Dram Shop Liability Insurance

Definition - What does Dram Shop Liability Insurance mean?

Dram shop liability insurance is a policy designed for businesses that sell and serve alcoholic beverages. It protects the business from accidents that can be traced back to alcohol-induced behavior within the premises of the business.

This policy is also known as liquor liability insurance.

Insuranceopedia explains Dram Shop Liability Insurance

Dram shop liability provides legal assistance to owners of bars, taverns, inns, or any other establishment that might get into legal trouble because of disruptive or illegal behavior due to alcohol purchased from the establishment. This might mean physical altercation or self-harm but also covers mistakenly serving alcohol to a minor. Companies that sell this policy may offer classes to their clients in order to prevent these types of accidents from happening within the establishment.

Some states require this policy as a condition of running an alcohol-based business.

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