Reviewing Premises and Dram Shop Liability Triggers

Claims involving allegations of alcohol intoxication require careful analysis when determining what policy or policies may apply.

Two common theories centered on alcohol-related allegations that come into play include premises liability and dram shop liability, according to John P. Cunningham and Julia B. Jackson, presenters at a recent Property Loss Research Bureau conference in Orlando.

Generally, these negligence claims arise from injuries that are caused by intoxicated persons on the landowner’s premises, according to Cunningham, ice chairman of the St. Louis-based Brown & James Liability Insurance Litigation Department.

The theory of liability usually raised against a tavern owner is the failure to protect the injured party from the danger posed by the intoxicated person, Cunningham said.

Premises liability typically falls under a tavern’s commercial general liability (CGL) coverage. Examples of alcohol-related premises liability claims are injuries resulting from bar fights and falls.

“What we most often see are bar fights,” Cunningham said. He noted foreseeability is not always clear-cut.

“When the bar knows that a particular individual has a reputation for violence, then [it is] exposing [its] customers to perhaps what would be an unreasonable exposure to harm,” he said.

A tavern or bar with a history of violence will likely have evidence of such. Plaintiff attorneys will obtain police records to use as supporting evidence, Cunningham said.

Even so, showing the attack is reasonably foreseeable alone is not sufficient to give rise to liability on the part of a tavern owner for an injury from a bar fight, he said.

The plaintiff also needs to prove that the tavern owner failed to take reasonable steps to prevent the injury.

An issue can arise when the bar provides extra safety measures, such as adding security cameras or having security guards on hand.

“The tavern voluntarily assumes a duty of what otherwise might not be a duty,” Cunningham said, adding that reasonable foreseeability is the determining factor in whether a case should be defended or targeted for settlement.

Dram Shop Liability

Dram shop liability claims generally stem from allegations of bars over-serving alcohol. Cunningham described the most common dram shop claims as “serving or over-serving a customer who causes an injury on or off premises to a third party.” The plaintiff is typically a party who is injured by the insured’s customer, he said.

Some 43 states have some form of dram shop law in place. The laws are meant to be a deterrent to the over-serving or illegal sale of alcohol by tavern owners, said Jackson, chief litigation officer at Illinois Casualty Co.

According to Jackson, while 43 states have a dram shop law in place, there are variances among the laws based on type of sales, proof requirements and damage caps.

The states that don’t recognize dram shop liability include Delaware, Kansas, Louisiana, Maryland, Nebraska, Nevada, South Dakota and Virginia.

Dram shop claims usually involve drinking and driving accidents, or intoxicated persons who end up hurting others and sometimes even themselves, she said.

According to Jackson, there are some common misconceptions relating to dram shop liability:

One is that an intoxicated individual may recover damages. In reality, only 10 states allow an intoxicated person to recover damages he or she sustained as a result of an alcohol-related injury.

Cunningham and Jackson said it’s important to be familiar with the applicable state’s social host liability law, if allegations arise from a house party. In those cases, coverage may be available under homeowners’ policies.