Risk management should be a key concern for every business owner, but never more so than for those who sell or manufacture alcoholic beverages. The problem is that any company that sells or manufactures alcohol may be held liable for injuries that result from its use, which can include not just drunk driving accidents but also assault and battery, bodily injuries, and other issues. In the case of alcohol manufacturers, even the physical problems that occur as a result of alcohol abuse can become a liability.
The Role of Liability Insurance
All businesses must carry liability insurance, but standard policies don’t cover many of the issues associated with alcohol sales and manufacture. That takes a specialized liquor liability insurance policy. Having an insurance policy in place to cover the costs associated with liability lawsuits makes it possible for bars, restaurants, stores, and alcohol manufacturers to operate profitably without worrying about losing it all due to overly punitive laws.
Why Selling Liquor Is Such a Risk
Most states have what are known as dram shop liability laws in place. These laws are exceptionally punitive towards any business that serves alcohol. They tend to be broad in their wording and application, usually indicating only that any establishment that sells alcohol can be held liable for its customers’ harmful acts if committed while intoxicated.
Dram shop laws are only part of the problem for business owners whose establishments sell alcohol. The company can also face not just civil fines but also criminal penalties should a worker provide service to minors, and there are also general liability issues to contend with.
Liquor Liability Insurance Requirements
In some states, liquor liability insurance is required. Massachusetts, for example, requires restaurant and bar owners to carry this type of specialized insurance policy. Each establishment is required to have a minimum of $250,000 per person in accident coverage in order to obtain a license to sell alcoholic beverages.
Other Forms of Risk Management
Just taking out an insurance policy does not constitute a risk management plan. Any business that sells alcohol should also take a proactive stance toward employee training and incorporate liquor liability into its broader risk management plan. Other forms of liquor liability risk management can include:
Providing Ongoing Staff Training
Every person who works at a dram shop should be trained to recognize when patrons have consumed too much alcohol or enter the establishment already intoxicated. Both Training for Intervention Procedures (TIPS) and ServSafe certifications can be helpful.
Reconsider Happy Hour Offers
Happy hour deals can really bring in the crowds, but they can also increase a bar or restaurant’s risk of facing liability lawsuits. Applying happy hour deals to food items instead of drinks can be a big help.
Offer Incentives
Many of the liability lawsuits that occur under dram shop laws involve drunk driving. Offering incentives such as free food to designated drivers is a good way to reduce the risk of patrons driving home drunk.
Keep Thorough Records
Not all incidents and accidents can be prevented. Having accurate records of who was served alcohol at what time and in what quantities can help with resolving liability issues.
Get Protected
No establishment that sells alcohol should be without liquor liability insurance even in states that don’t mandate its purchase. That said, it’s equally important to maintain a strict liquor liability risk management strategy. The combination of these two tactics can help to protect any business that serves alcohol.