Does your business serve or sell alcohol?
Effective August 1st, 2017 liquor liability is now required in the state of Rhode Island.
RI Senate bill 373 Sub A was passed by both the House and Senate during the past legislative session. The purpose of this legislation is to require any applicant or holder of a retail liquor license to provide a certificate of insurance showing that they carry insurance coverage for general liability, liquor liability, and property damage in the minimum amount of $300,000.
The bill was submitted to Governor Riamondo, who took no action on the bill (neither signed or vetoed) and the bill became law in July.
This bill includes some exceptions: Class F1 (one day) liquor licenses and licenses in Burriville and North Providence (these towns already had similar laws in place) are exempt from this legislation. All other retail license holders must comply or their license will be revoked.
Why am I just hearing about this?
This legislation was not expected to pass so when it did it caught many stakeholders off-guard. The biggest question has been: how will this new legislation be implemented? Unfortunately, over a month after this legislation went into effect, we still don’t have many clear answers.
It appears each municipality is enforcing compliance in different ways. Some cities and towns are just waiting until the renewal date of the liquor license to inform the holder and require a certificate of insurance showing the proper liquor liability coverage. Other municipalities are sending out inspectors and/or letters to all license holders to ensure compliance.
Why is Liquor Liability coverage important?
Many business owners mistakenly assume that a general liability policy covers them for all their liability exposures. If you read your general liability policy you will see that bodily injury or property damage for which any insured is held liable is excluded if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. Meaning, without proper liquor liability coverage, your business may be held liable for the actions of intoxicated customers.
If your customer injures themselves or others while intoxicated your business may be on the hook.
Think of the exposure of a tipsy patron. Individuals are much more likely to get into a fight, a car accident or even just fall and hurt themselves while intoxicated. Business owners can and have been sued for inordinate sums of money especially if death is a result of the accident.
What is contributory negligence?
You don’t even have to be the establishment that over served an individual to be held liable. In Rhode Island, each defendant is held responsible for all the damages awarded regardless of the percentage of their responsibility.
Let’s say a patron has one drink at your establishment and then goes on to three other bars and gets over served you may be brought into the suit for contributing to their intoxicated condition. If that individual gets into an accident and injures themselves, other passengers in their car, occupants of another vehicle and/or causes significant property damage, you can bet that a lawyer will try to collect as much money from as many people as possible – including you.
In October of 2106, a paralyzed woman was awarded $23 million in a case against Twin River even though there was no clear evidence that they actually served the teenage drunk driver. Over 9 separate entities were named in the suit and were determined to have some liability in this case. If any of these entities did not carry proper liquor liability coverage, a judgement like this will likely put them out of business.
The bottom line
If you hold a retail liquor license in the state of Rhode Island and do not currently have Liquor Liability coverage with a minimum limit of $300,000 you are out of compliance and could lose your license.
Contact us today to find the right liquor liability coverage you need to not only meet this new requirement, but also protect your business from disaster.