What is Liquor Liability Insurance? Is it Necessary?

Lets face it, here in Austin, TX, we have quite a few bars. Hey, we're the Live Music Capital, so music and liquor go well together. But when it comes to Business Insurance, one the most overlooked coverages for bars, restaurants, and liquor stores, is Liquor Liability Insurance. The last study I read about 1 out of 4 bars do not carry Liquor Liability Insurance. Although some states might require owners to have it, Texas is not one of them. The primary reason business owners forgo this coverage is probably obvious, cost. It definitely will impact your premium, so is the additional cost worth it? 

Yes. I have heard the argument from some business owners that they don't sell that much liquor or beer and it isn't necessary. It doesn't matter if you serve one drink or 1000, there is still a potential lawsuit. That one drink you served could have been to someone that had already been drinking elsewhere and didn't look impaired when the waitstaff/bartender served that individual their last drink. What happens when that individual gets in their car and causes a wreck? The authorities are going to want to know who served them last. You know where I'm going with this. Yes, back to the business owner. Doesn't matter if you only served them one beer. That one beer could have put them over the edge. If you don't have the coverage, you are putting your business at serious risk. 

Another note worth mentioning, since I have seen it on more than one occasion, is related to the premium audit (see previous post). When you start your insurance policy, and estimate gross sales, the insurance carrier is going to base the premium on a percentage of sales that are liquor sales. At the end of the policy period, you will fill out actual numbers when you get your audit paperwork. Again, the initial figures are only estimates. Unfortunately, sometimes this is overlooked by the the insured or the agent. Either the insured forgets or the agent forgot to explain.  Bottom line, if these numbers are higher, you will most likely get a bill in the mail from the insurance company. The last thing you want are surprises, so you should be aware of this up front when giving estimated gross sales. 

Even though servers/bartenders are TABC certified, you should still consider adding Liquor Liability Insurance to your Business Insurance. As shown above, whether you're a restaurant, bar, liquor store, or any other type of business serving liquor, there is exposure for a potential lawsuit.  If you have any additional questions, or need a quote, please feel free to contact us.