If you own or manage a business that serves alcohol—such as a bar, restaurant, catering company or event venue—you’ve likely come across both
general liability insurance and
liquor liability insurance.
Yet many business owners assume that one policy covers everything. That assumption can leave huge gaps. In this article we’ll detail what each type of coverage handles, why they differ, and why in most cases you need both.
What is General Liability Insurance?
General liability insurance (GL) is typically the foundational liability policy for any business. It protects against common risks like:
- Bodily injury (for example a customer slips and falls on your premises)
- Property damage (for example you damage a customer’s property during your operations)
- Advertising injury (for example alleged libel, slander from your marketing)
- Legal defense costs and settlements or judgments arising from covered claims.
Importantly, GL is broad in many types of business, but it has
exclusions. One of the most common: it typically excludes injuries or damage caused by the business selling or serving alcohol if that is part of the business operations.
What is Liquor Liability Insurance?
Liquor liability insurance is a more specialized policy (or policy endorsement) aimed at the unique risk when your business serves, sells or distributes alcoholic beverages.
Key points:
- It covers third-party bodily injuries or property damage caused by a patron who became intoxicated at your establishment.
- It often covers defense costs, legal fees, and potential settlements under “dram shop” laws in many states (laws that hold establishments liable for serving intoxicated patrons or minors who then cause harm)
- It may include or offer add-ons such as assault & battery coverage (for fights, bouncer incidents) or coverage when employees drink on the job (though many policies exclude this)
- It is typically required if you have a liquor license or your landlord/event contract demands you carry it.
Why General Liability Alone Isn’t Enough if You Serve Alcohol
- Because GL policies almost always exclude claims that arise from the business selling, furnishing or serving alcohol. If a bar over-serves a visibly intoxicated patron and that patron injures someone, a GL policy likely won’t respond.
- Under dram shop laws, your business can be held liable for the actions of an intoxicated patron. Without liquor liability coverage you risk huge legal exposure.
- Liquor liability claims tend to be much higher risk: they can involve fatal accidents, large judgements or settlements, property damage from drunk-driving, fights, etc. The coverage limits for liquor liability may need to be higher.
How They Work Together
Think of GL as your broad base protection—covering everyday business risks. Meanwhile liquor liability is a
layered protection that kicks in when the alcohol-service risk is triggered. Many insurers will require you to have GL in place before they will issue liquor liability coverage.
So for a bar or restaurant:
- You carry GL for standard risks (slips, falls, property damage)
- You carry liquor liability for incidents involving served/sold alcohol (intoxicated patron causes accident, fight, drunk driving, etc.)
- You review your liquor liability policy carefully: does it include assault & battery? Does it cover your staff drinking on the job? What are the limits?
Key Considerations for Liquor Liability Insurance
When shopping for liquor liability coverage, keep these in mind:
- Assault & battery coverage: If fights break out you want coverage. Some policies exclude it.
- Requirements for liquor license/lease: Some states or landlords will require proof of liquor liability before you can serve alcohol.
- Coverage limits: Because the stakes are higher, you’ll want adequate limits to protect your business.
- Exclusions: For example many policies exclude employee-on-job drinking, or service to minors, or incidents after hours. Know what your policy doesn’t cover.
- State laws: Dram shop laws vary by state. Some states make establishments liable if they serve intoxicated patrons who then cause harm. Understanding your state’s law is critical.
- Risk management: This is insurance, not prevention. But you should implement responsible beverage service policies, staff training, monitoring, and documentation to help mitigate risk.
Bottom Line
If your business serves, sells or distributes alcohol—whether a bar, restaurant, catering business or event venue—don’t assume your general liability policy has you covered for alcohol-related incidents. In almost every case you’ll need dedicated liquor liability insurance on top of your general liability.
The two work in tandem: GL handles everyday risks; liquor liability handles the unique exposures tied to alcohol. Ignoring liquor liability or assuming GL will suffice could leave you dangerously under-insured.
Next Steps
Make sure you review your current insurance policies. Ask your broker or carrier:
- Do I have liquor liability coverage?
- What are the limits and exclusions?
- Does my GL policy exclude alcohol-related incidents?
- What state laws apply in my state (e.g., dram shop laws)?
Protect your business proactively—don’t wait for a claim to test your insurance.
