Is liquor liability available only to those who have a license to sell liquor? Also, what would you recommend for a caterer that serves alcohol but does not have a license?

Ohio Subscriber

In answer to your question regarding whether liquor liability is available only to those who have a license to sell liquor, I offer the following.

The liquor liability coverage form is a liability policy specifically developed for covering the liquor-related exposures of insureds in the alcoholic beverages industry, or whose business involves the sale or service of alcoholic beverages. Liquor liability is designed to pick up coverage for liquor-related exposures which are specifically excluded under the CGL policy. It covers not only claims arising out of the insured's selling of alcoholic beverages, but also arising out the insured's furnishing or serving of them. Thus, a license to sell liquor is not a prerequisite for obtaining the coverage. There is an exclusion on the liquor liability policy, however, that prevents coverage for injury arising out of any alcoholic beverage sold, served, or furnished while any REQUIRED license is not in effect. So, the coverage would be excluded if the insured was required to have a license to dispense liquor but that license was not in effect.

As for a caterer that serves alcohol but does not have a license, even if the caterer does not sell the alcohol and only serves or distributes it, the liquor liability exclusion in the CGL form would apply and there would not be coverage for the insured for a BI or PD claim under that form. Therefore, a liquor liability policy for the insured should be recommended. Although the caterer does not have a license, so long as there is not one required of the insured that it has failed to obtain (or renew), the exclusion in the liquor liability policy should not be a problem.

There are endorsements—CG 24 08, CG 21 50, and CG 21 51—that the insured may want instead of the liquor liability policy; but regardless of the route the insured wants to take, it is better risk management to have liquor liability coverage than to not have it.