What hard market in liquor liability means for clients

Clients planning St. Patrick’s Day celebrations may find themselves short on luck when it comes to insurance coverage.

It’s becoming more difficult for clients to get insurance for liquor-related losses with the terms they need, one managing general agent observes.

“Right now, liquor liability is one of those operations that are turning into more of a hard market,” Tyson Peel, director of property and casualty for Burns & Wilcox Canada, said in a recent interview with Canadian Underwriter.

Liquor liability does not just apply to bars and nightclubs. It also applies to clients holding celebrations or special events at which alcohol is served.

For some clients, liquor liability may not be top of mind because their core business is not hospitality, said Peel. But these kinds of clients could still face exposure if they are running a celebration or special event where alcohol will be served.

Any organization that has responsibility for premises is responsible, in certain circumstances, for protecting persons on their premises from preventable harm, the Insurance Bureau of Canada advises. IBC adds that risk increases when alcohol is served.

If people are served alcohol past the point of intoxication, whoever served that alcohol can be liable, warns Secure Insurance Solutions Group Inc., a Markdale, Ont.-based brokerage, on its website.

When deciding whether or not to offer coverage, an underwriter will take into consideration whether the client has any experience with the provision of alcohol, Peel said. “If you don’t have experience, you might not be able to get coverage anymore, because they only want to take people who have actually run events or run a bar in the past. It’s just little signs across the board, where it’s just a lot more difficult to obtain the insurance coverage that you need.”

If your client wants $5 million in coverage, for example, he or she may have to find some combination of primary and excess coverage, because some carriers are reluctant to offer more than $2 million at the primary layer.

“It is the host’s responsibility, at the end of the day, to make sure your patrons aren’t over-served and are not drinking and driving,” said Peel. “Make sure you have alternative potential means for them to get home outside and beyond taxi chits or ride share programs, anything along those lines. Having them readily available at the end of your event or during your event is a definite positive.”

Your clients can also be exposed if they are allowing intoxicated people into their events.

“Especially on something like a St. Patrick’s Day celebration, where you are going to have people who are going to be celebrating all day long, make sure they are not coming (if they are) under the influence, because you could potentially get pulled into some sort of claim that may happen later on in the night,” Peel said.