquor Liability policies.

Assault and Battery…

One of the most common exclusions to Liquor Liability policies is Assault & Battery coverage. A&B coverage is defined as: Coverage against Bodily Injury and Property Damage arising out of alleged acts of Assault and Battery. Although most standard General Liability forms do not exclude claims of this nature, many carriers will attach specific exclusions addressing this exposure for certain types of businesses such as bars or dance clubs where confrontations between employees and patrons can often times lead to allegations of excessive force. Keep in mind that Assault & Battery suits can also stem from patron to patron confrontations as well.