Dram Shop Law

Published: | Updated: May 12, 2018

Definition - What does Dram Shop Law mean?

The Dram Shop Law states that businesses that sell liquor to a person who is obviously intoxicated can be held liable for losses that person causes within a certain amount of time. Restaurants and bars have to buy liability insurance to cover this risk.

Insuranceopedia explains Dram Shop Law

The Dram Shop Law is common in the United States; however, not every state has it since it can be difficult to prove that liquor served at a particular establishment is to blame for a specific loss. For example, a person could have some drinks at a bar, then take a few shots in their car before driving off and causing an accident.

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