What Does Liquor Liability Insurance Cover in New Mexico?

You and your business could be held responsible for the actions of others when guests or customers are served alcohol past the point of intoxication during an event or on the premises of your business. Before hosting an event or starting a business that deals with alcohol, you must speak with your insurance provider and inquire about the types of coverage you can get. This article will explain everything you need to know about liquor liability insurance in New Mexico and what it covers.

Liquor Liability Insurance – What Is It? 

Liquor liability insurance, also known as dram shop insurance, is purchased to protect and help a business that distributes, serves, or sells alcohol. This form of insurance provides coverage for the cost of property damage, bodily injury, and other expensive claims. These claims typically arise due to the actions of an intoxicated person after the company served them alcoholic drinks. 

Liquor liability insurance New Mexico can help provide coverage for the following:

• Cost of medical expenses to treat an injury
• Cost of repair to fix property damage
• Cost of judgments or settlements
• Cost of legal work and requirements

What Does Liquor Liability Insurance Cover?

Liquor liability insurance can help provide coverage for the following:

Third-Party Property Damage

Suppose a person is under the influence of alcohol and causes damage to someone else's belongings or property in the premises of your business. In that case, liquor liability insurance can help cover the cost of damages. The coverage compensates for the cost of repair and replacement of the third person's property. 

Drunk Driving

If an intoxicated person operates a vehicle after having alcohol at your bar, restaurant, pub, or any other business and gets into an accident that causes bodily injury to someone or damages their property, the resulting expenses will be borne under liquor liability. Even the best and most popular restaurants and businesses face the risk of damages arising from drunk driving; therefore, they must remain prepared for such circumstances.   

Battery or Assault

If one of your customers is found physically beating or hurting someone else after you served them an alcoholic drink, the medical cost or legal cost will be covered under the insurance policy if the injured person decides to sue. For example, if an intoxicated customer stirs up a fight with another customer and breaks their arm, the cost of the medical and legal expenses will be covered under the insurance.   

Additional Claims

Liquor liability insurance can also cover the cost of additional claims according to the needs of your business. For instance, some insurance providers also offer coverage for bouncers in case they hurt or injure a customer. You can also obtain coverage for claims of mental stress or damage, incidents of violence, and much more. 

Who Should Get Liquor Liability Insurance?

Generally, any business that distributes, sells, makes, or serves alcohol to customers should get liquor liability insurance coverage. Here are some examples:

• Grocery stores
• Caterers
• Restaurants and bars
• Liquor stores

How Is the Cost of Liquor Liability Insurance Determined?

Several factors determine the cost of liquor liability insurance. It can easily cost your business several hundred to several thousand dollars in a year to get coverage. Different insurance companies can use varying factors to calculate the cost of liquor liability insurance. Some of the factors include:

Coverage Limit

If your policy's coverage limit is high, the cost of insurance premiums will also be high. 

Location

The cost of insurance can be affected based on the area or state you live in. 

Liquor Sales

The amount of liquor your business sells on a yearly basis can also determine the amount of premiums you will have to pay and the coverage you will need. 

Industry 

There are businesses that are exposed to greater risks in some industries. For instance, a bar may be at a higher risk compared to a retail store that sells liquor. 

What Is Not Covered Under Liquor Liability Insurance

Liquor liability insurance does not cover the following:

Slander and Libel

General liability insurance typically provides coverage for libel and slander unless the policy has an exemption for alcohol-related claims. 

Business Property Damage

Even if the damage to your property is caused by an intoxicated person, liquor liability will not cover the resultant expenses. However, you may choose to opt for commercial property insurance in order to pay for the cost of replacing or repairing your property. 

Underage Drinking Incidents

Although the insurance policy does not provide coverage against incidents that occur due to underage drinking, there may be other legal options to deal with the damage if the minor had a realistic-looking fake ID. You must train your employees to keep an eye out for fake IDs and to card every individual. 

Difference between Liquor Liability Insurance and Host Liquor Liability Insurance 

Liquor liability insurance provides financial protection to your business from claims and damages resulting from property damage or bodily injury if you are involved in selling, serving, produce, or distributing alcohol. This type of coverage can be customized and added as an endorsement to general liability insurance or be bought separately. 

Host liquor liability insurance, on the other hand, provides protection to companies and businesses that don't directly sell, serve, distribute, or produce alcohol but allow people to drink it on the premises of their property. Host liquor liability is sometimes included as a part of general liability insurance. 

Final Thoughts

Liquor liability insurance is a form of commercial insurance designed to protect business owners from financial damages that may arise as a result of a lawsuit or penalty from a customer. Before purchasing any insurance plan, it is important to know the terms and conditions of the policy and how it can help your business.