What Exactly Is Dram Shop Insurance?

Dram shop insurance is a very specific form of liability insurance that's aimed at all types of businesses, clubs, and organizations that serve alcohol to patrons, guests, or members. The term "dram shop" is a bit of an old-timey term to describe taverns and bars. Thirty-eight states have dram shop laws in place that impose strict liability on businesses that serve visibly intoxicated persons who subsequently proceed to injure someone while in a drunken condition.

Why is Liquor Liability Insurance Necessary?

The biggest concern most establishments are going to have is the possibility that a drunk driver will leave the location and end up involved in a catastrophic vehicle accident. Plaintiffs in such cases can rack up very large medical bills, legal expenses, lost wages claims and other items. Similarly, drunken patrons could become involved in physical altercations, sexual assaults, or slip-and-fall incidents—any one of which may give rise to liability in the form of a personal injury claim. In extreme cases, a shop might even face a wrongful death case.

Depending on the state your business operates in, dram shop laws may extend to providing other intoxicating substances. In particular, marijuana legalization in recent years has extended the scope of dram shop law beyond alcohol.

What Is Strict Liability?

In most civil proceedings, there is some element of negligence, recklessness, or intent to commit harm. Obviously, as a commercial establishment, a bar probably isn't trying to overtly cause harm to come to its patrons.

Strict liability sets negligence, recklessness, and intent aside. Instead, the only question that would be put before a jury if the case went to court is whether the patron was clearly intoxicated at the time they were served. Camera footage could be subpoenaed during the discovery process, and witness testimony from employees, other patrons, and passersby would also be collected in the form of depositions.

Your business would then be stuck with the unenviable task of demonstrating that the person was not obviously drunk at any of the times they were served. Under U.S. civil law, the plaintiff only would need to prove it was more likely than not the case this happened.

How Are Rates Set?

Insurance companies look at numerous factors when setting rates. They will ask questions about what days and hours the business keeps. How large is the building? Even the price of the average drink there will be a factor. You can learn more about insurance rates by contacting services such as Chicago Nitelife Insurance.