(April 2013)
2. Exclusions
This insurance coverage does not apply to any of the following, except as noted:
c. Liquor Liability (04 13 changes)
The insurance company does not pay for bodily injury or property damage that any insured may be liable for because of any of the following:
• Causing or contributing to a person becoming intoxicated
• Furnishing alcoholic beverages to a person who is under the legal drinking age
• Furnishing alcoholic beverages to a person who is already under the influence of alcohol
• Any law that relates to the sale, gift, distribution, or use of alcoholic beverages
Related Court Cases:
CGL Policy's Liquor Exclusion Inapplicable To Sales During Festival
Liquor Liability Exclusion Held Applicable To Nonprofit VFW Post
The following significant changes are in the 04 13 edition:
Any of the actions described above may result in an occurrence. In that case, there is also no coverage if any of the following claims related to that occurrence are brought against the insured:
• Hiring, employing, monitoring, or training others
Example: Bubba applies for a bartending position at Buster’s Brewskies and tells Buster he has already taken TIPS training. Buster hires him on the spot and does not schedule TIPS training. Buster serves Barbie beers even though she is visibly intoxicated. Barbie leaves, starts her car, drives off, and strikes a pedestrian. The pedestrian sues her and Buster’s Brewskies. The argument is that Buster is negligent because he did not properly hire and train Bubba and his lack of TIPS trainings is proof of the negligence. Such negligence is excluded because of this addition to the liquor exclusion. |
• Noting that a person is intoxicated and either providing transportation to that person or failing to provide such transportation
Example: Buster’s Brewskies uses a local taxi service to provide rides home for intoxicated customers. Beulah takes advantage of this service but is injured when the driver turns the wrong way on a one-way street and strikes an oncoming vehicle. Beulah sues Buster’s Brewskies because it hired a cut-rate taxi service that did not verify licenses or prior violations. |
This exclusion does not apply if the named insured is not in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages.
Examples:
• Mel's Medical Supplies Distribution holds a company Christmas party and serves alcoholic beverages at no charge.
• Paul at Peter Piper's Printing takes Mary to lunch and pays for a bottle of wine to go with the meal.
Both of these examples are covered if bodily injury or property damage occurs as a result of consuming alcoholic beverages. |
On the other hand, consider this:
Example: Harry's Hard Rock Malt Manufacturing, Inc. sponsors a fundraiser by holding a Casino Night. The event includes betting and gambling opportunities and charges are made for the food and alcoholic beverages. Harry does not obtain the proper permits and licenses required for the function. Iggy was served alcoholic beverages, was injured on his way home and claimed the injuries are due the liquor served. Iggy’s injuries are not covered because Harry is in the business of manufacturing alcohol and this situation was subject to several state and local statutes and ordinances. |
The named insured may not serve alcoholic beverages but does allow others to bring such beverages onto its premises. In that case, this exclusion does not apply even if a license is required to operate this way. It is not such a liquor-related business even if it charges a fee to consume the beverages on the premises.
Example: Jersey Set-ups is a pizza parlor and billiards hall. Jersey cannot obtain a liquor license because of past indiscretions but its patrons demand the right to drink while on premises. Jersey reaches a compromise. It will sell “set-ups” and its patrons are allowed to bring any alcohol they like to add. There is also a refrigerator on premises where regulars keep their beer. Jersey Set-ups is not subject to the liquor exclusion because of this new language. |
Note: CG 24 08–Liquor Liability provides limited liquor liability coverage by deleting the liquor liability exclusion.
Related Article: ISO Commercial General Liability Coverage Forms Available Endorsements and Their Uses
Another way to cover an insured's liquor liability exposure is through separate Liquor Liability Coverage. The two ISO Liquor Liability Coverage Forms are CG 00 33–Liquor Liability Coverage Form (Occurrence Basis) and CG 00 34–Liquor Liability Coverage Form (Claims-Made Basis).
Related Article: CG 00 33 and CG 00 34–Liquor Liability Coverage Forms Analysis
Related Court Cases:
Liquor Liability Exclusion Held Applicable To Nonprofit VFW
Liquor Liability Suit Based On Failure to Restrain Patron Did Not Circumvent Exclusion
CGL Policy's Liquor Exclusion Inapplicable To Sales During Festival
Can Insurer Duck Liability for Drunk-driving Deaths?
