Texas Dram Shop Bill Requires Bars Buy Liquor Liability Insurance

A recently proposed state bill from Democratic Rep. Chris Turner is aimed at making sure all Texas bars and restaurants that derive the majority of their revenue from alcohol sales have liquor liability insurance.

The refiled “dram shop” liability bill, House Bill 409, from the Grand Prairie representative would hold bars, restaurants and other alcohol-serving establishments responsible for serving drunk patrons and customers.

Inspired by the tragic story of 2-year-old Abdallah Kader who was in a car struck by an over-served patron and died after living in a near-vegetative state for six years, Turner says he is more adamant than ever that bars and restaurants need to be held liable for injuries and damages resulting from over-serving alcohol.

While many Texas bar and restaurants currently have some form of liability insurance, it has been estimated that only one out of every three establishments that should have specific liquor liability insurance actually have the right kind of coverage.

House Bill 409 would require that any bar or restaurant that generates more than 50 percent of its revenue from alcohol sales would need the right liquor liability coverage. According to the filed bill, “A person may not hold a permit allowing the person to sell alcoholic beverages for on-premises consumption unless the person maintains a liability insurance policy.”

Joe Thomas, account representative for Food & Beverage Insurance Agency in Houston, sees some positives in the proposed law.

“Every moment a bar or restaurant goes without liquor liability coverage is a moment where they’re risking everything, putting their entire business on the line,” said Thomas. “Accidents can happen at any time without warning, and it’s important for all parties involved that the business have proper liquor liability insurance in order to take responsibility and also to protect itself.”

Thomas added that most general liability policies won’t cover liquor liability or “dram shop” issues.

“We hear it all the time in our offices, ‘I have general liability coverage. That will take care of everything I need.’ That couldn’t be further from the truth,” Thomas said. “The truth is most general liability policies do not cover liquor liability issues, so it will be important for bar and restaurant owners to examine their coverage and make sure it really fits their needs and the requirements of the state.”

Updated dram shop laws would affect more than just bar and restaurant owners. Patrons might notice some changes as well should House Bill 409 be passed.

One possible change would be in how bars handle underage patrons. While there is no law currently in Texas that keeps businesses from allowing underage customers inside, serving alcohol to minors is a Class A misdemeanor that can carry jail time and stiff penalties. However, currently many bars do allow minors in with certain restrictions, such as during hours when the kitchen is open or during shows and special events. Should the state start to toughen its liquor liability laws, it’s entirely possible that more bars will place age restrictions on entry, keeping those 21 and under from entering their premises at all times.

Another change for customers could be in how they are served. As the state gets tough on establishments that over-serve customers, it’s likely that bartenders and servers could become even stricter with how they serve patrons and when they cut them off to avoid any possible incidents.

Some speculate that customers could end up helping subsidize the cost of compliance with the new law, should it be passed, in the form of higher drink prices.

Source: Food & Beverage Insurance Agency