Liquor Liability Insurance: What It Is, Where to Get It
Liquor liability insurance protects small businesses that manufacture, sell or serve alcohol.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Updated · 3 min read
Written by
Senior Writer & Content Strategist 
Edited by
Head of Content, Small Business 
Liquor liability insurance protects small businesses that manufacture, sell or serve alcohol. This business insurance typically covers claims of bodily injury or property damage caused by people to whom you served or sold alcohol.
General liability insurance generally protects your business against claims of bodily injury or property damage. But most of those policies exclude coverage for alcohol-related claims. That makes liquor liability insurance a necessity for restaurants, bars, breweries, wineries and any business that deals with alcohol as part of its daily operations.
Save up to 30% on business insurance
NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
What is liquor liability insurance?
Liquor liability insurance is a type of liability insurance. That means it primarily pays out to cover your legal defense and settlement costs in case of a lawsuit.
Specifically, liquor liability insurance covers your business if someone accuses you of serving alcohol to a person who harmed them or their property.
Which businesses need liquor liability insurance?
Any business that sells or serves alcohol as part of its daily operations should consider investing in liquor liability insurance. These types of businesses may include:
- Restaurants.
- Bars.
- Wineries or breweries.
- Hotels.
- Caterers.
- Event facilities.
- Liquor stores.
- Grocery stores that sell alcohol.
Liquor liability insurance is especially important if you live in a state that has a "dram shop law." Most states do. Thes reegulatons allow someone to hold businesses responsible for the actions of an intoxicated person to whom they served alcohol.
Additionally, some states require you to have liquor liability insurance in order to be approved for a liquor license.
Save up to 30% on business insurance
NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
What does liquor liability insurance cover?
Liquor liability insurance generally covers your legal expenses and settlement costs. It can pay out when your business is accused of bodily injury or property damage caused by an intoxicated person that your business served alcohol to, even after they leave your business location.
Scenarios where liquor liability insurance could protect your business include:
- Assault and battery: Liquor liability insurance can cover you if an intoxicated person is involved in a fight or other physical altercation and someone sues.
- Sexual assault or harassment: If an intoxicated person assaults or harasses someone, you’ll be protected under this type of insurance.
- Property damage: You’ll be covered if an intoxicated person damages someone else’s property.
- Bodily injury: If an intoxicated person injures themselves and sues, liquor liability insurance should protect you.
- Drunk driving: If an intoxicated person drinking at your business leaves and drives a car, liquor liability insurance will protect you in the case of a lawsuit from any resulting damages or injuries.
What does liquor liability insurance exclude?
Situations and instances that are not covered under liquor liability insurance include:
- Underage drinking: Liquor liability insurance will not protect you from claims involving underage drinking.
- Business property damage: Your business property is not covered under liquor liability insurance. For this type of protection, you’ll need commercial property insurance.
- Libel and slander: Other types of damage, like libel and slander, are not covered under this type of business insurance.
- Sickness or illness from manufacturing: If your business manufactures alcohol and customers become sick as a result of a production error, this will more than likely be covered under product liability insurance instead of liquor liability insurance.
Liquor liability insurance vs. host liability insurance
Liquor liability insurance protects businesses that sell or serve alcohol as part of their typical operations. But host liability insurance protects your business if you serve alcohol or allow it to be consumed at a special event you host.
Typically, host liability insurance is included in your business’s general liability insurance policy. It covers you against any bodily injuries or property damage lawsuits that occur as a result of the actions of an intoxicated person who drank alcohol at an event you hosted.
How much does liquor liability insurance cost?
The average cost of liquor liability insurance is $45 per month or $542 per year, according to Insueon, an online insurance agency.
The cost of business insurance varies depending on the specifics of your business. Liquor liability insurance is no different. Your premiums will depend on:
- Business size.
- Type of business. A dive bar probably carries more liquor liability risk than a grocery store that happens to sell alcohol.
- How much alcohol you sell. A club that earns thousands in revenue per night from bar sales probably faces more risk than a family restaurant where only a fraction of customers order beer or wine.
- Your claims history. As with most types of insurance, past claims will increase your premiums in the future.
You may be able to reduce the cost of liquor liability insurance by tacking it onto your business owner's policy. By bundling different types of business insurance with the same provider, you can often receive your policy at a lower rate.
Where to get liquor liability insurance
If you’re searching for this type of insurance, you might consider starting with your current business insurance company, if you have one.
If you don’t yet have business insurance or your current provider doesn’t offer this type of insurance, look into the following options:
Go directly to an insurance provider
If your current provider doesn't offer liquor liability insurance, you can look to local or national insurance companies to meet your needs.
If you're shopping online, consider Ergo Next, which lets you tack liquor liability insurance onto a general liability insurance policy. You can buy coverage online.
You might also consider a specialized insurance provider, like the Food Liability Insurance Program. FLIP offers policies for a variety of food- and beverage-based businesses. You can purchase an ongoing liquor liability insurance policy or coverage for a specific one-time event.
Work with a broker or agent
Working with a professional can be helpful if you’re buying business insurance for the first time or want to make sure you fully understand your risks. This person will work with you to discuss your business needs, get quotes from different providers and compare the quotes you receive to determine which one can offer you the best policy.
Use an insurance marketplace
For a more affordable way to get liquor liability insurance, utilize an insurance marketplace like Simply Business. You'll enter information about your business online and get multiple quotes from different insurance company. You can then compare the best options and choose the one that works for you.
Article sources
NerdWallet writers are subject matter authorities who use primary,
trustworthy sources to inform their work, including peer-reviewed
studies, government websites, academic research and interviews with
industry experts. All content is fact-checked for accuracy, timeliness
and relevance. You can learn more about NerdWallet's high
standards for journalism by reading our
editorial guidelines.
