There are so many insurances for business owners: general liability, worker’s comp, disability, health, key man insurance… you probably don’t even know what you have – you just trust your insurance agent and pay the bill when it arrives.

If your business involves the sale of alcohol, you will also need a liquor policy. This coverage is generally not included in your general liability policy, and is essentially to cover the special liability involved in selling alcohol at retail. But, what exactly is a liquor policy? What does it cover? I think of it as a sort of “gap” insurance or a “rider” type additional coverage. It fills in where your other insurance has a “gap” in coverage.

A liquor policy covers claims arising from the sale or service of alcoholic beverages (or otherwise furnishing them at a company party, for example). General liability coverage usually excludes this coverage so a separate policy or rider is necessary. But, it only applies in a limited set of circumstances.

When will a claim not be covered by a liquor policy?

• If the insured’s Liquor license not in effect – your liquor license was not renewed on time (or was cancelled or revoked).
• If the claim involves workers comp, disability, unemployment or other employer’s liability – the injury was to an employee on the job.
• Expected or intended injury (from the insured’s standpoint) except if it was incurred to protect a person or property – for example, your establishment is known for bar fights.
• Product liability claim (for products other than alcoholic beverages) – for example, the injury was caused by a defective promotional item used by a patron at the bar.
• Other insurance coverage applies (automobile coverage, for example).
• War.

In the unfortunate situation where a scenario arises that might result in a claim, you should notify your insurance company, in writing, how, when and where the injury took place, and the nature and location of the alleged injury. You will also want to supply the names and addresses of the potential claimant and any witnesses. It is critical for the insurance company investigators to collect evidence before it is destroyed or memories fade. The faster you notify them of a potential claim, the faster they can work to defend you.

If you first learn about a claim when you receive legal papers to start a lawsuit, you should provide them to the insurance company immediately. There is a short time for them to timely prepare defensive response paper on your behalf.

If you need to explore more about this insurance type, speak to your insurance agent. When we have questions, we turn to the Feltner Agency for their expertise. If you are looking for a great resource, we are glad to share our best New York experts.