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
171-0873 (10/18)