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Massachusetts Liquor Liability Insurance – Free Quotes | Econosurance

Anyone who sells alcohol on their premise, including the manufacturing, selling, and serving of liquor, is at risk of a pricey lawsuit. Many people enjoy a drink every once in a while – for some, it helps to relax and unwind, for others, it makes them more social. 

However, drinking too much can lead to accidents and injuries. If a customer causes an accident or hurts another person, you may be held responsible for it even if the incident takes place outside of your business premises. Furthermore, you may be considered responsible regardless of the legality of the customer's behavior.

This is where liquor liability insurance comes in. In this article you will learn the basics behind liquor liability insurance, who needs it, what it covers, and how to save money on the policy. 

People at a bar toasting by clinking their beer glasses

What Is Liquor Liability Insurance?

Liquor liability insurance is a policy designed to protect the manufacturers and sellers of alcohol. Primarily, it focuses on the consequences of excessive drinking. Suppose a patron is involved in an accident or wrongdoing – in that case, you will be covered if you are held liable for their actions.

Most standard policies will not cover alcohol-related incidents. Additionally, dram shop liabilities are in effect in 43 states. These make a business liable if they serve a customer who is clearly intoxicated. Therefore, if you serve someone who has already drunk more than enough and then that customer totals another person's car, you will be held responsible. Such accidents can bankrupt even a healthy business, so it would be best to have liquor liability insurance.

Who Needs Liquor Liability Insurance?

All businesses that serve alcohol can find themselves in a situation where they could benefit from liquor liability insurance. These businesses include:

  • Bars and taverns
  • Restaurants
  • Breweries and wineries
  • Caterers
  • Grocery stores
  • Liquor stores

Remember that liquor liability only covers alcohol-related incidents. To have coverage for other liabilities, you still need general liability insurance.

A woman sitting behind a table (head is not in the picture) is holding a wine glass with red wine at a dimly lit restaurant

What Does Liquor Liability Insurance Cover?

As mentioned, most general liability insurance policies exclude alcohol-related events if your business produces, sells, or serves alcohol. Under liquor liability insurance, you will be covered for:

  • Bodily injury If a drunk patron causes bodily injury, either on the premises or after leaving, and you are considered responsible, the insurance will cover you. This includes any medical costs, loss of income, and legal fees.
  • Property damage If the intoxicated customer causes property damage while drunk, such as crashing their car into a shop, you will be covered for any costs related to those damages.
  • Assault and battery – This insurance is often excluded unless you specifically ask for it. Since insurance usually only applies to fortuitous injury and damage, you need assault and battery insurance to cover situations where a bouncer injures a customer or a customer assaults another customer.
  • Legal fees – Any legal fees from court cases and settlements will be covered under the liquor liability policy.

What to Consider When Purchasing It?

When purchasing a policy, you should scrutinize it to see what is and is not covered under the agreement. For instance, review defense provisions as they can be deemed outside the limits of the policy. Usually, legal fees and other related expenses do not affect the limits of your policy, but in some cases, e.g., if your insurer uses proprietary forms instead of the standard ISO forms, your defense costs could fall under the policy limits.

Also, consider if the coverage is claims-made or by occurrence. Under a claims-made policy, you are covered for a claim irrespective of the date of the claim event as long as the policy is active. With an occurrence policy, you have coverage for claim events that occur during a specific period (usually while the policy is active) even once the policy has expired. 

Stress, mental anguish, and psychological injury are all considered mental injuries. Claimants who were affected by an intoxicated customer can claim these as injury. However, some policies specifically exclude mental injuries from their policy. 

Finally, some insurance companies offer free risk management training to the employees of their clients. If you are interested in such training, ask your insurance provider about their offerings.

Close-up of two cocktails being clinked together

How to Save Money on Liquor Liability Insurance?

Liquor liability insurance may feel like an added expense on top of all the other policies you need. However, it is invaluable for most businesses serving alcohol. People are unpredictable, even more so when they consume alcohol, so it is better to be prepared for the worst than lose a fortune in a lawsuit. In spite of that, there are several tips for reducing the cost of your monthly premium payments. These include:

  • Bundle policies – If you have already purchased other insurance, ask your insurer if they can bundle your policies. Bundles usually come with a discount, helping you save money.
  • Shop around – Although it can be cheaper to bundle, it is still beneficial to shop around. Each insurance company calculates risk differently. Thus, get multiple quotes to find the best deal on the market. 
  • Pay in full – If you have that option, do not pay the premiums monthly but annually. By paying the entirety of your policy upfront, you can shave off a significant amount of the total price.
  • Reduce risks – As mentioned, some insurance companies offer alcohol-serving training. If your employees take the course, it can lead to lower premiums. Also, encouraging customers to purchase food along with alcohol will reduce the risk of severe intoxication.
  • Up your deductibles – The easiest way to save money is by increasing your deductibles, which will reduce the cost of your premiums. However, you will need to have more savings in the event of a claim.

If you would like to insure your business or explore the options available to you, email us, give us a call, or fill out the free quote form on our website. Our experts are always happy to help!

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