Liquor liability is a big risk – even during COVID-19

By Higginbotham on July 22 , 2020


Liquor is big business – but it can also be a big liability. According to The Drinks Business, U.S. alcohol sales reached $253.8 billion in 2018. At the same time, alcohol is associated with health problems, drunk driving and other serious risks – and businesses that sell alcohol may be held liable.

The current pandemic has changed the way people drink, but it hasn’t stopped the consumption of alcohol or the related risks. In fact, recent changes may make some risks even greater.

Liquor Risks and Liability Laws

Alcohol use is associated with many risks, including the following:

  • Underage Drinking: According to the CDC, despite being too young to drink legally, people between the ages of 12 and 20 drink 11 percent of all alcohol consumed in the U.S., and excessive drinking results in 4,300 deaths among underage youth every year.

  • Alcohol Poisoning: Binge drinking can result in fatal alcohol poisoning. According to the CDC, alcohol poisoning kills an average of six people every day in the U.S.

  • Drunk Driving: According to the NHTSA, more than 10,000 people die in drunk-driving crashes each year. Drunk driving also causes numerous injuries and property damage.

In some cases, businesses that sell or serve alcohol may be held liable for associated injuries or deaths.

According to the National Conference of State Legislatures, 30 states have dram shop provisions that hold restaurants, bars, liquor stores and other licensed establishments liable for injuries or deaths resulting from intoxication. Laws vary from state to state, but businesses that serve alcohol to people who are underage or who are obviously intoxicated can typically be held liable.

When lawsuits arise, they can result in massive six and seven-figure settlements. In some cases, the bar loses its liquor license, as happened in a Plano, Texas case in which a bar was sued for knowingly overserving a patron who later shot and killed eight people.

The Impact of the Pandemic

The COVID-19 pandemic forced many bars and restaurants to close their dining areas. However, this didn’t necessarily stop them from serving alcohol. Many states loosened their liquor laws to permit to-go sales of cocktails and other alcoholic beverages. According to ABC News, 34 states, Puerto Rico and the District of Columbia have introduced new alcohol on-demand laws during the pandemic. Some people want these new laws to be made permanent, and WKYC reports that Ohio has introduced a bill that would do this.

Many businesses have been eager to take advantage of the potential income stream, but to-go cocktails come with some obvious liability issues.

In addition to banning alcohol sales to underage customers, states may also have laws regarding the type of container that can be used and where the beverages can be stored in the car. Businesses should take care to make sure they are following all relevant regulations, but because many of these laws are new, the full impact on liquor liability lawsuits may not be apparent for a while.

Liquor Liability Best Practices

  • Follow state and local laws, including new regulations related to to-go sales during the pandemic.
  • Always check IDs to avoid serving underage individuals.
  • Refuse to serve individuals who are obviously intoxicated.
  • Encourage the use of designated drivers and sober rides home. For example, you can provide free non-alcoholic drinks to designated drivers and provide patrons with information on safe transportation home.
  • Train all staff to follow laws and policies related to alcohol safety.
  • Maintain liquor liability insurance coverage. If a lawsuit occurs, liquor liability insurance can help with the legal costs, including defense and settlements or awards.

For more information about managing liquor liability risk at your business, contact one of our brokers.

Subscribe to Higginbotham Emails

Tags: Risk Management


Follow us on Twitter