Alcohol at Events: Liquor Liability Insurance and What It Actually Covers

You can find alcohol at all sorts of events, from weddings to corporate parties. It helps guests unwind and connect, but it can also pose a serious risk. Overserved guests can injure others or damage the venue, and event organizers can be held liable legally and financially.

To protect event hosts from million-dollar lawsuits, you need liquor liability insurance. Let’s review what it covers, why you need it, and common exclusions.

What is Liquor Liability Insurance?

Liquor liability insurance is a special type of event insurance that protects you against risks involved in serving alcohol at events. It can cover:

• Medical expenses
• Third-party property damage
• Lawsuit legal fees
• Settlements and judgments

Plus, many state and municipal laws require you to carry liquor liability insurance if you’re hosting an event that serves alcohol. Not carrying liquor liability coverage can lead to severe financial losses and legal consequences.

The Risks of Serving Alcohol at Events

Alcohol can make any event’s atmosphere livelier, wonderful for celebrations and competitions. It can facilitate social connections, which can help business relationships. However, serving alcohol at any event has its risks.

Common Alcohol-Related Risks

Injuries caused by intoxicated guests: Guests served alcohol might accidentally cause injuries to themselves or others at the event. Messy situations like this can lead to costly lawsuits against the event organizer.

Property damage: Alcohol can worsen reckless behavior at events. Overserved guests may cause harm to your equipment or rented venue.

Alcohol-related aggression: Alcohol is known for exacerbating violent situations. A study showed that only a small number of people become aggressive when drinking alcohol. Event hosts cannot guarantee that there will not be anyone who becomes more aggressive when overserved.

Medical emergencies: Alcohol poisoning and other health emergencies can arise due to excessive drinking at events.

What Does Liquor Liability Insurance Cover?

Coverage for Host Liquor Liability

Liquor liability insurance’s main purpose is to protect the event organizer when serving alcohol. As long as there is alcohol, it is crucial to carry liquor liability insurance (and meet any other liquor-related requirements). If an incident happens during the event, host liquor liability insurance can cover medical costs, legal fees, and other covered damages.

Coverage for Third-Party Injuries and Damages

Liquor liability insurance can protect you from claims made by guests or third parties who suffer from alcohol-related incidents at your event. This includes both medical and property damage. Common examples include:

• Intoxicated guest breaking venue property
• Two overserved guests fighting each other
• A guest who’s drunk too much injures themselves

Legal and Medical Costs

Lawsuits can be costly even if you are not found liable for the incident. After all, you still need to pay the attorneys. Liquor liability insurance can cover a portion of the court costs, attorney fees, and settlements or judgments. The lawsuits have to be related to alcohol consumption at events.

Liquor liability insurance is also able to cover the medical costs for injuries caused by alcohol-related incidents. Medical expenses for debilitating injuries can cost millions of dollars, so this coverage is crucial if your event plans to serve any alcohol.

Property Damage

Property often gets damaged by intoxicated individuals or accidents involving alcohol at events. Liquor liability insurance can help pay for this property damage, such as:

• Venue damages caused by an intoxicated guest
• An overserved guest damages furniture in the event property

Bodily Injury or Death

If an intoxicated guest causes bodily injury or death, the event organizer can get sued for the harm. Liquor liability can cover the worst case scenario of a death arising from an intoxicated fight or accident. Wrongful death lawsuits occur when the family or estate of the deceased sues the event host or organizer for compensation. If alcohol service might’ve played a role, the wrongful death suit can be supported by the dram shop rule.

Negligence

Liquor liability insurance policies can cover damages and injuries that arise from the negligent serving of alcohol, whether that’s the sale or distribution of alcohol.

Serving alcohol at events comes with many risks of negligent claims. For example:

• Not checking IDs and serving minors alcohol
• Continued serving an obviously intoxicated guest
• No security (or not enough security based on number of guests at the event)

What Liquor Liability Insurance Does Not Cover

Exclusions in Policies

Liquor liability covers incidents related to alcohol consumption at your event, but it doesn’t necessarily cover everything. Here are some of the most common scenarios that are excluded from standard liquor liability insurance policies.

Incidents outside of the event: If a guest leaves the event and causes an accident afterwards, liquor liability insurance will not cover related expenses.

Unlicensed vendors: It is the event host’s responsibility to check that all alcohol vendors are properly licensed. If alcohol is served by an unlicensed vendor, ensuing incidents related to the intoxication will not be covered by liquor liability insurance.

Non-compliance: If you do not fail to comply with local alcohol laws, insurance will not cover alcohol-related incidents. In addition, coverage limits will always apply. If you need more coverage, it is best to buy a policy with enhanced coverage limits.

The Role of Other Insurance Types

Events require many different insurance coverage types to mitigate risk. Alcohol-related incidents are far from the only potential issue. Event organizers should also consider insurance for:

General liability: Companies planning business events need general liability insurance. It covers a wide variety of liability claims, such as negligence, bodily injury, and property damage. It essentially covers liability claims except alcohol-related ones.

Event cancellation: If a key performer or staff member drops out at the last minute, if there is dangerous event, if there is a power outage… If there is an unforeseeable that requires you to cancel your event, event cancellation insurance can cover lost revenue and expenses.

Workers’ compensation insurance: You are likely legally obligated to carry workers’ comp if you have any employees at the event. Any workers’ injuries, illnesses, or death while on the clock at your event can lead to expensive lawsuits if you don’t carry workers’ comp.

Terrorism insurance: This is a niche event policy that protects event organizers from liability in case of a terrorist attack. This type of event insurance is typically only purchased for high-risk events, such as political rallies or large concerts. Political terrorism policies will cover war, strikes, riots, civil commotions, and other damages that are excluded from standard event insurance.

Business equipment insurance: Equipment protection is useful if your own business equipment (as opposed to third-party equipment) gets damaged during your event.

How to Obtain Liquor Liability Insurance

Choosing the Right Insurance Provider

For liquor liability insurance, it is important to choose a reliable event insurance provider. They should be familiar with local laws and event venue requirements. We highly recommend choosing from one of the best event insurance companies, with Eventsured being an excellent choice for liquor liability.

What to Look for in a Policy

Here are key terms to compare when it comes to liquor liability insurance policies.

Coverage amount: How much liquor liability coverage you need depends on event risk and size.

Premium: The insurance premium is how much you will need to pay for liquor liability coverage. In states with dram shop laws, host liquor premiums will be higher.

Insurer financial strength: You need to make sure you’re buying liquor liability insurance from a reliable insurance company that can actually pay out if your event runs into a problem. Event insurance reviews can help you better gauge the reliability of an insurer.

Cost of Coverage

Liquor liability insurance premiums depend on numerous factors. The main ones are:

• Event size: Larger events will have greater liability risks
• Event duration: Event-goers often become more lethargic or vulnerable as events go on for long, especially if people are living at the venue (e.g. music festivals)
• Dram shop laws: Many states have dram shop rules that hold businesses liable for damages or injuries caused by customers served alcohol at their events

Temporary vs. Annual Policies

Short-term liquor liability insurance policies are the most popular. They cover a single event, up to a maximum duration (e.g. 30 days). Host liquor liability may be included with an event insurance policy.

Long-time liquor liability may make more sense if you need coverage for more than 30 days/a single event. If you expect to host multiple events in a year, you can benefit from annual liquor liability insurance.

Other Factors to Consider When Serving Alcohol at Events

Insurance is important for saving your bottom line after incidents happen, but prevention through responsible practices and protocols is also essential. Here are some other considerations when serving alcohol at your event.

TIPS (Training for Intervention Procedures)

Staff and volunteers should be trained on responsible alcohol service. The TIPS certification can be obtained online after undergoing alcohol service training.

Responsible Alcohol Serving Practices

Alcohol servers, like the bartenders and waiters, need to ensure that guests don’t become overly intoxicated. If a guest appears intoxicated or has already consumed several drinks, it may be a good idea to limit their alcohol consumption.

Designated Drivers & Transportation

Event organizers should offer safe transportation options, such as carpooling with a designated driver or paying for guest Ubers. Before the event, designated drivers should be encouraged or planned to greatly reduce risks.

Event Permits and Local Regulations

Make sure that your event meets any local requirements for alcohol service. This may mean getting event permits or buying a certain amount of event liquor insurance. Commonly, liquor licenses are required for events, such as the one day license. Otherwise, you cannot legally sell or serve alcoholic drinks.

Case Study: Liquor Liability in Action

Overserved guests causing accidents at events has been a tale as old as time. Because of dram shop laws in many states, alcohol-serving establishments are held liable for injuries or damages caused by overserved, intoxicated patrons. If you don’t carry liquor liability insurance, you may be sued for millions in medical expenses and/or property damage.

Here are some examples where liquor liability insurance can protect you for events.

• At a company holiday party with a bar, a guest drinks too heavily and slips and falls over wet floor. They sue the company for bodily injuries, amounting to a settlement of $3,000,000. Event liability insurance covers $2 million of the settlement. The company pays $1,000,000

• At a local music festival, two overserved guests get into a fight and cause property damage to the rented concert venue. The event host is sued for property damage of $100,000, all of which is covered by their liquor liability insurance policy

• Two guests trip over each other at a wedding and get heavily injured. Both sue the event host, who does not have sufficient liquor liability insurance. The host ends up having to pay $500,000 in medical expenses

In the first two cases, the event organizer was able to save a significant amount of money. The first one regretted not buying a larger coverage amount, but was fortunate they still saved $2 million dollars on the settlement.

In the third case, the wedding organizer needed to obtain liquor liability insurance. They ended up needing to drain all their savings in order to pay for the medical fees.

Conclusion

Liquor liability insurance is crucial for events that serve alcohol. Even if your state doesn’t have dram shop laws that automatically hold the organizer liable for alcohol-related incidents, host liability insurance could save you millions of dollars in lawsuits.

Organizers should assess the event risks and choose from the best event insurers to ensure they have enough financial protection. Consult with an insurance or legal expert to understand the best liquor liability coverage for your event.