Liquor Liability Insurance in Connecticut: What the Dram Shop Act Means for Your Restaurant or Bar

If you serve alcohol in Connecticut, the state has already decided you can be held responsible for what your customers do after they leave. That is the plain meaning of the Dram Shop Act, and it is the reason liquor liability insurance exists. I write it for restaurants, bars, caterers and package stores from West Hartford Center to downtown Bristol, and the same misunderstandings come up every time.

What the Dram Shop Act says

Connecticut General Statutes section 30-102 is the Dram Shop Act. Stripped of the legal language: if a seller serves alcohol to an intoxicated person and that person then injures someone or damages their property, the injured party can recover from the seller, up to $250,000 per injured person and $250,000 aggregate per incident.

There is a notice requirement. The injured party has to give the seller written notice within 120 days of the injury, or 180 days if the injury resulted in death or incapacity.

Two things about this matter for your insurance. First, the cap is per injured person and per incident, so one bad night can produce multiple claims. Second, the cap applies to the Dram Shop claim itself. Connecticut courts have allowed separate, uncapped claims where the service was reckless rather than merely negligent, or where the person served was a minor, and plaintiffs’ lawyers plead those counts alongside the Dram Shop count whenever the facts allow. Your insurance has to respond to all of it, including the cost of defending you, which is often the largest number.

Why your general liability policy does not cover this

Every restaurant and bar carries general liability. Most owners assume it covers alcohol. It does not.

The standard commercial general liability form contains a liquor liability exclusion. If you are in the business of selling, serving or furnishing alcohol, the GL excludes claims arising from a person being intoxicated, from serving a minor, or from serving someone already under the influence. The exclusion is broad and on purpose, because the industry decided decades ago to price alcohol separately.

So a restaurant with a $1 million GL policy and no liquor liability has, for the claim that matters most, nothing. The GL pays if someone slips in your bathroom. It does not pay if someone you overserved drives into a family on Route 44.

Liquor liability is either a separate policy or an endorsement added to your GL or your business owners policy. Either way, it is a distinct coverage part with its own limit, and you have to ask for it.

How liquor liability is priced

Carriers rate liquor liability mostly on alcohol as a percentage of total sales. That single ratio drives more of your premium than anything else.

A family restaurant in Farmington where alcohol is 15 percent of revenue is a very different risk from a bar in Bristol where it is 80 percent. Many standard carriers will write a restaurant up to a certain alcohol percentage, and above that the account moves to the excess and specialty markets, where the price and the terms change.

Hours, entertainment, the age of your crowd, prior claims and liquor control violations all move the rating too. Package stores, which sell but do not serve, rate lower than bars.

Because the alcohol percentage is so important, get it right on the application. Carriers audit it, and a restaurant that reported 20 percent and audits at 45 percent has a problem at renewal, or at a claim.

Assault and battery: the sublimit that bites

Here is the one that catches bar owners. Many liquor liability policies, especially in the specialty markets, either exclude assault and battery outright or cover it only up to a small sublimit.

Assault and battery claims are exactly what happens at bars. Two customers fight in the parking lot. A bouncer removes someone too enthusiastically. A patron is injured by another patron the bar should have cut off. If your policy has an assault and battery exclusion, you are defending that yourself.

When I quote liquor liability, I read that section of every policy. A cheaper quote with an assault and battery exclusion is not cheaper. Ask to see the sublimit in writing.

Caterers, breweries and events

Caterers who serve alcohol at weddings and corporate events need it, and venues will require a certificate showing it. Caterers who bring their own bartenders are a different risk from ones where the client provides the alcohol, and the policy needs to match.

Breweries and wineries have a taproom exposure that is essentially a bar, plus manufacturing and distribution on top.

One-off events, such as a fundraiser with a cash bar, can be covered with a short-term liquor liability policy. Many venues require it as a condition of the rental.

Make the permit match the policy

Connecticut liquor permits come in many types: restaurant, cafe, package store, caterer, manufacturer and more, each with its own rules about what you can sell, to whom and when. Your insurance application describes your operation too, and the two need to agree.

If your permit says restaurant and your operation has quietly become a bar with a kitchen that closes at 9:00, you have a mismatch that matters at claim time. If you upgrade your permit for live entertainment or later hours, tell your agent, because you have changed your risk. I ask to see the permit when I quote.

What carriers like to see

Underwriters price on the numbers, but the terms they offer depend on how you run the place. Things that help:

• Server training. Formal responsible-service training for every bartender and server, with records. Some carriers credit it and some specialty markets require it.
• ID policy. A written policy of carding anyone who looks under a set age, and actually doing it.
• Incident log. A written record of every refusal, ejection and incident. It is your best evidence when a claim arrives 100 days later.
• Cut-off procedures. A written procedure for refusing service and getting an intoxicated customer a ride.
• Cameras. Coverage of the bar, entrances and parking areas.

None of this is complicated, and it is the difference between a carrier that wants your account and one that does not.

Workers’ comp, while we are here

Restaurants and bars are employers, and Connecticut requires workers’ compensation for every employer with employees. Kitchens produce burns and cuts, bars produce slips and lifting injuries. Look at workers’ compensation at the same time as the liquor policy. The full package is on the restaurant insurance page.

The short version

If you serve alcohol in Connecticut, the Dram Shop Act means you can be held liable for what an overserved customer does, up to $250,000 per person, and a reckless-service or minor-service claim alongside it is not capped. Your general liability policy excludes all of it. You need liquor liability, with a real limit, without an assault and battery exclusion, on a policy that matches your permit and your actual alcohol percentage.

I quote liquor liability for restaurants, bars, caterers and package stores across West Hartford, Farmington, Avon, Bristol, New Britain and the rest of Hartford County. Call (860) 672-1733, send a note, or email brandon@thebeamagency.com with your permit type, hours and a rough food-to-alcohol split, and I will tell you what it looks like.