One of the greatest exposures you face as the owner of a business which sells alcoholic beverages is the exclusion of all protection under both your general liability and umbrella liability policy for any law suit even tangentially connected to the selling or serving of alcohol.

The exclusion is simple: it eliminates coverage where you have caused or contributed to the intoxication of any person, have furnished alcoholic beverages to a minor or an already intoxicated person, or due to the violation of any statute or regulation pertaining to alcoholic beverages. This problem is further aggravated by the “dram shop acts” of your state.

The Dram Shop Acts:
The dram shop acts, give persons a civil right of action against providers of alcoholic drinks when they are injured or their property is damaged through the actions of an intoxicated person. It also may give a right of action when a person’s source of support is reduced or eliminated. Example:

Spouse Of Customer Sues Restaurant
Nolan v. Morelli, 226A2d 383. This case involved an action by a woman who sought to recover damages for the death of her husband, killed in a one-car accident. She claimed that the death of her husband was caused by intoxication which, in turn, was caused by the restaurant owner’s sale of liquor to him. She won!

Injured Third Party Sues Tavern
Rappaport v. Nichols, 156 A2d 1. In this case, an 18 year old boy was involved in a collision in which a man was killed. His estate sued the boy and four taverns charging that the minor had visited them before the accident. He was served liquor in spite of knowledge that he was a minor. The sales, therefore, were illegal conduct which in turn caused or contributed to his negligent operation of a motor vehicle. The taverns … lost!

Customer Sues Tavern
Schelin v. Goldberg, 146 A2d 648. This is a case which involves the customer as the injured party – not an innocent third party! The customer entered the tavern in an intoxicated condition and was served liquor. He was subsequently injured in a fight with another person and recovered damages from the tavern owner based on the owner’s breach of duty to protect the customer. In another case the court found against a tavern owner after an intoxicated customer was hit by a taxi cab leaving a bar in Manhattan. While there’s even a case where they found a bar at fault after a bouncer injured an intoxicated customer after evicting him at closing!


The liquor liability policy is aimed at protecting the liquor liability exposures of clients working in the hospitality industry. The company provides a defense and pays the sums that you become legally liable for as a result of the selling, serving, or furnishing of any alcoholic beverage. Injury is a defined term meaning “all damages, including damages because of bodily injury and property damage, and including damages for care, loss of services or loss of support.”

WHO IS INSURED: Coverage is afforded to the specific individual or corporation, partner, and members of joint ventures, and is extended to cover employees for acts within the scope of their employment.

We at Casswood have a long history and expertise in handling Liquor Legal Liability Coverage. Contact us and let us keep your business safe.