Is your business vulnerable in the event of a liquor liability claim?
Written By Jackie Lorick
Liquor liability is something of a hot topic these days and has many business owners wondering if their general liability policy protects them from such an event. The simple answer to that question would be . . . maybe, as each claim is evaluated by an insurance claims adjuster and depends upon several factors. After polling a few underwriters from various insurance companies, the answer really depends upon the following: the type of business the insured runs, the claims scenario, who the carrier is, and the policy forms.
Liquor Liability Exclusion and Host Liquor Coverage
All standard general liability policies have an exclusion stating that should the insured be in the “business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages,” the policy would not provide coverage for liquor liability. If the insured is not in such a business, then there is what is known as “host liquor” coverage. This type of coverage protects clients who generally do not have any alcohol exposure but might have an office outing and are (for example) providing a glass of wine with dinner for their employees. Even Non-Profits must consider carefully when alcohol is served at a function. The Nonprofits Insurance Alliance has some great tips for all businesses when alcohol is served at function.
This coverage can be at times deemed a gray area for adjusters, as it is hard to determine whether or not such events are incidental to the business exposure. If the client is hosting a large party where alcohol is present, it is always best to go the route of adding a special event policy with liquor liability coverage to prevent yourself from being in a “gray area of coverage.”
Beware of the Host Liquor Liability Exclusion
Also, it is important to note that some carriers have even started adding additional exclusions to their general liability forms that will remove host liquor coverage for insureds. For this reason, we always recommend insureds read their policy documents carefully! If an insured is still unsure, they should call their trusted independent insurance agent to talk through their options.
If an insured is in the “business” of alcohol, it is obviously always best to include a liquor liability policy in their insurance portfolio.
So, is your business adequately protected from a liquor liability claim? Call your local insurance agent to find out.