Liquor Liability:Lowering the RiskCasey Roberts, ACSR, AFIS, CIC

Whether Your Risk Is…

A Long, Long Time Ago In A Land Far Away…•Whiskey Rebellion in 1794

• 18th Amendment

• Liquor Liability/Dram Shop Laws

• Social Host Liability

Two Terms – Used Interchangeably• “Liquor Liability” & “Dram Shop Liability” refer to your legal/financial responsibility• You “enjoy” this liability if:

– Sell, serve, distribute, furnish, manufacture– Allow BYOB – Allow others to serve alcohol at your venue– And if the courts say you do!

Current State Applications

• 43 states have statutory provisions to hold parties responsible for the causing of injuries or death as a result of intoxication

• 7 do not: Kansas, Delaware, Maryland, Nebraska, Nevada, South Dakota, Virginia

Dram Shop Laws By State

In Absence Of Specific Laws• Common Law negligence may well apply

– IE, what would a reasonable and prudent person have done given the same set of circumstances

• Social Host Liability applies in roughly half of the U.S. states

The Exposure Is Huge• Approximately 45,000 bars & nightclubs in U.S.• Approximately 630,000 restaurants

• Source: Insurance Journal, 10/2/15

• About $211,570,000,000 in total alcoholic beverage sales in the U.S. in 2014

• Source: www.statista.com

Per Capita Consumption In U.S.• Beer – 20 gallons

•Wine – 2.8 gallons

• Distilled Spirits – New Hampshire @ 5.49 gallons down to West Virginia @ 1.27 gallons

• Source: statista.com

Both AAIS & ISO Exclude Coverage In GL Policies

• AAIS Reference – GL-200, Exclusion 6

• ISO Reference – CG 00 01 04 13, Exclusion 2. c.

AAIS – GL-2006. We do not pay for bodily injury, property damage, personal injury, or advertising injury for which any insured may be held liable by reason of:

a. causing or contributing to the intoxication of a person;b. the furnishing of alcoholic beverages to a person under

the influence of alcohol or under the legal drinking age; c. a law or regulation relating to the sale, gift, distribution,

or use of alcoholic beverages.

AAIS – GL-200• This exclusion applies if you are in the business of manufacturing, distributing, selling, or serving alcoholic beverages.

• The end!

ISO – CG 00 01 04 13• 2. Exclusions

– This insurance does not apply to:– C. Liquor Liability– “Bodily injury” or “property damage” for which any

insured may be held liable by reason of:• (1) Causing or contributing to the intoxication of any person;• (2) The furnishing of alcoholic beverages to a person under the

legal drinking age or under the influence of alcohol;

ISO – CG 00 01 04 13• (3) Any statute, ordinance or regulation relating to the sale, gift,

distribution or use of alcoholic beverages.– This exclusion applies even if the claims against any insured

allege negligence or other wrongdoing in:• (a) The supervision, hiring, employment, training or monitoring of

others by that insured; or• (b) Providing or failing to provide transportation with respect to any

person that may be under the influence of alcohol;If the “occurrence” which caused the “bodily injury” or “property damage”, involved that which is described in Paragraph (1), (2) or (3) above.

ISO – CG 00 01 04 13However, this exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. For the purposes of this exclusion, permitting a person to bring alcoholic beverages on your premises, for consumption on your premises, whether or not a fee is charged or a license is required for such activity, is not by itself considered the business of selling, serving or furnishing alcoholic beverages.

Endorsements - ISO• Amendment of Liquor Liability Exclusion – CG 21 50 04 13

• REPLACES in its entirety the Liquor Liability exclusionary language in the CG 00 01

• Essentially this DELETES the BYOB exception in the CG 00 01

Endorsements - ISO• Amendment of Liquor Liability Exclusion – Exception for Scheduled Premises or Activities – CG 21 51 04 13• REPLACES in its entirety the Liquor Liability exclusionary language in the CG 00 01• RESTATES the Liquor Liability exclusion (in different language) and then ADDS an exception for the for the specified activity and/or consumption on the premises SHOWN IN THE SCHEDULE

Significant Legal Decisions (recent)• Penn-America Insurance Company v. Peccadillos, Inc.

• July 16, 2010, Superior Court of Pennsylvania•McGuire v. Curry

• May 20, 2009, Supreme Court of South Dakota• Essex Insurance Company v. Café Dupont, LLC

• December 16, 2009, U.S. District Court for the District of Columbia

Training Issues for Insureds – Risk Reduction• TIPS – Training for Intervention Procedures • ServSafe Training & Certification (National Restaurant Assn.)• Learn2serve (360 training.com)• Responsible Serving Course (Professional Server Certification Corp.)

Training Issues for Insureds – Risk Reduction•Don’t give away free drinks• Last call before closing time• Card everyone•Official protocol for handling inebriated guests• Signage

If There Is An Issue…• Pull Your Receipts

– Who served –what was served – how much – interplay between server and patron – document all of this

• Access Your Surveillance Film– Secure video footage– Don’t over-write your footage

THANK YOU• Casey Roberts, ACSR, AFIS, CIC

• Laurus Insurance Consulting• 328 Cupola Court, Lincoln, Ca. 95648

• casey@laurusinsuranceconsulting.com•www.laurusinsuranceconsulting.com