Risk Management When Selling or Serving Alcohol
Many businesses and organizations sell or serve alcohol, either as part of their daily operations
or for special fund raising events or company parties. Intoxicated guests may injure themselves
or others. In addition to the often tragic consequences of these incidents, they can result in
expensive lawsuits and negative publicity for the organization.
Following are some guidelines to help ensure that alcohol is served and consumed responsibly.
Develop a Written Policy
As with any type of safety program or organizational initiative, the key to success is clear direction and support from top management. Organizational rules for the serving of alcohol are often known as “House Policies.” These address issues such as:
- Knowing and following applicable laws
- Training all staff, outside caterers/bartenders and volunteers
- Denying service to underage guests
- Promoting designated drivers and outside transportation services
- Monitoring consumption
- Managing intoxicated guests
- Actively marketing food and alternative beverages
Know the Law and Your Legal Liability
In order to limit your criminal and civil liability, it
is critical to operate within the law. For links
to the Alcoholic Beverage Control Board in
each state, plus Federal laws that may be
applicable, see this website.
Most states also have laws that create a cause of action for lawsuits against those selling or serving alcohol by those who were injured. Laws addressing commercial sales are commonly known as “Dram Shop Laws,” and those addressing non-commercial situations are known as “Social Host Liability Laws.”
These laws vary widely in how the injured party must prove negligence, and in how they address minors vs. adults. Mothers Against Drunk Driving offers information on these laws through its website.
Note that the absence of a law does not mean that injured parties cannot attempt to sue you — these laws just make that easier by establishing a cause of action. Injured parties can also sue you based on common law negligence. Be sure to consult legal counsel to understand how to apply these concepts to your particular situation.
Information on various other state and Federal laws, including age restrictions, pregnancy warning signs, Sunday sales, etc., can be found at the Alcohol Policy Information System website.
Train Those Selling or Serving Alcohol
Individuals who are selling or serving alcohol
are implementing your organization’s policies.
Therefore, it is important for them to be trained
regarding those polices as well as the
applicable laws. This applies to employees
as well as to volunteers at fund-raisers or
parties. If alcohol will be sold or served by
outside caterers or bartenders, your contract
should require them to follow your
organization’s training requirements or have
equivalent requirements of their own.
State laws vary regarding what types of organizations are covered by the law, who is required to be trained, and the content of required training. Find helpful information at the Alcohol Policy Information System website.
Even if training is not required by law in your situation, it is still an important part of ensuring the safety of your guests and reducing your liability exposure. Many training courses are available online, making training of individual employees or volunteers quick and inexpensive.
Below are some vendors that offer training for those selling or serving alcohol. You should check with your state Alcoholic Beverage Control Board first to determine if they require certain courses, or offer courses for reduced rates. When training through a vendor, ensure that their courses meet your state’s requirements.
- Training for Intervention Procedures (TIPS®)—Health Communications, Inc.
- Controlling Alcohol Risks Effectively (CARE®)—American Hotel & Lodging Educational Institute
- ServeSafe Alcohol® —National Restaurant Association
- Techniques of Alcohol Management (TAM®)—National Hospitality Institute
Check Your Insurance Coverages
Consult with your insurance agent to be sure
that your insurance policy covers liquor liability
in the manner you intended. Some insurance
policies exclude liquor liability, or only cover
specific locations or specific special events.
If alcohol will be sold or served by outside caterers or bartenders, you should consider requiring them to carry General Liability, Products/Completed Operations and Liquor Liability insurance with appropriate limits. You should be listed as an Additional Insured on these polices and require the contractor to provide a Certificate of Insurance confirming these requirements. A hold harmless agreement protecting you in the event of a claim caused by the contractor’s negligence may also be appropriate.
Consult with legal counsel regarding contract language, and with your insurance agent regarding insurance requirements for contractors.
To learn more about Hanover Risk Solutions, visit hanoverrisksolutions.com
The recommendation(s), advice and contents of this material are provided for informational purposes only and do not purport to address every possible legal obligation, hazard, code violation, loss potential or exception to good practice. The Hanover Insurance Company and its affiliates and subsidiaries ("The Hanover") specifically disclaim any warranty or representation that acceptance of any recommendations or advice contained herein will make any premises, property or operation safe or in compliance with any law or regulation. Under no circumstances should this material or your acceptance of any recommendations or advice contained herein be construed as establishing the existence or availability of any insurance coverage with The Hanover. By providing this information to you, The Hanover does not assume (and specifically disclaims) any duty, undertaking or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.
LC JAN 2019 12‐187