Liquor Liability Insurance for Bars: What You Need to Know

Over a recent 13-year period, Ontario’s rate of alcohol-related emergency department visits increased by 4.4 times. As the owner of a bar, nightclub, or tavern, what does this mean for you?

Every day, you invite the public onto your property to have a drink and enjoy themselves. While the majority of your patrons will drink responsibly, there’s always the chance that someone may (intentionally or unintentionally) have too much to drink.

If this occurs, there are countless things that might happen that could get you — and your business — into serious legal trouble.

Liquor liability insurance for bars is a complex topic with many different laws and factors to consider. Our goal is to give you the information you need without all the confusing legal jargon.

Keep reading for your easy-to-understand guide to liquor liability insurance in Ontario.

What Is Liquor Liability?

There are certain types of insurance that every business needs.

No doubt when you bought the building or signed the lease, you needed to buy general liability insurance before you could open your doors. You may have even bought a business owner’s policy (BOP) that combines several types of insurance into one package.

These are necessary first steps, but operating an establishment that serves alcohol adds another layer of risk and responsibility.

As mentioned at the outset, anything can happen when alcohol gets involved. Consider some different scenarios you might encounter:

  • An intoxicated customer trips and falls inside your bar, injuring themselves or someone else
  • An intoxicated customer backs their car into another patron’s vehicle in your parking lot
  • A customer has too much drink and physically assaults your staff or other patrons
  • An intoxicated customer gets behind the wheel and gets involved in a car accident after leaving your bar
  • One of your bartenders drinks on the job and injures themselves or damages bar property
  • Some of your employees become intoxicated and cause problems during a staff party

These scenarios (and dozens more like them) have happened to countless bar owners — and it could happen to you too.

Liquor liability insurance for bars and nightclubs acts as your safety net if an alcohol-related incident happens on your property. It will cover medical bills, property repair work, legal fees and settlements, and other costs associated with a lawsuit.

Do I Need Liquor Liability Insurance?

If you operate a bar or a nightclub, the answer is obvious — you need liquor liability coverage. But what about other types of businesses or establishments where alcohol is present?

For example:

  • Breweries
  • Wineries
  • Private bartenders
  • Restaurants that offer alcoholic beverages
  • Hotels, resorts, or stadiums that serve alcoholic beverages
  • Catering companies that provide bartending services
  • Companies that manufacture alcoholic beverages
  • Retail stores that sell alcoholic beverages
  • A host venue for an event where alcohol is served

With very few exceptions, the answer is the same. If your business makes, handles, sells, or serves alcohol, you need liquor liability insurance. 

Anyone involved in serving alcohol can become responsible for injuries or damages if alcohol is a significant factor in the incident. Even if you’re only hosting an event where alcohol will be served, it’s best to have liquor liability insurance just in case the unexpected happens.

What About Dram Shop Laws in Canada?

Here’s a possibility you may not have considered.

What if one of your bartenders (knowingly or unknowingly) serves a customer past the point of intoxication? What if that customer then attempts to drive and gets into an accident after leaving your establishment? Worst of all, what if they injure or kill themselves or someone else?

Could your business be held responsible?

The short answer is: Yes, it could.

The reason goes back to the dram shop laws that the US established in the 1700s. Under these laws, a business can be held liable for selling alcohol to intoxicated persons (including minors) who later cause injury, death, or property damage.

Canada has its own version of dram shop laws that every bar owner needs to know. It’s also up to you to educate your staff and provide ongoing training about responsible serving. 

This is one more reason why liquor liability insurance for bars is so important. The truth is that your business can get into serious legal trouble for over serving alcohol — even if the injury or accident occurs off the property.

Your liability insurance will protect your business if the court determines that alcohol served at your establishment was a leading factor in the incident. The policy will cover any medical bills, repair bills, and legal fees associated with the lawsuit.

What’s Included in Liability Insurance?

With this overview of liquor liability in mind, let’s now consider some specific ways this type of insurance protects your business. Here are some different scenarios and types of liability related to serving alcohol.

Server Liability

Your servers and bartenders need to understand when it’s okay to serve alcohol and when they need to cut someone off. If they serve a customer past the point of intoxication, you could become liable for any problems that occur as a result.

Occupant Liability

This form of liability states that a person (or a company) that’s responsible for a premise is also responsible for ensuring that everyone on that premises is protected from preventable harm. Naturally, this would include any incidents related to the consumption of alcohol.

Employer Liability

What if you’ve organized a staff party or outing and some of your employees drink to the point of intoxication? In some circumstances, you as the employer could be held responsible for your employees’ actions.

Security Liability

What if you own a nightclub or another type of bar that requires security personnel? If your security guards use unnecessary or excessive force with an intoxicated customer, they may face legal responsibility for their behaviour.

Sponsor Liability

Are you hosting an event on your premises where alcohol will be served? As the sponsor of the event, you’re responsible if any potentially dangerous activities or situations arise in connection with alcohol.

How Much Does Bar Insurance Cost?

Discussing all these different scenarios might make you feel anxious. How much is liquor liability insurance going to cost you? Can you even afford the costs if you’re just opening your business?

Before you panic, remember that liquor liability is just one part of the larger commercial insurance “umbrella.” When you work with an experienced broker, they’ll help you find the coverage options you need while ensuring you don’t pay for options you don’t need.

The amount you’ll pay for liability insurance depends on the following factors:

  • The location of your bar or nightclub
  • The type and age of the building
  • The total square footage of your property
  • The total value of your bar equipment and inventory
  • The average number of customers you serve
  • The size of your wait staff and bartending staff
  • Any security systems and fire systems on the property
  • Your projected sales figures

Keep in mind that no two insurance policies are identical. The exact price you’ll pay depends on all of these factors and others as well, such as your deductible amount and level of risk exposure.

For example, a wine shop that sells bottles for off-premises consumption does not carry the same level of risk as a nightclub that holds 300 people. And a food truck that sells craft beers carries far less risk than a tequila bar that hosts live music events.

How Do I Get Liquor Liability Insurance?

The laws surrounding liquor liability might be complicated, but buying a policy doesn’t have to be. All you need to do is speak with an experienced insurance broker like James Inwood.

Before you make the call, gather all the information mentioned in the list above. We will need these details to get a thorough understanding of your business and its unique risks. Using this information, James will then contact different insurance providers to find the best policy options for your business.

In as little as a day, you’ll get a customized quote that includes all the coverage you need. The quote may also include some “extras” that you may or may not wish to add to your policy.

Liquor Liability Insurance for Bars

By now, you have a much better understanding of what liquor liability insurance is (and why you need it). If you own an establishment that serves alcoholic beverages, this is one type of insurance you can’t afford to go without.

Understandably, you might still have questions about the exact types of coverage you need. This is where James Inwood comes in.

We have more than a decade of experience providing liquor liability insurance for bars, restaurants, and other establishments. We also offer other important types of insurance for bars, including general liability, property, and crime coverage.

To learn more, fill out our contact form and tell us about your business. If you prefer speaking to a real human, call or WhatsApp us anytime at 647-966-7093.

James Inwood is a member of Canadian Insurance Brokers Inc. CIBI operates across Canada with more than 40 licensed brokers and is completely independent so our advice is always objective. Representing 14 insurance carriers on the personal side and over 20 insurance providers on the commercial side helps give my clients clear choice and competitive pricing.

James Inwood, Insurance Broker
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