LIQUOR LIABILITY COVERAGE FORM (OCCURRENCE BASIS) SAMPLE INSURANCE PROPOSAL LANGUAGE

(November 2025)

REPRINT PERMISSION

PF&M subscribers are permitted to reprint the following sample insurance proposal language below when preparing insurance presentations for their commercial insurance clients. Any other uses require approval by The Rough Notes Company, Inc.

PROPOSAL DISCLAIMER

The following paragraph or similar language must be included in all insurance proposals:

Disclaimer: The information provided in this brochure does not represent the exact contract terms of the policy. Consult the actual policy for exact definitions, conditions, coverages, exclusions, and limitations. Coverage may vary based on the company's underwriting guidelines and practices.

TIPS FOR USING THIS PROPOSAL LANGUAGE

This proposal language is not intended to be a complete insurance proposal. It does not include a client-specific section containing the name and address of the insured, the insurance company(s) and the agent, along with their details, a list of locations, limits, deductibles, and similar customer-specific items. Such sections should be prepared separately.

The purpose of any insurance proposal is not to replicate the insurance policy but to provide a summary of potential coverages.

Paragraphs explaining coverage specific to this form may be the most important addition to your insurance proposal and sales effort. Coverage examples can be customized for each customer. Be careful when changing any proposal language to ensure it does not broaden coverage beyond what the policy specifies.

This proposal should be combined with proposals for other lines of business, such as commercial property, commercial general liability, workers compensation, and umbrella liability, to create a comprehensive account proposal.

Related Articles:

Liquor Liability Coverage Forms Available Endorsements and Their Uses

Liquor Liability Coverage Forms Endorsements Checklist

SAMPLE PROPOSAL LANGUAGE FOR THE INSURANCE SERVICES OFFICE (ISO) LIQUOR LIABILITY COVERAGE FORM (OCCURRENCE BASIS)

INTRODUCTION

The Insurance Services Office (ISO) Liquor Liability Coverage Forms protect the insured against damages for bodily injury and property damage that result from causing or contributing to a person's intoxication, furnishing alcohol to minors or individuals already intoxicated, or violating any law, statute, ordinance, or regulation related to selling, giving, distributing, or using alcoholic beverages.

LIQUOR LIABILITY COVERAGE

INSURING AGREEMENT

The insurance company agrees to pay the amounts the insured is legally required to pay as damages because of injuries covered by this coverage form. The liability for the injury must be imposed on the insured because they sell, serve, or furnish alcoholic beverages. The insurance company also has the right and duty to defend the insured against any lawsuit seeking damages, but only if coverage applies to the damages alleged in the suit. Payments are limited to the insurance limits, and the insurance company's right and duty to defend ends when those limits are exhausted through judgments and settlements.

EXCLUSIONS

Exclusions must be reviewed carefully, as many have conditions, exceptions, limitations, or restrictions not listed below.

Expected or Intended Injury

Coverage does not include injuries that are expected or intended by the insured. However, there is an exception for bodily injuries caused by the insured using reasonable force to protect people or property.

Workers Compensation and Similar Laws

Coverage does not include any requirements or obligations of the insured under laws such as workers compensation, disability benefits, unemployment compensation, or similar statutes.

Employers Liability

Bodily injury to an insured employee resulting from their employment or duties related to the insured’s business is excluded. This also applies to bodily injuries suffered by the employee’s relatives stemming from the employee’s injury. The exclusion applies whether the insured is liable as an employer or in any other capacity. It also applies if the insured must share damages or reimburse someone else who is required to pay damages due to the injury.

Liquor License Not In Effect

Coverage does not apply to injury if the required liquor license was not in effect at the time of the injury.

Your Product

Coverage does not extend to injuries arising out of the named insured's product, but it does include liquor liability exposures related to that product.

Other Insurance

Insurance does not apply to any injury covered by another insurance or would be covered except for its limits being exhausted. This exclusion does not apply if the other insurance also covers the insured’s liability due to any act of providing alcoholic beverages.

War

Bodily injury or property damage caused by any type of war, including undeclared or civil war, is excluded. This includes warlike actions by military forces and government measures to prevent or defend against attacks involving military personnel or agents. It also includes rebellion, revolution, insurrection, or unlawful seizure of power, as well as actions taken to prevent or defend against these events.

SUPPLEMENTARY PAYMENTS

The insurance company pays the following for claims it investigates or settles, or suits against the insured it defends:

• All expenses the insurance company incurs in investigating or settling the claim.
• The cost of bonds to release attachments. This applies only to bond amounts within the coverage limit. The insurance company is not obligated to provide these bonds.
• Reasonable expenses the insured incurs when the insurance company requires assistance in investigating or defending a claim or lawsuit, especially if the insured has to take time off work. It covers up to $250 daily for time away from work.
• Court costs from a lawsuit that are the insured’s responsibility. This does not include attorney fees or other expenses that are the insured's responsibility.
• Prejudgment interest that may accrue on the portion of a judgment the insurance company is required to pay, based on the insured's liability.
• Interest accumulated on the full judgment amount after the judgment is entered and before the company has paid, offered to pay, or deposited in court the part of the judgment covered by and up to the insurance limit.
• Expenses the insured pays for first aid given to others during an accident involving bodily injury covered by the insurance.

WHO IS AN INSURED

If named or designated as an insured on the declarations:

• Individual

The individual and their spouse are insureds.

• Partnership or Joint Venture

The partnership and joint ventures are considered insureds. Members, partners of the insured, and their spouses are also insureds, but only when they are conducting the named insured’s business.

• Limited Liability Company

The limited liability company is an insured. Its members are also insureds, but only when engaging in the company's business. The managers of the named insured are also insureds, but only while they are performing their duties as managers.

• Any Other Organization

That organization is an insured if it is not a partnership, joint venture, or limited liability company. Executive officers and directors are insureds but only when performing their official duties. Stockholders are insureds but only for their limited liability as stockholders.

• Trust

The trust is an insured. The named insured’s trustees are also insureds, but only in their capacity as trustees of the trust.

The following are also insureds:

· Employees of the named insured who are not executive officers or managers of a limited liability company are insureds but only when performing duties within their scope and related to conducting the insured’s business.

However, there are restrictions, and no employee is covered for injury:

o To the named insured or the named insured's partners or members.

o To a co-employee in the course of their employment or while that co-employee is performing duties in the conduct of the named insured's business.

o To a relative of that co-employee as a result of the paragraph above.

o Where there is a requirement to share damages with or compensate another party responsible for paying damages due to the injury described in the co-employee paragraphs above.

· No employee is an insured for property damage to property they own, occupy, rent, or lend to themselves, any other employee, or any partner or member of a partnership, joint venture, or limited liability company.

· Any party with temporary legal custody of a deceased named insured’s property. However, this only applies to liability arising from or caused by maintaining or using that property, and only until a proper legal representative is appointed.

· A properly appointed legal representative holds all the rights and responsibilities of the named insured if the insured dies, but only within the scope of their duties as a properly appointed legal representative.

· Any organization the named insured has recently formed or acquired, and in which they own a majority interest, is considered an insured if no other insurance coverage is available. However, this does not apply to newly formed or acquired partnerships, joint ventures, or limited liability companies. The coverage under this provision is limited to 90 days after the formation or acquisition, or until the policy period ends, whichever comes first. Additionally, coverage does not include injuries that occurred before the organization was formed or acquired by the named insured.

· No one is an insured regarding the conduct of any current or former partnership, joint venture, or limited liability company not listed on the declarations as a named insured.

LIMITS OF INSURANCE

The most the insurance company pays for all injuries resulting from providing alcoholic beverages is the Aggregate Limit listed on the declarations. Coverage ends once this limit is exhausted from paying or settling claims and judgments during the policy period.

Subject to the Aggregate Limit, the Each Common Cause Limit is the maximum amount the insurance company will pay for all injuries that one or more persons or organizations sustain due to alcoholic beverages being provided to any one person.

The Limits of Insurance are applicable separately to each 12-month period and any shorter period of less than 12 months, starting from the beginning of the policy period indicated on the Declarations. If the policy period is extended after issuance, the limits also apply to the extended period. The maximum amount the insurance company will pay is the limit specified on the declarations, regardless of the number of insured persons, claims, lawsuits, or involved parties.

LIQUOR LIABILITY CONDITIONS

Bankruptcy

The insurance company remains obligated even if the insured or its estate files for bankruptcy or becomes insolvent.

Duties in the Event of Injury, Claim, or Suit

The insured has specific responsibilities if a claim or coverage demand arises:

• Notify the insurance company of any incident that could lead to a claim. At a minimum, the notification must include the following:

o Provide details on how, when, and where the event occurred.

o Provide the names and addresses of all injured, along with those of any witnesses.

o Include details about the nature and location of any injury or damage caused by the incident.

o The notice must be provided as soon as practicable.

• Immediately document the details of the claim or suit, including the date it was received. The insurance company must be notified as soon as possible. Follow up the initial notice with a written report of the claim or suit in a timely manner.
• Every insured involved in or with the claim must:
• Immediately provide the insurance company with copies of demands, notices, summonses, and other legal documents related to the claim or lawsuit.
• Assist the insurance company in obtaining records and other necessary information.
• Cooperate with the company as it investigates, settles the claim, or defends against the suit.
• Assist the company in enforcing any rights it has against any individual or organization that may be responsible for injury or damage covered by this insurance.
• No insured may voluntarily make payments, assume obligations, or incur expenses beyond first aid without the insurance company's approval. If they do, they do so at their own expense.

Legal Action Against Us

No one is authorized to initiate or join a lawsuit against the insured that seeks damages. The insurance company can only be sued if all specified conditions are fulfilled. It may be sued to recover amounts from an agreed settlement or a final judgment against the insured.

However, the insurance company is not responsible for damages outside the coverage terms or exceeding the applicable insurance limit. An agreed settlement involves the insured, the insurance company, and the claimant or their legal representative signing a settlement and liability release.

Other Insurance

The insurance company's obligation to pay is limited when there is other valid and collectible insurance covering the loss, as described below:

· Primary Insurance

This insurance is primary. The insurer's responsibilities are not impacted unless another applicable insurance with a primary status also covers the loss. In such cases, this insurance shares the obligation according to the Method of Sharing.

· Excess Insurance

This insurance is excess over prior insurance and applies to injuries outside claims-made policies if there is no retroactive date or other policies cover periods that extend beyond the retroactive date.

If another insurer defends the insured, this policy will not defend. However, if no defense is provided, this policy will defend but obtain all insureds' rights to recovery against all other insurers.

The insurer covers only losses that surpass what other policies would pay for without this insurance, including total deductibles and self-insured amounts from other insurance.

· Method of Sharing

If the other policy allows contributions by equal shares, this insurance does so too. Each insurance company pays an equal amount until its coverage limit is reached or the loss is settled, whichever occurs first.

If the policy does not include contributions by equal shares, contributions are made by proportional limits. With this approach, each company's share is the ratio of its applicable limit of insurance to the total applicable limits of insurance by all insurance companies.

Premium Audit

All premiums are calculated in accordance with the insurance company's rules and rates.

The advance premium is simply a deposit. After each audit period, the insurance company calculates the actual earned premium and informs the first named insured. The premium must be paid by the date specified on the billing notice. If the advance (deposit) and audit premiums exceed the actual earned premium, the company refunds the difference to the first named insured.

The first named insured must maintain the records and information that the insurance company needs for premium calculations and provide copies of them to the company upon request.

Representations

By accepting this policy, the named insured confirms that the statements on the declarations are complete and accurate. It also agrees that these statements are based on the representations it provided to the insurance company, and that the policy was issued accordingly.

Separation of Insureds

Except for the insurance limits and rights specific to the first named insured, the coverage applies to each named insured as if they were the only one covered. Additionally, it applies separately to each insured against whom a claim is made or a suit is filed.

Transfer of Rights of Recovery Against Others to Us

All rights the insured holds to recover any payments from others are transferred to the insurance company. The insured must protect these rights and refrain from actions after the loss that could impair them. The insurance company may require the insured to pursue legal action or transfer these rights to the company and assist in their enforcement.

When We Do Not Renew

If the insurance company decides not to renew the policy, it must provide written notice to the first-named insured at the mailing address listed on the declarations at least 30 days before the expiration date. Proof of mailing constitutes adequate evidence of notice if the notice is mailed.

DEFINITIONS

Refer to the coverage form for a list and description of definitions.