Having the right business liability insurance is something that every business needs to protect themselves from damages that may occur as a result of doing business, especially those that serve alcohol even though there is currently no law in Texas requiring liquor liability insurance. Many feel that the dram shop law in Texas should require such important business coverage and efforts are ongoing to make such a change. Businesses that serve alcohol should discuss risks with a liquor liability insurance company and consider adding coverage to be protected from potential damages they could still face after serving someone who is subsequently involved in a negligent action.

Texas Law and Liquor Liability Insurance

There is no Texas laws requiring that establishments serving alcohol must carry liquor liability business insurance. Most companies carry general business liability insurance; however, this insurance does not cover liquor liability for any company that makes money with the sale of alcoholic beverages. That requires the addition of an endorsement to an existing business liability policy. Since most restaurants and bars are privately owned small businesses, they are usually set up as LLC specifically to reduce the amount of personal liability that business owners face should an intoxicated person be served liquor and subsequently cause an accident. Although this does protect the bar or restaurant owner, it frequently leaves individuals affected by an accident caused by alcohol without recourse for resulting damages.

Proposed Changes to Texas Dram Shop Laws

Although not every restaurant needs liquor liability insurance, there are many that should carry it. According to lawmakers pushing for better rules on liquor liability, as many as 1 out of 3 restaurants and bars in the state should have this insurance based on the type of establishment and amount of alcohol served. By ensuring these establishments with the greatest risk have liquor liability insurance, those suffering a loss due to an establishment’s failure to refuse service to intoxicated individuals would be able to file for compensation, which is not currently possible. Improved dram shop laws would protect and help those injured by intoxicated individuals and the establishments that failed to intervene.

Liquor Liability Insurance For Small Businesses

While small businesses that serve alcohol may be opposed to the idea of having to carry some form of liquor liability insurance, it is important for these business owners to look at the whole picture. The overall purpose of business liability insurance is to cover damages caused by the negligent actions of an establishment or injuries that occur from being in business. Providing this coverage protects the entire community, particularly innocent parties to the negligent actions of an intoxicated individual. Liquor liability insurance is important on both a business and a community level. It is something that responsible business owners should carry, even if it is not mandatory. Additionally, current dram shop law does not release a business from being sued, so claims made can still result in damage and financial loss.


What does this mean for owners of businesses that serve alcohol? For now, it means that there is still no requirement for them to buy this specific coverage from a liquor liability insurance company. It is still strongly advised that by business liability insurance carriers that this be done. Wise business owners understand that even though liquor liability insurance is not required, it provides them and their community with much greater protection against potential lawsuits. To learn more about liquor liability insurance and whether a business needs this type of coverage, business owners should speak to an experienced business liability insurance company for advice!

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