Liquor Liability Insurance Explained:

If your business provides or sells alcoholic beverages, you are at risk for a liquor liability lawsuit. The majority of states in the United States require that any establishment that serves alcohol carry a liquor liability insurance policy, but unfortunately, many businesses do not. Your regular liability insurance policy will not be enough to cover you should a liquor liability claim be filed.

Here are some liabilities that you may have overlooked, that a liquor liability policy would cover:

1. Sales to minors. This is an area that is very important for business owners. If you do not ask for I.D. from your customers, you could be selling alcohol to a minor. As a business owner, you would then be held liable because you did not check for an I.D.

2. Sales that occur outside of legal hours. Most states have a cut-off after which alcohol cannot be legally sold. If you operate a store that is open twenty-four hours, this law could affect you if an employee sells alcohol after the cut-off time.

3. Sales to a third party procuring alcohol for a minor. Even though at first glance, you would think that the person purchasing alcohol for a minor would be liable in this instance, it is not the case. The business owner still bears the brunt of liability if a person of legal age purchases alcohol for a minor.

4. Sales to someone who is under the influence. In most states it is against the law for a business owner to sell alcohol to someone who is already under the influence. It is not possible for a business owner to be 100% sure if someone is truly intoxicated, making this a very important area of coverage.

The penalties for breaking the above stipulations can be severe. They may range anywhere from a lawsuit from a parent or the state, heavy fines, the loss of your liquor license, and in serious cases, arrest and jail time.

As a storeowner in an establishment that sells alcoholic beverages, you may be the unwitting participant in a sting operation from your local police department. Local police departments often obtain the assistance of minors to test merchant's carding practices.

In addition to obtaining a liquor liability policy that will protect you if any of the above problems take place, it is important to try your best to minimize the risks to your business. You can do this in several ways, and it is recommended to do your best to implement all of them.

First, place notices in prominent locations in your business which state that you actively I.D. anyone who attempts to purchase alcohol and then train your employees to enforce it. It is best to I.D. anyone who looks as if they are under the age of 30, and it is far better to ask someone for an I.D. at all times, than to make a mistake. When you hire an employee, make sure that they understand your commitment to avoiding liability risks. If they try to sell alcohol to one of their underage friends, you will bear the burden of the risk.

By following the rules and enforcing them equally, you can operate your business without the fear of liquor liability risks.

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