Dram Shop Liability
Dram shop liability laws prevent bars, stores and other businesses from selling alcohol to minors and intoxicated people.
Whether you’re planning a book club meeting, a wedding, or an office party, you may plan to serve alcohol as part of the mixer. But if you serve or sell alcohol at your event, you’re opening your business up to dram shop liability — being held responsible for the harmful actions of people who became intoxicated at your event.
If you provide alcohol at your event, whether it’s an open bar or a cash bar, you could run afoul of dram shop liability laws. Allow us to explain.
In the 18th century, apothecaries used “drams” as a unit of measurement. For an apothecary, a dram measured roughly one-eighth of an ounce. Pubs and taverns selling whiskey at the time adopted the term “dram,” though there is a bit of discrepancy over just how much a dram of whiskey equated to.1 (We’re guessing that it depended on who was pouring.) Regardless, the pubs and taverns that sold alcohol were often referred to as “dram shops.”
Now, although the name no longer applies in the literal sense, dram shop laws still apply to bars and other establishments that serve alcohol. Further, dram shop laws may also apply to you if you are serving alcohol at a party or other event.
Dram shop laws were enacted to prevent bars, stores and other businesses from selling alcohol to two groups: Minors and people who are already intoxicated. It is considered a crime to serve either of these groups. But you can be held liable if someone of drinking age gets in trouble because you served them.
Washington, D.C., and 42 states currently have dram shop laws in place.2 And although the statutes may vary by state, according to some dram shop laws, you could be held liable if a person who is served alcohol at your event goes on to injure themself or another person.
You’ve probably seen it in the movies, maybe even in real life: a regular goes into a bar after a tough day demanding a shot, and then another, and another. . . . The bartender tries to say “no,” but the patron insists. The bartender agrees, but only after taking the customer’s car keys.
The bartender isn’t doing this only out of kindness. Should the intoxicated individual drive home drunk and get into an accident, the bartender and the establishment that served the intoxicated individual could be held liable. This same risk applies to you as an event organizer or host when serving alcoholic beverages.
You may be wondering whether event insurance may cover you for dram shop liability. The answer: Not necessarily.
Event insurance will cover you for third-party bodily injury or third-party property damage at an event for which you are the host or organizer. For example, if a guest at your event trips over a carpet runner and breaks a limb, event insurance may cover the medical costs related to an injury.
At Thimble, event insurance also includes liquor liability insurance, which can protect small businesses and event hosts from the financial impact of liability related to their guests’ alcohol consumption. So if the trip-and-fall described above is related to alcohol consumption, then your event insurance may cover you for liabilities.
While dram shop liability encompasses claims related to both the sale and free distribution of alcohol, liquor liability insurance only covers you for liabilities resulting from alcohol-related accidents when you are not in the business of selling alcohol.
If alcohol is being sold at your event, then you will need to add additional liquor liability insurance to your coverage. But you should be aware that there may be exceptions to liquor liability coverage.
Liquor liability insurance coverage does contain some exclusions:
To make sure you’re protected, have servers ID patrons who could be underage and avoid serving already-intoxicated guests. And to cover your property from loss, theft or damage, you may need commercial property insurance if the event is being held at your premises. If it is not, then you may need Business Equipment Protection to cover your property at a location other than your business premises.
You need two things to help reduce your dram shop liability risk at your next event. One is a common-sense approach to avoid selling alcohol to minors and already intoxicated guests. The second is Thimble’s Event Insurance will reduce your risk exposure to third-party bodily injury and property damage.
Plus, we make purchasing insurance as easy as we can. If you can download our app, you can purchase a policy. It’s that easy, and almost as fast. Or, if you prefer, click “Get a Quote,” answer a few questions to get covered, and get back to the party planning. Salud!