What is Liquor Liability Insurance?Businesses that sell or serve alcohol can sometimes be held responsible for incidents that their intoxicated patrons are involved in. This potential liability can lead to expensive legal costs and reparations if something major happens and involves an intoxicated patron. Liquor liability insurance helps protect Massachusetts businesses that sell and serve alcohol from much of the liability that comes with offering adult beverages.
While liquor liability insurance is a specialized form of commercial liability insurance that protects against only certain risks, the expenses that liquor liability policies may help pay on covered claims are generally similar to those expenses that other commercial liability policies usually assist with. Most liquor liability and other commercial liability policies will help pay legal fees, settlements and judgements associated with claims that they cover.
What Massachusetts Businesses Need a Liquor Liability Policy?
Per state law, most Massachusetts businesses that sell alcohol are required to obtain a liquor liability policy. Having a policy that meets the state’s minimum coverage requirements is a prerequisite for obtaining a liquor license from the Alcoholic Beverages Control Commission.
Additionally, many businesses and other organizations that serve alcohol at official events (e.g. company parties, fundraisers, etc.) might also want a liquor liability policy. Simply offering alcohol at an official event can create potential liability for the sponsoring company or organization if things get out of hand.
Businesses and organizations that need liquor liability coverage for one-off or occasional events should speak with an insurance agent who specializes in this type of insurance. Many insurers offer event-specific policies that offer coverage for only a limited time and have correspondingly affordable premiums, and a specialized insurance agent will be able to explore whether such an option is suitable for a business or organization’s situation.
Are Servers Covered by Liquor Liability Policies?Generally speaking, businesses’ liquor liability policies cover their employees who serve alcohol. Servers, bartenders and anyone else who serves drinks may want to confirm with their employer that coverage is provided, however.
Anyone who needs a liquor liability policy for themselves ought to speak with a specialized agent. If adequate coverage isn’t provided by an employer, a knowledgeable agent can explore what other options are available to an individual.
What Types of Incidents Are Covered by Liquor Liability Policies?
Liquor liability policies usually cover a variety of alcohol-related incidents. Depending on a specific policy’s terms, conditions and exclusions, the policy might cover:
Common accidents in which intoxicated patrons are injured
Fights and other physical assaults in which intoxicated patrons have a role
Sexual assaults committed by intoxicated patrons
DUI and DWI accidents caused by intoxicated patrons after leaving a business
Cases of alcohol poisoning to intoxicated patrons
Do Businesses Need a Liquor Liability Policy That Covers Psychological harm?Some liquor liability policies provide coverage for psychological harm, and this is one coverage that many businesses may want to seriously consider getting.
Broadly speaking, psychological harm may encompass the psychological effects that people who are involved in or witness a major covered incident sustain. Because these effects may be experienced by witnesses as well as participants and victims, psychological harm often greatly expands who might file a lawsuit over a covered incident.
As an example, consider a bar fight that broke out between two drunk patrons and resulted in a bloody massacre. Not only may the two patrons who were involved try to sue the bar, but so too might witnesses who were troubled by the incident. Depending on how crowded the bar was, the number of people who file a lawsuit could be expanded from two to potentially dozens or more.
Having a liquor liability policy that includes coverage for psychological harm is one way businesses might be able to protect themselves from this increased risk.