Common-Sense Methods to Control Liquor Liability Exposures
This article distinguishes liquor liability from commercial general liability and explains why establishments must manage alcohol service as a separate risk. It notes that alcohol server training, often called TIPS, can reduce underage drinking, intoxication and drunk driving, but only when applied consistently by servers. Because confrontation often delays intervention, the article recommends practical, nonconfrontational controls to help avoid liquor liability incidents, Together, these measures help restaurants, bars, taverns, and pubs reduce intoxication, lower claim frequency, and strengthen responsible alcohol-service practices.
Sometimes, underwriters and agents lump liquor liability exposures in with commercial general liability exposures (remember the nomenclature comprehensive general liability is no longer in use). While liquor liability is related in nature, it is separate and distinct. Liquor liability relates to exposures specifically excluded under the commercial general liability policy. I know the statement seems basic in nature, but sometimes the distinction gets lost in translation. Understanding this distinction becomes clearer when you consider how a single incident can generate both a premises liability claim and a liquor liability claim.
Don’t Lump Liquor Liability with Commercial General Liability Exposures
Sometimes, underwriters and agents lump liquor liability exposures together with commercial general liability exposures (remember the nomenclature comprehensive general liability is no longer in use). While related in nature, it is separate and distinct. Liquor Liability relates to exposures specifically excluded under the Commercial General Liability policy. I know the statement seems basic in nature, but sometimes the distinction gets lost in translation. Understanding this distinction becomes clearer when you consider how a single incident can generate both a premises liability claim and a liquor liability claim.
A premises liability claim may ensue because a patron trips and falls at the restaurant because the walkway or steps were not illuminated adequately. The liquor liability claim ensues because the patron tripped and fell because the restaurant overserved alcoholic beverages. Thus, the event may create both a liquor liability and a premises liability claim.
Coverage for liquor liability can be provided by simply deleting the exclusion within the commercial general liability coverage form. In this case, it becomes part of the commercial general liability coverage. However, the more common method is to issue a stand-alone policy or add the coverage onto the commercial general liability policy with separate limits and a governing coverage part. Once coverage is addressed, the next step is understanding how insureds can effectively control and reduce liquor liability exposures.
Prevention of Liquor Liability Claims
With that aside, how should a risk with a liquor liability exposure seek to prevent or control the likelihood of a liquor liability claim from occurring? The usual answer is to have a TIPS program. TIPS stands for “Training for Intervention Procedures.” TIPS is a skills-based program to help servers of alcoholic beverages help prevent intoxication, underage drinking and drunk driving.
However, the effectiveness of TIPS depends heavily on how consistently it is applied in real‑world operations.
The training helps identify problems and actions servers should take while confronting irresponsible drinking. But here is the kicker. It only works if it is practiced. The truth of the matter is in most applications it is only practiced on a haphazard basis. Typically, servers serve alcoholic beverages and continue to serve them until one of two things happens. The first is when the patron gets up and leaves. The second is when the patron is intoxicated enough that they cause a problem with servers or other customers. Because of this inconsistent application, only a few establishments implement truly effective controls to limit intoxication.
One Extreme Measure to Control Liquor Liability Risks
In fact, I have only seen one risk which truly controlled their liquor liability exposure. They had a no-exception policy of a two-drink limit. Once a customer consumed their second drink, they would no longer serve that patron alcoholic beverages. It sounds extreme. However, when you think about it, it does not take a lot of drinks to get to the .08% blood-alcohol level. For a single drink, the blood alcohol content increases by .02 %. Therefore, a blood alcohol content .08% takes about 4 drinks. To appreciate why even moderate consumption can lead to intoxication, it is important to understand how the body processes alcohol.
A general rule of thumb is it takes about one hour to process one drink. Drinking more than one drink an hour results in higher concentrations depending upon age, genetics, weight and health and requires more time to break down the alcohol.
In the US, a standard drink is as follows.
- 12 ounces of beer (about 5 percent alcohol by volume)
- 5 ounces of wine (about 12 percent alcohol by volume)
- 1.5 ounces of distilled spirits/liquor (about 40 percent alcohol by volume)
However, many alcoholic beverages served today exceed these standard measurements, increasing the likelihood of intoxication even at moderate consumption levels.
Many craft beers have alcohol content well above 5%, and in some cases, they approach 9%. Furthermore, some establishments serve in pints (16 ounces). Meaning just one beer within an hour may put some individuals close to legal intoxication much faster than expected. These factors highlight why operational controls are essential for establishments seeking to manage liquor liability effectively.
Inconsistent TIPS Applications
Even implementing TIPS procedures has variations. Consider the aspect of assuring patrons consuming alcoholic beverages are of drinking age. I have been in numerous establishments who exercise what I consider the “gold standard” in assuring patrons are of age. The gold standard is to require all patrons without regard to their apparent age to show identification proving they are of age. This practice is non-confrontational and may even be viewed by older clientele as complimentary. After all, who does not like being told they look young? Age verification is only one aspect of controlling liquor liability; another involves managing how quickly patrons are served.
In the real world, most restaurants, taverns, bars, and pubs cannot survive restricting patrons to two drinks. TIPS is an effective control. However, TIPS relies heavily upon confronting patrons which may inhibit servers from practicing it timely. But they can take effective non-confrontational common-sense steps to prevent incidents.
Non-TIPS Tips
One effective method is slowing the rate of service. The rate at which individuals consume alcohol can have a dramatic effect on the level of intoxication. By slowing the rate at which servers provide follow-up rounds reduces the likelihood or delays the potential of a patron becoming intoxicated. By managing how quickly follow-on drinks arrive to patrons to close to an hour per drink, the customer’s level of consumption can be controlled.
Another effective non‑confrontational control involves selecting products that naturally limit the potential for intoxication by product selection. By selecting alcoholic products that are lower in alcohol content, restaurants and bars can reduce the incidence of intoxication of patrons. The term “session beers” is commonplace and has found its way onto menus all over the world. A session beer loosely defined as a beer below 5% alcohol by volume (ABV). With less alcohol, patrons are less likely to become intoxicated than when they consume alcoholic beverages with higher alcohol content. Furthermore, the new non-alcoholic beers are the same as your father’s NA beer. Many of today’s NA beers are tasty and appeal to those who like beer for taste, not alcohol. This same principle can also be applied to mixed drinks by substituting lower‑ABV spirits.
This concept can be applied with mixed drinks by providing substitutes for hard liquors. I have been in restaurants that offer sake/soju and tonics, or sake/soju martinis rather than drinks made from vodka or gin. The effect is using alcohol with ABV ranging between 14% to 20% rather than 40%. These types of substitutions demonstrate that operators can reduce intoxication risk without compromising customer experience.
Passive Methods of Liquor Consumption Control Can Reduce Aggressive Incidents
With a more passive method to reduce exposure to liquor liability incidents, establishments can list the ABV values of all the alcoholic beverages they serve. This permits responsible patrons to make a choice for lower alcoholic content or understand when they are consuming high ABV beverages. Thereby, patrons can make choices to prevent their own intoxication. Taken together, these operational practices significantly enhance the effectiveness of traditional training programs such as TIPS.
By catering to these consumer trends and showing the ABV, drinking establishments help their customers consume less alcohol and perhaps even consume more products while decreasing the potential for intoxication. When combined with consistent training and practical service controls, these measures demonstrate that liquor liability exposures are both predictable and manageable.
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