If you have been injured in an accident and you believe an establishment that serves alcohol may be partially responsible for your injuries, you will need to understand the insurance policies that can affect your lawsuit. Establishments that serve alcohol in any capacity have liquor liability coverage or similar insurance plans. Some insurance providers may offer dram shop policies, but is dram shop insurance the same type of policy as liquor liability insurance? Learn more about how dram shop liability insurance works and dram shop laws you should be aware of.

What Is Liquor Liability Coverage?

Liquor liability insurance is a type of liability insurance that protects businesses from specific incidents for liability claims. Instead of the business paying the full cost of damages for liquor liability incidents out-of-pocket, the business’s insurance company will pay for personal injuries and damages with a liquor liability policy.

As a victim, you may be able to use this policy to recover compensation for injuries, property damage, and non-economic damages to reduce the financial impact associated with your accident.

What Does Dram Shop Insurance Not Cover?

While dram shop insurance will cover most types of claims (e.g., third-party bodily injury), this insurance policy will have some exclusions. The main exclusion for liquor liability insurance is the sale of alcohol to minors, since selling alcohol to underaged people is illegal.

Do All Businesses Have Liquor Liability Insurance Coverage?

Generally, establishments that sell alcohol, serve alcoholic beverages, distribute alcohol, or supply alcohol to other businesses should have liquor liability insurance. Businesses that generally have liquor liability insurance include restaurants, bars, taverns, breweries, wineries, grocery stores, liquor stores, and caterers.

Host Liquor Liability Insurance

Some liquor liability insurance policies do not apply to all businesses. The host of an event where alcoholic beverages were served may have host liquor liability insurance instead of liquor liability coverage. This type of insurance policy will allow you to recover compensation if you get in an accident that involves an intoxicated person on their way home after a private event.

What Is the Difference Between Liquor Liability and General Liability Insurance?

While general liability insurance is meant to cover most of the hazards associated with the operation of a business, a general liability policy will not cover the specific hazards related to serving alcohol. If a business has both general liability insurance and liquor liability insurance, you will generally only be able to receive compensation from the liquor liability insurance coverage.

For example, if you are injured by an intoxicated customer at a bar, then liquor liability insurance will cover the cost of your damages. If a business does not have a liquor liability insurance policy, then general liability insurance may cover your personal injury claim.

How Do Dram Shop Laws Work?

Dram shop laws are designed to hold commercial businesses licensed to sell or serve alcohol accountable for injuries and damages caused by intoxicated individuals. If an individual becomes intoxicated by consuming alcohol on business premises and injures another person, then the business owner may be held legally or financially responsible for third-party bodily injury, property damage, and other damages that occur in a car accident or other accident.

Liquor liability insurance for a business may be triggered if there is evidence that the business or employees served alcohol negligently. According to Missouri state laws, businesses that serve alcohol to minors that fail to obtain identification to verify a customer’s age or that continue to serve alcohol to visibly intoxicated people can be considered negligent.

What Establishments Are Vulnerable to Dram Shop Laws?

In Missouri, commercial establishments that are most vulnerable to dram shop laws are bars, taverns, pubs, and restaurants. However, not all establishments that have liquor liability coverage will be equally vulnerable to dram shop laws. Even though liquor stores have liquor liability insurance coverage, liquor stores are generally excluded from dram shop liability regulations because people are not served alcohol at liquor stores.

What If Your Establishment Refuses Service or Has Safe Drinking Policies?

There are various factors that can help a business reduce dram shop liability risk. If an establishment refuses to serve alcohol to someone who is visibly intoxicated, this can demonstrate that the business is not negligent.

Businesses that educate employees on how to identify intoxicated people or how to avoid over-serving alcohol may be considered responsible. If a business encourages serving non-alcoholic beverages or offers to call rideshares for intoxicated customers, this can also demonstrate responsibility.

How Can Safe Drinking Policies Impact Your Claim?

The existence of safe drinking policies enforced by a business can be significant if the business is taken to court by dram shop claims. If there is evidence that a business has safe drinking policies, you will not be able to receive compensation from the business’s liquor liability insurance even if you were injured by an intoxicated customer. This is because safe drinking policies enforced by the business may remove liability.

What Defines a Visibly Intoxicated Individual?

A visibly intoxicated person is someone who displays impaired motor capacity, including clumsiness, slurred speech, and slow reactions. Red eyes, a flushed face, or aggressive behaviors can also indicate someone has consumed too much alcohol.

Employees of a business that serves alcohol should be trained to identify visibly intoxicated individuals. If there is evidence that a business continued to serve alcohol to a visibly intoxicated individual and that individual then caused your accident, liquor liability coverage can pay for your damages.

Will You Need to Hire a Lawyer If a Dram Shop Claim Is Filed Against You?

When a business has liquor liability coverage, you can recover compensation when you file a claim against the business. It is best to hire a lawyer with extensive knowledge about dram shop laws. Your lawyer will use evidence to prove that the business should be held liable for an intoxicated person’s actions if that intoxicated individual caused your injury.

It is important to hire a lawyer to negotiate a fair settlement, since the business’s insurance company will try to deny your claims. Additionally, coverage limits on the business’s liquor liability insurance may not cover the full costs of your bodily injury and property damage, so your legal team may need to explore alternative legal avenues.

Along with general liability insurance, most businesses that serve alcohol will have dram shop insurance. Dram shop liability insurance will cover claims related to selling alcohol and serving alcohol that is not outlined in a general liability policy. 

If you want a business to be held liable by dram shop law, get in touch with Holman Schiavone, LLC at 816-399-5149 for a free case evaluation today.