When restaurants serve alcohol, they increase a consumer's chances of becoming drunk. If the intoxicated party then causes harm, the harmed party might hold the restaurant responsible. This is because the restaurant served the alcohol to the person or people who caused the damage. Many dining establishments carry liquor liability insurance to help them in such cases.
But, what if you only sold someone the alcohol, rather than served it to them? What if you only sold them the bottle in your liquor store, which they then chose to drink? Does that free you from liability?
Simply put, no. The sale of alcohol by the bottle (or other quantity) is just as risky as the sale of alcohol by the drink. Most liquor stores need to carry liquor liability insurance as a result.
Liquor Liability Insurance
Businesses that provide alcohol usually need liquor liability insurance. It covers the losses a business might face if it sells someone alcohol and that person then causes a costly accident. The policy might pay for the costs to clean up the damage caused, for example. And in particular, liquor stores need this coverage because they provide the substance that could contribute to such accidents.
An illustrative example might clarify why this coverage is essential. Let's say someone drives drunk and gets into a head-on collision that injures someone else. The injured person could sue the liquor store. They might claim that because the store sold them the alcohol, the store contributed to the intoxication that caused the accident. Store management might have to reach a settlement with the affected party.
Still, some liquor store proprietors might argue: My store only sold someone the alcohol. It was their choice that they drank it and harmed someone else. I am not responsible.
It is not that cut and dry.
Even if you only sold someone a sealed bottle of alcohol, you still provided them a mechanism for intoxication, which is a liability risk. What if you sold a bottle to someone who went right outside, opened the bottle, and then drank it behind the wheel, for instance? On the way home, they caused that head-on wreck.
Your actions, however innocent, still might have contributed to the accident. The parties harmed by the wreck might try to sue for this reason. With liquor liability insurance, you can usually get financial help with court fees, settlements and other costs that might arise.
Still, there is no guarantee your policy will have to pay for someone's losses at all. Even if a lawsuit arises, that does not mean it will prove successful. Laws governing liabilities in liquor stores — often called dram shop laws — are strict. The party suing you usually must prove that you committed some form of negligence by selling the alcohol. Still, you might rack up legal costs even as you fight the case. It is these costs that many liquor liability policies might cover. That's why you should never go without it.