Dram shop insurance is an insurance policy carried by alcohol serving establishments to cover them in the event of dram shop law violations or liability for an intoxicated patron's actions.
Dram Shop Laws
Dram shop laws allow victims of an intoxicated individual to sue the shop that served alcohol to that individual if the damage inflicted was the result of intoxication.
Certain states require a set amount of dram shop insurance as part of issuing a liquor license, while others may use it conditionally as punishment or as proof of financial responsibility.
Some states may impose training requirements and certifications on a staff serving alcohol.
Negligence and Recklessness
Most states with dram shop laws consider negligence and recklessness when setting liability. This may include things like serving a visibly intoxicated person, not asking for identification before serving and encouraging excessive consumption.
Some states specifically require bartenders or servers to see identification before serving, while others don't necessarily require it, but still hold the staff and establishment responsible if a minor acquires alcohol.
State requirements and dram shop laws can vary considerably and may reach beyond bars and liquor stores to event planners and social event hosts.
- Antonio_Diaz/iStock/Getty Images