Where there’s alcohol, there’s responsibility. A single drink can be the start of a celebration—or the beginning of a liability. Any business that sells, serves or allows alcohol consumption onsite—whether it’s a bar, restaurant, grocery store, winery or event venue—could be held accountable for what happens next.
The risks are real. According to the Centers for Disease Control and Prevention, excessive alcohol use contributed to more than 178,000 deaths in 2024, and 17% of U.S. adults admit to binge drinking. Intoxicated individuals can pose risks to themselves, those around them and the businesses that serve them.
“With liquor liability claims rising each year, it’s a growing concern for many types of businesses—not just bars and restaurants,” says James Tippett, ERIE senior risk control consultant. Any place that sells or serves alcohol can be at risk, from grocery and convenience stores to other entertainment venues. “Taking proactive steps now can help businesses protect their customers, their reputation and their bottom line.”
The majority of states require businesses to carry liquor liability insurance to ensure there is sufficient money to cover all related damages. Some states—like Maryland and Virginia—don’t require liquor liability insurance. However, landlords and financial institutions with a stake in the property may separately require liquor liability insurance, even if there are no relevant state laws.
That’s because one claim could force a business to close for good if that business didn’t have the proper insurance coverage. There is no average claim amount, as total damages and liability can vary significantly from one case to the next. But it is conceivable that a single claim could cost hundreds of thousands of dollars, depending on the amount of property damage or seriousness of medical injuries. If the intoxicated patron gets on the road to drive and winds up in a serious accident, the costs continue to multiply.
The wrong assumption could cost your business
Many business owners (who are in the business of manufacturing, distributing, selling, serving or furnishing alcohol) mistakenly assume they are protected from liquor liability through their general liability insurance. Not true. Alcohol-related incidents are only covered under liquor liability insurance coverage—which can be added to a general liability policy. With the right liquor liability insurance, your business is covered for such losses as legal/attorney fees, settlement payments, medical costs, property damage and necessary repair costs.
Liquor liability laws vary from state to state, so the amount of required coverage is different depending on the state, as are the methods for calculating premium and the penalties incurred for violation. Talking to a commercial insurance agent can help you make sure you have the right coverage for your business.
Take the necessary precautionary steps
While no business can completely eliminate the risk of a claim, there are steps you can take to reduce exposure and strengthen your defense if a patron decides to take legal action. Erie Insurance offers the following tips to reduce liquor liability incidents:
- Know the applicable laws that are in force in the state in which you’re operating.
- Check the ID of anyone who looks under the age of 25; if in doubt of a patron’s age, check it.
- Perform pre-hire background checks on any employee who will be serving alcohol (especially check Motor Vehicle Records).
- Conduct liquor liability training for all servers and bartenders. You may consider mandating that servers and bartenders complete a “TiPS®” certification training program. TIPS certification stands for Training for Intervention Procedures, and it’s a nationally recognized training program.
- Create a detailed written policy that outlines proper procedures and penalties for an employee’s noncompliance. Have all alcohol servers read and sign it.
- Invest in video surveillance in your business.
- Avoid free pouring.
- Maintain records of situations in which service was refused or someone was ejected from your premises.
- Display bar signage that indicates limits to drinking.
- Limit drink specials.
- Review your website content and social media posts to ensure you are not positioning the business as a place to drink heavily and party.
- Limit the hours when you’re serving alcohol (especially after the time you are no longer serving food).
- Review your commercial insurance with your agent to ensure your business is adequately protected.
Most of your patrons are responsible, but it only takes one incident to put your business at risk. The right preparation, training and insurance can make all the difference.
James Tippett is a senior risk control consultant for Erie Insurance, a 100-year-old insurance provider based in Erie, Pennsylvania.