Traditionally, a dram shop is any shop where spirits are sold by the dram. Today, the term refers to any tavern, bar, or similar commercial property where alcoholic beverages are sold. Dram shop laws refer to laws that make businesses liable if they sell or serve alcohol to a minor or to patron who is visibly intoxicated and whose drunkenness caused injury or death. Learn more about “dram shop” laws and how liquor liability insurance can help reduce your risk of suffering costly lawsuits and damages.
Laws Surrounding Alcohol-Related Accidents
Dram shop laws govern lawsuits over injuries or deaths caused by people who purchased or were served alcoholic beverages at bars or restaurants. Every state in the United States has dram shop laws. Through dram shop laws, third-party victims of dangerous drunken behavior are able to file civil lawsuits against establishments, store clerks, or wait staff who sold alcohol to a minor or intoxicated patron. Victims also have the right to directly sue the intoxicated person and may receive damages from both parties.
Dram shop laws were named after 18th Century England establishments that sold gin by the spoonful which was known as a “dram”. Civil lawsuits enforce these laws and they apply to all types of businesses that serve or sell alcohol. However, it can be challenging for third-party victims to prove liability. In some instances, an employee may not be able to determine a patron’s level of intoxication or their ability to safely operate a vehicle. To win a lawsuit, a victim must prove a series of items, such as proof that the establishment sold alcohol to a visibly intoxicated person and that the alcohol from the establishment resulted in the person’s intoxicated state.
It is important for businesses to properly train their employees how to identify a minor or an intoxicated person and make it clear that they are to not sell or serve alcohol to these patrons. Examples of signs to look for that may indicate intoxication include slurred or slow speech, loss of coordination or balance, bloodshot eyes, or overly emotional or aggressive behavior. If a victim is successful in their lawsuit, know that some states put caps on the amount of injury compensation that a plaintiff can be awarded. Damages from dram shop cases may have caps as low as $250,000.
Importance of Having Liquor Liability Insurance
Liquor liability insurance, commonly referred to as dram shop liability, is liability coverage for businesses that sell, serve, manufacturer, distribute, or supply alcoholic beverages. This type of business insurance generally provides coverage for property damage or bodily injury caused by an intoxicated person who was sold or served alcohol by an establishment. Even if your business was not at fault and your employees refused to serve or sell alcohol to an intoxicated patron, meritless lawsuits can still occur. When this happens, you could suffer a financial loss from having to hire a lawyer to protect your business. Liquor liability insurance reduces these costly financial risks.
When shopping for liquor liability insurance, there are several features you want to look for. These include:
Assault and Battery Coverage
Physical altercations can occur when one or both parties are intoxicated. Bars and restaurants may face claims when injuries or damages occur due to assault or battery. Check to make sure that the liquor liability policy you choose includes assault and battery coverage.
Legal Defense Costs
The costs associated with defending your business in court can be significant. Carefully read through your liquor liability insurance policy to see your limits for legal defense costs and if needed, seek an alternative policy that will provide you with more coverage.
Mental Injury Coverage
While physical injuries are most common in personal injury lawsuits, victims may also allege that they were injured in non-physical ways. You want to ensure that your business is protected against claims of mental anguish, excessive stress, or psychological injuries. Note that some liquor liability policies exclude mental injuries.
Employee Coverage
Although most businesses forbid employees from consuming alcohol on the job, some workers still do so. If you are concerned about this possibility, look for a liquor liability policy that covers employees as patrons.
Call an Entertainment Insurance Broker Today
Businesses that sell or serve alcoholic beverages may wonder if they really need liquor liability insurance. Some businesses neglect to get insurance as they believe that their general liability insurance is enough. In reality, general liability is usually not enough when claims from patrons arise. Without liquor liability insurance, you could be sued for a significant amount of money in damages if an incident occurred. The more severe the injury or damages, the higher the amount you can be sued for. If your business falls under dram shop laws, such as restaurants, bars & nightclubs, contact an entertainment insurance broker today to learn how to acquire liquor liability insurance.