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Liquor Liability Insurance

Liquor Liability Insurance

Liquor liability insurance is also known as dramshop liability in many parts of the United States. Most businesses that sell or serve alcohol are either legally required to buy liquor liability insurance, or will benefit and protect their business from having this insurance coverage.

Liquor liability insurance quotes protects bars and restaurants from intoxicated customers.

The three major risks associated with any business that sells or serves alcohol are a) the sell of alcohol to an intoxicated customer, b) contributing to the over-intoxication of a customer and c) serving alcohol to a minor. While none of these events will trigger a liquor liability claim on their own, any accidents or injuries to the customer, the minor, or an unrelated third party may create a major liability for the business if it was caused by, or related to, any of the three events.

Dram Shop Liability is the Same Thing as Liquor Liability Insurance

Dram shop is a legal term that refers to bars, pubs, taverns, and similar venues where alcoholic beverages are sold or consumed. Historically, dram shop referred to places where alcohol was sold by the dram, (a small quantity of liquid). Many insurance companies today prefer to use the term liquor liability because it is more straight-forward and easier to remember.


Dram Shop liability laws were created to protect the public from intoxicated individuals who were over-served.


Dram shop liability is a reference to the various state laws that govern legal liability for bars, liquor stores, and other business establishments that sell or serve alcoholic beverages. The purpose of state dram laws is to protect the public from the hazards associated with selling or serving alcohol to intoxicated customers and minors.

Liquor Liability Insurance Cost

Liquor liability insurance can get pretty expensive depending on various factors and the state your business in in. A basic dram policy will often start around $500 annually for a small business. They can easily exceed thousands of dollars for larger businesses. It’s often more affordable to purchase liquor liability coverage in conjunction with a general liability policy or a commercial insurance package; however, they can also be purchased on an individual basis.

The limits of insurance (i.e. the amount of insurance coverage) is one important factor in determining price. Other components used to rate liquor liability insurance include:

Cost Factors for Liquor Liability Insurance:

The cost of liquor liability insurance is based on factors such as state, sales, and operating hours.
Types of alcohol sold
Hours of operation and closing time
Food versus alcohol receipts (if any)
Square footage of bar or restaurant
Average price of drinks
Happy hours and drink specials
Entertainment venues, live music, and karaoke
Bouncers and door keepers
State where business is located
Server training and certifications

In some instances it can be difficult for many bars and taverns to find an admitted insurance carrier to quote coverage for liquor liability insurance. The basic difference between the two types of insurance companies is that admitted carriers are required to file rates with the state and follow rules and regulations set by each state’s Department of Insurance.

Non-admitted carriers are not required to file rates or follow the same state regulations. They do have to prove to the state that they are financially able to pay claims and conduct insurance business. The primary consideration for a business owner should be the insurance company’s years in the insurance industry and financial strength as reported by AM Best or Standard & Poor’s.
Liquor liability insurance is often quoted by non-admitted insurance companies instead of admitted carriers.

It’s important to note that non-admitted carriers play a vital role in the insurance industry because they are often willing and able to take on higher risk coverages that have a greater likelihood of having a loss. In some cases, and some states, liquor liability insurance is one area where many admitted insurance companies may be unwilling to quote liquor liability insurance. Sometimes they don’t want the risk.

What is Covered by Liquor Liability Insurance?

Liquor liability coverage will vary depending on the insurance company and their status as admitted or non-admitted. Business owners should review their policy carefully or consult with a licensed agent specializing the unique exposures associated with liquor liability insurance. In general, the following coverages can and should be included within a good quality insurance policy:

Common Coverages Under a Liquor Liability Policy:
Bodily Injury:  injury to others
Mental Damages:  mental anguish or psychological damage
Defense Costs:  legal costs for defending a claim
Assault and Battery:  fights and brawls
Employee Coverage:  equal coverage for intoxicated employees
Property Damage:  damages you're held liable for in court
Specific Incidents:  stabbings; shootings; sexual assault; etc.
Liquor Liability Insurance Quote

General liability Shop.com offers liquor liability insurance quotes in all states. We work with more than 15 admitted and non-admitted insurance carriers to ensure you get more insurance options and the lowest rates on liquor liability for your bar, pub, restaurant, liquor store, or your hosted event. In most cases, we can either bundle your liquor liability with an affordable GL, a commercial package policy, or we can offer stand alone liquor liability insurance.

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State Laws and Liquor Liability Insurance

There is a lot of confusion surrounding liquor liability from state to state. The primary reason for this uncertainty involves various state laws written to address dram shop liability. Currently, only 30 states have legal provisions that allow related establishments to be held liable for selling or serving alcohol. However, this does not necessarily reduce the risk for business owners in the other 20 states.

Each states’ provisions, laws, and limits of liability have a positive or negative impact on the probability of a successful claim against a business. Therefore, the same dramshop laws also impact product availability, insurance rates, and the overall cost for liquor liability insurance. I other words, insurance companies offer more favorable rates in states where the laws favor the business owners.

General liability insurance will not protect bars and restaurants from liquor liability risks. However, several carriers offer premium discounts when they quote both lines of insurance.

Learn more about a General Liability Insurance.

General Liability Shop.com recommends that every business that sells, serves, or permits alcohol in their establishment investigate the liability risks associated with alcohol in their specific state. We also suggest you get several liquor liability insurance quotes. Finally, we advise you to make your own determination as to whether or not the risks of a claim outweigh the cost of liquor liability coverage.