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A Guide to Dram Shop Laws and Liquor Liability Insurance

Table of Contents

liquor lined up along bar

Last Updated: 1/2/2024

Sometimes, just one drink turns into a few and a few turns into an inability to drive, think straight, or act politely. This can result in belligerent patrons who then injure or harm others as a result of their intoxication. 

Did you know that you could be held responsible for a situation like this if you were the one serving or selling alcohol? It’s true—you may then be forced to pay out of pocket for legal and medical fees if you don’t have liquor liability insurance—all because of dram shop laws.

As someone who sells or serves alcohol as part of your business operations, getting familiar with your state’s dram shop laws (liability laws concerning selling and serving alcohol to minors or intoxicated people) is critical to understanding the risks of your industry. Understanding these risks is the first part of taking the necessary steps to protect your business from financially damaging claims with liquor liability insurance

Below, we  go over what dram shop laws are, and why they make having liquor liability and dram shop insurance so important if you were ever to get sued for overserving alcohol. Let’s dive right in!

Glasses of Delicious Beer

What Are Dram Shop Laws?

Dram shop laws allow people who were victims of someone’s drunken behavior to file a civil suit against the party that provided them alcohol.

The specifics vary from state to state, but for the majority, you can easily be sued for overserving someone or serving alcohol to a minor, which then results in the entire establishment being sued. Some states only make dram shops liable if the person who caused the accident was underage, while other states set damage caps on any awards. 

Liquor liability insurance came about as a result of dram shop laws. 

These laws can also extend to social events involving alcohol where someone is hosting a gathering for friends, family, or coworkers and they are sued as a result of an over-intoxicated individual causing property or bodily damage.

Did you know? Historically, a dram referred to a small unit of measurement that bars and taverns in 18th-century Britain used to sell alcohol, which equaled ¾ of a teaspoon. As a result, these locations were referred to as “dram shops,” which is where the law gets its name from.

Which States Have Dram Shop Laws?

Currently, 42 states and the District of Columbia have dram shop laws. Use our directory below to learn more about dram shop laws in your state.

State
Summary of Liability
Legal Resources

Dram shop laws in Alabama

If you illegally sell alcohol to someone who is visibly intoxicated

Dram shop laws in Alaska

If you sell alcohol to someone who is underage or drunk

Dram shop laws in Arizona

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Arkansas

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in California

If you sell alcohol to visibly intoxicated minors

Dram shop laws in Colorado

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Connecticut

If you sell alcohol to an intoxicated person

Dram shop laws in Florida

If you sell alcohol to alcoholics or underage people

Dram shop laws in Georgia

If you sell, furnish, or serve alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Idaho

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Illinois

If you cause someone to become intoxicated (740 ILCS Section 58/5 is a separate law covering situations involving minors)

Dram shop laws in Indiana

If you furnish alcohol to someone who is visibly intoxicated

Dram shop laws in Iowa

If you sell alcohol to someone who is visibly intoxicated

Dram shop laws in Kentucky

If you sell alcohol to someone who was already intoxicated

Dram shop laws in Louisiana

If you sell alcohol to someone who is underage

Dram shop laws in Maine

If you serve alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Massachusetts

Liquor laws don’t allow statutory action, but courts allow lawsuits against businesses and hosts in many situations

Dram shop laws in Michigan

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Minnesota

If you illegally sell alcohol (Section 340A.90 covers hosts and underage drinking)

Dram shop laws in Mississippi

If you illegally sell or serve alcohol to someone who is visibly intoxicated

Dram shop laws in Missouri

If you serve alcohol to someone who is visibly intoxicated or underage

Dram shop laws in Montana

If you furnish alcohol to someone who is visibly intoxicated or underage

Dram shop laws in New Hampshire

If you negligently serve alcohol to someone who is underage or intoxicated, or if you recklessly serve alcohol

Dram shop laws in New Jersey

If you sell alcohol to someone who is underage or visibly intoxicated (Section 2A:15-5.6 covers social hosts)

Dram shop laws in  New Mexico

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in North Carolina

If you sell alcohol to someone who is underage and they cause a car accident

Dram shop laws in North Dakota

If you sell alcohol to someone who is visibly intoxicated, underage, or incompetent

Dram shop laws in Ohio

If you serve alcohol to someone who causes injuries or property damage off of your premises

Dram shop laws in Oklahoma

If you knowingly sell, deliver, or furnish alcohol to an underage person or someone who is incompetent

Dram shop laws in Oregon

If you serve or provide alcohol to someone who is visibly intoxicated, or if you provide alcohol to someone who is underage and the plaintiff can prove you reasonably should’ve requested ID or noticed that the ID presented was not legitimate

Dram shop laws in Pennsylvania

If you sell or provide alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Rhode Island

If you are negligent or reckless in serving alcohol to people who are underage or visibly intoxicated

Dram shop laws in South Carolina

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Tennessee

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Texas

If you serve or provide alcohol to someone who is visibly intoxicated or under the age of 18

Dram shop laws in Utah

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Vermont

If you sell alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Washington

If you sell alcohol to someone who is visibly under the influence or underage

Dram shop laws in Washington, D.C.

If you sell or deliver alcohol to someone who is underage or visibly intoxicated

Dram shop laws in Virginia

If you violate any liquor laws in the state

Dram shop laws in Wisconsin

If you sell, dispense, or give away alcohol to someone who is underage

Dram shop laws in Wyoming

If you illegally provide alcohol to someone

Nine different cocktails garnished with herbs and citruses sitting on an outdoor bar.

What Is Liquor Liability Coverage?

Liquor liability insurance, also known as dram shop liability insurance, is designed to protect you against third-party claims that your involvement in serving alcohol to a person harmed that third party or their property

For example, let’s say a restaurant unknowingly overserves alcohol to someone and they then drive home intoxicated. The driver gets into a collision where not only the vehicles are totaled but the other driver and passengers are severely hurt. On top of it all, the crash has caused property damage. 

These individuals now have extensive hospital bills or even lifelong damage and decide to sue the driver along with the restaurant that served them and everyone they can name on the suit. If you carry dram shop insurance, you may receive protection against claims like these so you aren’t left having to pay legal, medical, and other related fees entirely out of pocket.

Do I Need Liquor Liability Insurance?

If your business sells, manufactures, distributes, or furnishes beer, wine, or liquor, you need liquor liability coverage. Just one lawsuit could completely wipe out your business.

Defense lawyers charge an average of $300 an hour. Could you afford legal representation on your own for something that could take months or even years to resolve?

In 2017, a woman was over-served alcohol at a New Jersey bar and decided to drive home drunk. Along the way, she collided head-on with another vehicle, causing a child in the car to sustain a brain injury that drastically changed their quality of life. This lawsuit was settled in 2020 for $4.4 million.

With liquor liability insurance, you could have the protection you need to get you through dram shop lawsuits, should one ever happen to you. If you or your business were to be sued for overserving someone or providing alcohol to a minor, your policy would be in place as a safety measure to potentially help cover the costs associated with the lawsuit.

Buying insurance can be a daunting task, but Insurance Canopy makes it easier than ever with an online application. Just follow these steps to get covered:

  1. Select the coverage you need
  2. Choose your limits
  3. Submit the application
  4. Receive your certificate of insurance once your payment has processed 

Whether you’re looking for liquor liability for a restaurant, a bar, or private social events, Insurance Canopy can help you find the right coverage in 15 minutes or less. 

Knowledge Is Power

By understanding dram shop laws in your state, you can take the necessary steps to protect your business with liquor liability insurance. Learn more about dram shop laws and get insured today!

Three people laughing and holding drinks.

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