Many food and beverage vendors are eager to enhance profits by offering alcohol. With higher profit margins, alcohol sales are lucrative for many food businesses. But what are the risks and benefits of serving alcohol? Should you carry liquor liability insurance? What would that cover? And where can a food and beverage vendor obtain liquor liability insurance and maintain their general liability coverage?
Why Food and Beverage Vendors Should Serve Alcohol
Profit margins for alcohol sales are higher than for food sales. On average, sales are ⅓ to ½ more than without alcohol.
In addition, alcohol sales are increasing nationwide. In a recent example, Texas Longhorn fans bought 70% more alcohol in 2016 from concession stands than they did in 2015. During their double-OT win over Notre Dame alone, Longhorn fans bought $701,234 in beer and wine.
One caveat to the above example is that offering alcohol may be more lucrative for food and beverage concessionaires who operate in fixed venues, such as sports or entertainment arenas. If you are a mobile food or beverage vendor or run a food truck, the costs may outweigh the profits unless you operate primarily from a single location.
Consider the following if you plan to add alcohol service to your food business:
The Costs of Serving Alcohol
Mobile food and beverage vendors and food trucks have additional challenges due to taxes and laws regarding the sale of alcohol that reduce potential profit margins.
Because liquor licenses are often tied to location, acquiring a license for each food truck or mobile vendor location often isn’t feasible. At an average of $12,000 a pop for a liquor license, you'd have to sell a lot of alcohol at a single location to make up for that fee. One area where food trucks and mobile vendors can realize a profit is at sport or entertainment arenas where multiple events and high sales volume make up for the fees.
Hefty taxes, state laws barring when and where alcohol may be sold, and restrictions on the amount of alcohol that can be sold to each customer are all obstacles when it comes to adding alcohol to your menus and realizing a profit.
Liquor Liability - Risks Food and Beverage Vendors Face When Serving Alcohol
You could face costly claims and lawsuits if you are slapped with a liquor liability lawsuit. If you serve alcohol, you could be held liable for third-party claims and damages stemming from your sale of alcoholic beverages.
Claims could be brought against you for selling alcohol to minors or if a patron were to get in a drunk driving accident. Here are just a few liquor liability claims that concession stands have faced:
- A minor attendee was served alcohol at a brew festival sponsored by the insured. After leaving the festival, the underage attendee got into the car, lost control of his vehicle and struck a telephone pole. He suffered severe facial lacerations. The attendee sued the event sponsor and the beer vendor for illegal service to a minor and received $150,000 for bills.
- A man was served over ten beers by a concessionaire at the local softball park. After leaving, he rear-ended another vehicle. The other driver sustained severe head trauma and internal injuries. Suit was brought against the beer concessionaire. The case settled for $560,000 and expenses totaled $165,000.
- A concert attendee was served at least eight beers over the course of the evening. On the way home, his vehicle was travelling at a high rate of speed and he rear-ended another vehicle. Two passengers in the other car were ejected from their vehicle and suffered serious injuries. Both of the injured parties brought suit against the beer vendor for negligent services. The claim settled for $1,000,000 and expense costs totaled $77,000.
Why Food and Beverage Vendors Should Carry Liquor Liability Insurance
As the examples above show, liquor liability claims run into tens of thousands of dollars and more. Could you afford those expenses?
Even if you live in a state that does not have dram shop laws or has laws that are favorable to sellers of alcohol, liquor liability insurance is important for all food and beverage vendors for a few good reasons:
- Lawsuits can still be brought against you, especially in cases where catastrophic injuries or death associated with liquor liability have occurred
- Juries can award high amounts regardless of fault based on sympathies for the victim
- Insurance protects your business and your personal assets
- Defense costs can be expensive, even if you are not found liable
- Insurance provides peace of mind
What Does Liquor Liability Insurance Cover?
Liquor liability generally covers:
- Third-party damages such as property or bodily injury due to the sale, service, or provision of alcoholic products or beverages
- Litigation costs to defend against cases or claims for third-party damages
Most liquor liability insurance policies exclude assault and battery or illegal service, such as selling alcohol to a minor. In some cases, you may be able to purchase additional assault or battery coverage.
How Food and Beverage Vendors Can Buy Liquor Liability Insurance
Food and beverage vendors often had difficulty purchasing general liability insurance along with liquor liability coverage. In the past, FLIP excluded food and beverage vendors who sold alcoholic products or beverages. Now, however, a FLIP customer who wishes to serve alcoholic beverages or products and have a general liability policy can do so if they purchase a liquor liability policy with their FLIP policy. FLIP can also quote liquor liability policies for clients who do not want a FLIP policy.
To purchase a FLIP policy, click here.
Once you have a FLIP general liability policy, you can apply for a liquor liability quote here.
A licensed agent will help you assess your liquor liability coverage needs and provide options.
All policies have conditions, limitations and exclusions, please read the policy for exact verbiage. Claim scenario circumstances vary in nature and similar claims do not guarantee coverage.