Published On: September 20, 2023

One of bar owners’ most significant liability concerns is dram shop liability. Dram shop liability laws hold establishments accountable for injuries or damages caused by intoxicated patrons. The appropriate insurance from Tabak Insurance can help protect your bar from potential financial losses or legal trouble brought on by liability claims. Here’s how insurance for bars can protect your business from dram shop liability laws:

Understanding Dram Shop Liability Laws

Dram shop liability laws vary from state to state but generally hold establishments like bars, restaurants, and liquor stores responsible for the consequences of serving alcohol to individuals who are visibly intoxicated or underage. The key elements of dram shop liability laws include:

Duty of Care: Establishments must exercise reasonable care when serving alcohol. This duty includes refusing service to visibly intoxicated patrons and verifying the age of customers.

Proximate Cause: To establish liability, it must be proven that serving alcohol was a proximate cause of the injuries or damages sustained by a third party. This can be a complex legal issue.

Visible Intoxication: Establishments may be held liable if they serve alcohol to someone already visibly intoxicated. Visible signs of intoxication include slurred speech, stumbling, and impaired coordination.

Underage Service: Serving alcohol to a minor is a clear violation of dram shop laws in most jurisdictions, regardless of the minor’s level of intoxication. If an establishment unknowingly serves a minor alcohol, they may still violate the law for failure to check customer identification.

Third-party Claims: Most dram shop liability cases involve third-party claims where the injured party sues the establishment. These parties allege that the establishment over-served the intoxicated individual who caused the harm.

The Risks of Dram Shop Liability

Dram shop liability lawsuits can severely affect bar owners and their businesses. Defending against a dram shop liability lawsuit can be costly, including legal fees and potential settlements. If found liable, your business may be required to pay significant damages to the injured party, which can financially burden your bar or restaurant.

A dram shop liability case can damage your business’s reputation, decreasing customer trust and patronage. Some states may suspend or revoke the alcohol license of establishments found guilty of dram shop liability, effectively shutting down the business. In some cases, bar owners and employees may be held liable for the damages, putting their assets at risk. Insurance for bars helps protect businesses from the risks of dram shop liability.

Types of Insurance for Bars

Bar insurance typically includes several types of coverage that protect against various risks, including dram shop liability. By covering the risks your bar is exposed to, Tabak Insurance can help you maintain your business’s financial and reputational well-being. After reviewing your business’s needs, we can recommend the best insurance policies. Here are some key insurance policies that can protect your bar or nightclub:

Liquor Liability Insurance

Liquor liability insurance specifically addresses the risks associated with dram shop liability. This insurance can cover legal defense costs, settlements, or judgments resulting from alcohol-related incidents. It can also cover expenses related to injuries or property damage caused by intoxicated patrons. Liquor liability insurance can also cover incidents where minors are served alcohol illegally. Standard general liability insurance policies often exclude coverage for liquor-related claims, making a separate liquor liability policy helpful for bars.

Assault and Battery Coverage

Bars and nightclubs may face a higher risk of altercations and fights on their premises. Assault and battery coverage can protect your business if a patron injures another person on your property. This coverage is key in situations where intoxicated patrons become violent.

Workers’ Compensation Insurance

If your bar has employees, workers’ compensation insurance is typically required by law. This insurance covers medical costs and missed pay if an employee is hurt or becomes sick on the job. In a bar setting, this coverage is helpful due to the risks employees face while serving and handling alcohol.

Find Insurance for Bars Today

Choosing the right bar insurance coverage helps you protect yourself, your employees, and your property against liabilities. Consider local rules and regulations when deciding on one or more insurance plans for your restaurant, nightclub, or bar. Contact Tabak Insurance today to learn more about our comprehensive bar and restaurant insurance packages and how they can protect your business from dram shop liability laws. 

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