While a liquor licence can be very profitable for restaurants, there are some things you should keep in mind before applying for one. Standard liability insurance does not cover liquor-related claims. This includes intoxicated patrons who injure themselves or others while in or outside your restaurant. Liquor liability insurance is not only recommended for restaurants that wish to serve alcohol, but any business that sells, serves, or facilitates the purchase or consumption of alcoholic beverages. If you are someone who is planning to serve liquor in relation to your business, read on to learn more about liquor liability for businesses.
What Is Liquor Liability Insurance?
Alcohol, or liquor liability, is your business’s responsibility to cover losses, damages, or other expenses arising from the serving of alcohol. This includes any injury, death of a person or damages to property. Liquor liability insurance protects businesses that either manufacture, serve, distribute, or sell alcohol, including:
- Grocery stores
- Convenience stores
Any situation where alcohol that you served to one of your customers is deemed to be a contributing factor – liquor liability insurance will provide coverage.
Protecting your business
A liquor liability insurance policy covers costs associated with claims against you. You will be protecting your establishment against alleging third-party bodily injury or property damage due to an intoxicated patron. If one of your customers becomes intoxicated while at your establishment or function, and injures themselves or others, you or your employees may be liable.
According to the IBC website, organizations are responsible for patrons when alcohol is served. Forms of liquor liability include:
- Liability as a server: Your servers are responsible if they serve alcoholic beverages to people past the point of intoxication.
- Liability as an occupier: If you own a company or any other organization, you have a responsibility to protect persons on your premises from preventable harm.
- Liability as an employer: As the owner, you may in certain circumstances be responsible for the care of employees who over consume alcohol at a staff party.
- Liability as a sponsor of potentially dangerous activities: Risks from such activities increase when alcohol is served.
- Use of excessive force: Security personnel cannot use unnecessary or excessive force to manage intoxicated patrons.
A general rule to keep your insurance premium reasonable is ensuring that no more than 40% of your sales derive from selling alcohol.
Party Alcohol Liability Insurance (PAL) in Ontario
If you and your business are planning to host a party, be sure to have the right coverage. Party Alcohol Liability (PAL) insurance offers coverage if you are hosting an event, such as a company cocktail party or a banquet, where alcohol will be served. When holding these types of events, remember that a valid liquor licence must be obtained from the Liquor Control Board of Ontario.
Purchasing PAL insurance
If you are planning to host an event, there are two important factors to keep in mind:
1. The venue
If your event is open to the public, we strongly recommend that you cover yourself against any potential liabilities. Many venues will actually require you to have party alcohol liability coverage before letting you rent the space out. Be sure to speak with your venue before starting on any plans. Mishaps as a result of alcohol consumption do happen. It’s always best to play it safe and have protection in case any legal issues arise from your event.
2. Amount of coverage
A good rule of thumb is the bigger the event, or the more guests you are expecting, the more liability you will likely need. Different policies will offer liability insurance limits that vary by millions of dollars. Speak with one of our isure brokers to help you get the right amount of coverage without overdoing it!
No matter the occasion, if your guests or customers will be drinking alcohol, you and your staff have a legal responsibility to make sure they get home safely. That’s where your business’s liquor liability risk comes into play. Liquor liability insurance covers costs associated with negligent actions due to intoxication resulting from drinks served on your behalf. Speak with your isure broker before you host an event that is serving alcohol. To confirm that your organization is properly covered for liability exposure, consider isure for all of your insurance needs. Request a business insurance quote today!