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Everything You Need to Know About Dram Shop Insurance

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man with beard standing at a bar
Last Updated: 3/22/2024

If you are considering starting an alcohol-serving business, then you have probably spent some time looking at dram shop insurance.

Insurance can be tricky, though, with all the different policies, providers, and coverage limits. You may even be wondering if your business even needs insurance. Fortunately, that’s an easy one—the answer to that question is yes! 

Let’s dive deep into dram shop insurance—what it is, why you need it, and what coverages you can get today to financially protect your business from claims.

What Is Dram Shop Insurance?

Dram shop insurance is a liability insurance plan designed to protect alcohol-serving businesses from the risks associated with their industry. It combines several types of coverages to properly shield your business, including:

  • General liability
  • Liquor liability
  • Products-completed operations

Alcohol-serving businesses (or dram shops as they were called back in the day) face a variety of risks. These include bodily injury and property damage claims that arise from their business operation as well as those caused by individuals they served alcohol to.

What Does Dram Shop Mean?

Traditionally, the term “dram shop” refers to a location where alcoholic beverages were sold by the dram, which is a small unit of liquid. These days, an example of a dram shop could be a bar, tavern, pub, liquor store, grocery store, convenience store, or any other place where alcohol is sold. 

These days, “dram shop laws” refer to regulations that determine what businesses are liable for when they sell or serve alcohol to someone who later injures themselves, injures a third party, or causes property damage.
Almost all states have dram shop laws, except for the following:

  • Delaware
  • Kansas
  • Louisiana
  • Maryland 
  • Nebraska
  • Nevada
  • South Dakota 
  • Virginia

What Are Common Dram Shop Claims?

Here are several of the most common dram shop claims that businesses face:

  • Serving drinks to an intoxicated individual who then drives home and gets into a car accident that injures or kills another party
  • Being held responsible for selling or serving alcohol to minors who presented fake IDs
  • Serving alcoholic beverages to an individual who becomes intoxicated, gets into a physical altercation with a third party, and causes serious injury to that third party

Liability claims can be expensive, especially when they are caused by an alcohol-related accident. They can often cost a business hundreds of thousands of dollars or more to resolve.

With dram shop insurance coverage, you can mitigate and in some cases eliminate the out-of-pocket cost your business may be required to pay when faced with a claim.

Does My Business Need Dram Shop Liability Insurance?

Yes—in order to protect your business against the risks associated with serving alcohol, you need dram shop insurance.

While taking precautions to prevent these accidents from happening can help, the reality is that it isn’t possible to avoid them entirely. If an accident involving your business occurs, you could be held legally liable to pay for it.

Additionally, according to state dram shop laws, your business could also be held liable for accidents caused by individuals you served alcohol to, whether your business was directly involved in the accident or not.

Alcohol-related accidents can be very common and very expensive to resolve. Cases involving death or serious injury can often cost hundreds of thousands of dollars or more.

With the right dram insurance coverage, you can protect your business from the crippling cost of claims, allowing you to continue running your business with peace of mind.

Shelves full of various kinds of alcohol seen through the open doorway of a liquor store.

What Policies Do I Need to Protect My Business?

At the bare minimum, your liability insurance plan should include liquor liability, a policy specifically designed to mitigate the cost claims arising from liquor-related accidents. Insurance Canopy’s dram shop insurance plan provides $300,000 in coverage for liquor liability with options to increase your coverage up to $2,000,000.

That said, liquor liability insurance is not the only policy an alcohol-serving business should have. Here are a few more policies you may want to include in your business’ insurance plan.

General Liability

General liability insurance can protect your business from the cost of third-party claims that arise when someone or something is injured or damaged either on your premises or as a result of your business operation. It also covers copyright and personal advertising injury claims.

Most liability insurance plans include general liability, including Insurance Canopy. We provide up to $2,000,000 in total annual coverage and up to $1,000,000 in coverage per claim with no out-of-pocket deductible.

Damage to Premises Rented

Damage to premises rented coverage is designed to protect your business from the cost of fire damages done to rented business spaces, like a venue or commercial kitchen. The amount of coverage varies by provider, and not all providers offer this coverage. At Insurance Canopy, we provide up to $300,000 in coverage for damage to premises rented.

Assault and Battery

Assault and battery coverage is particularly important for alcohol-serving businesses. This coverage can protect your business from the cost of bodily injury and property damage claims that arise from assault and battery events like fights or sexual assault. It can also cover claims that your business failed to prevent or end an assault and battery incident, even when it should have done so.

Insurance Canopy provides the option to include this policy in your liability insurance plan with up to $25,000 in coverage.

Cyber Liability

A cyber liability policy can protect your business from the cost of first- and third-party claims that arise from a cyber security breach within your company. If you collect and store important business information—especially customer billing information—online, on a computer, or on a mobile or tablet device, you need cyber liability insurance.

The amount of coverage provided in a cyber liability policy varies by provider, but at Insurance Canopy, you can protect your business with up to $100,000.

bartender preparing a cocktail

How Much Does Dram Shop Insurance Cost?

At Insurance Canopy, the price for dram shop insurance starts as low as $550/year and includes the following coverages:

  • General Liability: up to $2,000,000 total coverage and $1,000,000 in coverage per claim
  • Liquor Liability: up to $300,000 total coverage and $100,000 in coverage per claim
  • Damage to Premises Rented: up to $300,000 total coverage

You can also choose to increase your limits for liquor liability up to $2,000,000 in total coverage and $1,000,000 in coverage per claim. Insurance Canopy also offers additional policy options for assault and battery insurance, as well as cyber liability coverage.

There are several factors that affect the cost of insurance, including the state your business operates in, the policies included in your plan, and the coverage limits provided by each policy.

How Do I Get Dram Shop Insurance?

Insurance Canopy makes it easy to get dram shop insurance. Simply follow these steps and get your business the protection it needs today:

    1. Start your online application 
    2. Select your limits
    3. Get your quote
    4. Complete the checkout process
    5. Get instant access to your policy and documents via the user portal

You can get the coverage you need in ten minutes or less! It’s that simple. So, what are you waiting for? Protect your business from alcohol-related claims with Insurance Canopy today!

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