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Off-Premises Liquor Liability

September 2020

When a tavern or restaurant is sued because an allegedly intoxicated patron causes an injury, state “dram shop” laws may impose responsibility to the establishment that provided the alcohol. These laws provide a remedy for recovery of damages for the innocent parties who suffered injury. Businesses often purchase liquor liability insurance coverage to provide protection for that liability. That type of coverage is usually tied to the sale or service of alcoholic beverages at “your premises.”  

The first line of the insuring agreement of the Illinois Casualty Company (ICC) Liquor Liability Coverage Form states:

We will pay those sums that the insured becomes legally obligated to pay as damages because of “injury” to which this insurance applies if liability for such “injury” is imposed on the insured by reason of the selling, serving, or furnishing of any alcoholic beverage at “your premises.”

It should be noted that the ICC definition of “your premises” is much broader than just the address listed on the declarations page of the insurance policy. However, with the growth of craft breweries, distilleries, and wineries, an increasing opportunity exists for the selling, serving, or furnishing of alcoholic beverage to take place outside of “your premises.” This happens most frequently at tastings and festivals as well as traditional special events, such as wedding receptions. Often the unendorsed liquor liability policy will not provide coverage for that off-premises exposure.

So how is liquor liability coverage provided for off-premises events? ICC has specific endorsements to appropriately expand the definition of “your premises” for businesses that typically have an off-premises liquor liability exposure. Those endorsements include:

  • Caterer

  • Distributor

  • Winery

  • Brewery, Craft Brewery, Micro Brewery

  • Distillery

ICC also has endorsements designed to provide coverage for off-premises events, such as festivals or wedding receptions. These are typically one-time special events with a specific date(s), including starting and ending times.

Most taverns and restaurants recognize that they have a degree of liability exposure when they provide alcohol at their premises. That liability does not change if the alcohol is provided off-premises; however, the insurance coverage may be different. Business owners should consult with their insurance agent to make sure that their insurance coverage properly matches their exposure to loss.

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