Liquor liability insurance is a must have for any venue or organization that sells alcohol. While most people drink responsibly, there are some who can cause quite a bit of damage. To cover your business or event space, it’s important to take out a liquor liability policy. In this guide we discuss the average cost of liquor liability insurance.
How Much Does Liquor Liability Insurance Cost? $500 to $3,000
The average cost of liquor liability insurance is about $500-$3000 annually. The cost can vary wildly, depending on the type of business. This number is going to depend of course on how large an event you a throwing and the type of event you are throwing. Essentially the higher likelihood of damage happening, the higher your insurance premium.
What is Typically Covered by Liquor Liability Insurance?
Liquor liability insurance insurance protects a company that manufactures, sells or serves alcohol, against claims that occur when a patron drinks too much and injures property, himself or someone else. Restaurants, clubs, taverns and bars that serve alcohol in any form, including wine, beer and spirits need this coverage.
The insurance will only cover damages that are the result of the legal selling, serving, or furnishing of alcoholic beverages. This means that it will not involve claims that involve any sales without the proper license or sales involving a minor.
What Influences the Cost of Liquor Liability Insurance?
The cost of liquor liability insurance goes up when the risk of patrons causing damage to other patrons, property, or themselves increases. The two main major factors affecting the premium are business classification and revenue breakdown. According to Jacques Wong of ReFrame Insurance, liquor liability insurance is determined by:
- % of liquor sales relative to overall revenue
- Total annual revenues
- Hours of operation – if you open late, expect to pay more
- Type of business – liquor sold at concession stands or restaurants will be rated cheaper than other places like a bar, nightclub, or pub. If you have pool tables or other “high risk” games, premiums go up because of the potential for violence.
For example, a business classified as a nightclub could be more likely to face rowdy patrons than a tavern and thus would likely face higher costs. Likewise, businesses that have large total alcohol sales volume or a high percentage of sales from alcohol would face higher costs as well. Typically, 25% or lower of sales from alcohol would be considered low while 75% or more would be considered high.
There are also other factors that can increase the premium cost, such as the hours of operation and the entertainment offered. For example, a bar that has late operating hours and offers potentially competitive games such as pool may be more likely to see problems and thus have higher premiums. In addition, businesses that have a history of making claims will likely have higher premiums.
Does Liquor Liability Insurance Cost the Same Everywhere?
Liquor liability cost can be affected by where your business operates. Liquor liability laws vary widely on a state by state basis, with some states such as Illinois, Iowa and Minnesota imposing very strict liability. In these states, businesses may not even be able to obtain a liquor license without first purchasing insurance.
Bryan Sirota of Guild Insurance says that in other states such as Kansas, Maryland, Nebraska, Wisconsin, Texas, and Louisiana impose little to no liability upon holder of liquor licenses. However, this does not mean that they would be immune from the dangers of not purchasing insurance.
How Do You Reduce Premium Costs?
The best way to lower your liquor liability premium costs is with proactive investment. Having staff that is trained in liquor sales can help reduce risk of incidents and could lower the premium paid. In addition, techniques such as encouraging patrons to eat food with their alcoholic beverages or making sure that there are always staff to watch patrons near the bar can help prevent incidents and thus claims.
When Does Your Company Need Liquor Liability Insurance?
It is highly recommended that all businesses that serve alcohol obtain some level of liquor liability insurance. No matter the business, unpredictable events can happen while serving alcohol. As a single incident could cost tens of thousands of legal fees alone, the insurance is more than worth it. Lastly, checking proper identification is important as most claims do not cover costs involving minors.
Where to Find Liquor Liability Insurance
There are several websites that provide easy ways to purchase liquor liability insurance. Due to the ease in comparing different quotes, we recommend using CoverWallet.
Jacques Wong- ReFrame Insurance