Oktoberfest is a time to raise your stein and dance a polka, so who really wants to be the wet blanket bringing up liability concerns? No one. Unfortunately, some people use Oktoberfest as an opportunity to overindulge, placing themselves and others at risk.
Blame it on (or thank) Bavaria. Oktoberfest began there in 1810 and is still home to a festival spanning more than two weeks every autumn. More than 6 million people annually participate in the party – and that’s just in Germany. Countless more celebrate Oktoberfest throughout the world, but all harken back to Munich’s Oktoberfest.
However, beer existed for eons prior to the beginning of Bavaria’s yearly homage to it. Whether modeling their lederhosen or dirndl dresses, for most, Oktoberfest is about beer. History.com says that about 12,000 years ago, pretty much as soon as people figured out how to grow grain crops, they figured out how to ferment grains to make beer. Their delight in their newfound favorite beverage may even have spurred them to come up with more advanced agricultural practices that in turn led to the growth of civilization.
Dram Shop Laws and Liability Insurance
Unfortunately, those first beers were a bit too satisfying for some and, since then, overindulging in alcohol has been a problem. For hundreds of years now, countries have taxed, limited and otherwise tried to control the use of alcohol, with fair to middling results. The United States is no exception. In 1920, the 18th Amendment went into effect, prohibiting the manufacture and sale of alcohol. The “Noble Experiment” lasted only 13 years and was repealed by the 21st Amendment, which repealed prohibition.
States then enacted dram shop laws. The word “dram” actually refers to a liquid measurement used in colonial times. No one quite agrees to its specific amount; it could be a shot or 1/13 of a pint, or 43 ml, unless you are an apothecary, in which case a dram is 1/16 of an ounce or 1.77 grams, which sounds a bit lean for measuring booze.
Regardless of what actually constitutes a “dram,” businesses that serve alcohol, such as bars, taverns, restaurants and even liquor stores all full under the purview of Dram Shop acts. Dram shop laws make individuals or businesses selling alcohol liable for damages stemming from such sales. Liability often stems from serving minors, intoxicated individuals and other related situations. No matter how vigilant an individual or business is, mistakes happen, and injuries may result due to those mistakes. Controlling booze service goes only so far. There is no way of knowing what someone partook in prior to arriving. Serving someone even one beer potentially puts a business at risk due to a motor vehicle accident, fight or vandalism.
Discerning the Correct Insurance Coverage
Groups or establishments serving alcohol must obtain liability insurance specifically for protection against acts by their patrons. General business liability insurance typically covers patron accident injury claims, such as slip and falls and food poisoning. It also covers most property damage claims, in addition to medical costs for third parties. It may even cover liquor liability to a limited extent, such as occasional dispensing at special events.
Businesses and organizations selling or serving alcohol are required in most states to carry other types of insurance coverage.
- Liquor Liability Insurance
- Dram shop laws make restaurants liable if they serve an obviously intoxicated person and that person injures themselves and others.
- Liquor Liability Insurance covers legal fees and damage payments.
- Workers' Compensation Insurance to cover injuries to employees
- Inland Marine Insurance, especially for catering companies. This insurance protects property as it is transported from one location to another.
- Assault and Battery insurance because bar fights have been known to break out
- Umbrella / Excess Liability Insurance to protect against catastrophic events
- Property Insurance with Off-Premise Coverage
- Cyber Liability coverage to insure in the event of a data breach
- Auto Insurance
Alcohol can make people act stupidly, and it takes only one mishap caused by a drunk patron to take a business down.
Paying for Protection
Groups hosting special events and fundraisers, such as Oktoberfest parties, not only need a temporary liquor license, but also need liability insurance for the event. For many locations, temporary insurance may be only a couple hundred dollars per day.
Business insurance premiums depend upon several factors, including:
- The size of the operation
- The type of operation
- How long your establishment has been in business
- Yearly revenue
- Types of entertainment available (pool tables, mechanical bulls, etc.)
- How many people work for the business
- Types of food and drinks served
- Location of the business
For example, liquor liability insurance in Louisiana costs about $2 per $1,000 of liquor sold. However, Louisiana is one of the few states without dram shop laws, so coverage is cheaper there than in other states. Just across the state line in Alabama, coverage runs about $16 per $1,000 in sales.
Social Host Liability
Social host liability deals with individuals who serve alcohol, often at parties or other social engagements. Social host liability varies greatly from state to state, especially in terms of how far the liability extends.
Most homeowners’ policies cover injuries that happen to others. The injuries can occur at the home, but most policies offer liability protection for injuries that occur elsewhere as well. Social host liability does not cover any injuries of an inebriated guest because they were negligent in getting drunk. However, a host may be liable for injuries to third parties. Considering that the liquor liability coverage of most homeowners’ policies is often in the range of $100,000 to $300,000, homeowners’ insurance may not suffice should an accident occur.
Being Smart About Insurance
When it comes to parties and festivals, “liability insurance” may be synonymous with “buzzkill.” However, compared to the reality of dealing with the repercussions of selling or providing alcohol to someone who is involved in a criminal act or a civil lawsuit, making sure you have the right liability protection is a piece of cake – or perhaps a pint of beer.