Loss control for "dram shops"

One line of thinking may ask, "Why would tasting rooms and microbreweries be interested in taking on this risk? There will always be a patron that inevitably drinks too much." Though this may be true, leadership can take steps to ensure employees are properly trained and that the business has the right policies and procedures in place to limit liability.

Identification checks: A fastidious and thorough ID check is standard practice for many taprooms, bars and wineries. This policy should be written and clear, as should the policies regarding false identification.
Training: Training for servers should also be required for any establishment that serves alcohol. A respected alcohol service training program like TiPS can go a long way toward minimizing overserving and injury.
Incident log: Bar managers should maintain a log of alcohol-related incidents that occur at their bar. For example, if a customer is visibly intoxicated and a bartender refuses to serve them and helps them return home, this should be noted. A log can be used as proof that bars are employing best practices and have taken steps to care for the customer, whether it's offering them food and water or calling for medical help.
Employee records: Maintain detailed records of employees, their training and their shifts. This can help clarify who may have made questionable sales or prove that a server acted in good faith, within knowledge gained through training.
Video surveillance: Video provides a way to observe patron and staff behavior and prove what occurred, when necessary. It can help demonstrate when a server "cut off" a customer, what led to a slip and fall and what time someone left the bar. However, businesses must have policies in place for storing footage; many systems default to constantly overwriting old footage, rendering the needed surveillance footage useless.

These elements are tied together with staff awareness and observation. This is particularly important in fraud cases. For example, at a brewery, a gentleman left the taproom and stumbled outside. He walked to the edge of a landscaped terrace, peeked over the edge and launched himself over. The fall was small but substantial enough to result in bodily harm. However, a taproom employee witnessed the episode. By serving as a witness, the employee could provide a stronger defense for the brewery when presented with a lawsuit by explaining that the gentleman did not accidentally fall over but rather launched himself off the terrace.

For agents and brokers new to the liquor liability space, it is important to understand the liability facing alcohol-selling insureds under dram shop laws. In addition, agents and brokers should:

Know the individual business with which they are working. Agents and brokers should be able to present underwriters with a full breakdown of how alcohol is sold and consumed at a business seeking coverage. This is critical to understand, as this liability and exposure can differ based on the type of business. A brewpub has different risks than a taproom.
Ask insureds about training and policies. Do they use a trusted training program? Do they have a protocol in place for dealing with overserved customers? These policyholders should have fully trained staff and policies that address overserving customers.
Familiarize themselves with state laws. Dram shop laws vary from state to state and even the most subtle of differences can be incredibly important. Some states have different types of training specific to their regulations that need to be followed as well. With the proper knowledge, agents and brokers can point their clients toward the appropriate state resources, demonstrating their value to the insured.

As the brewery and winery space continues to innovate, new risks and exposures will enter the market. Variations in dram shop laws will prove tricky for existing business owners and newcomers. This presents a ripe opportunity for agents and brokers to demonstrate their value as a knowledgeable resource in this industry niche — a resource that understands the latest on their state's dram shop laws and related loss control best practices.

Special Reports /

Alcohol-selling insureds face a number of liabilities under dram shop laws

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