The festive season will soon be upon us, and restaurant, bar, and pub owners are undoubtedly gearing up to host parties in the hope this holiday season may prove lucrative. It may signal a turning point for the hard-hit sector from the lingering economic effects of the pandemic. 

According to data from Restaurants Canada (RC), commercial food service sales are forecast to grow to $74.6 billion in 2022, representing a 21.6% increase over 2021 but 3% below 2019 levels. Nevertheless, RC says the fourth quarter of 2022 (October to December) will mark the first quarter when commercial food service sales return to pre-COVID-19 levels. Also, the national, not-for-profit association anticipates the industry will grow by 5.3% to $78.6 billion in 2023.

In light of these findings, while restaurant and bar owners are preparing their menus, dressing up their establishments, and stocking up on food and beverage supplies, now’s the time to do an insurance policy checkup and ensure you’ve got adequate liquor liability protection.

Holiday Party at a restaurant

What Is Liquor Liability?

Liquor liability is your business’s responsibility to cover losses, damages, or other expenses arising from the injury or death of a person or damage to property where alcohol that you served to one of your customers is deemed to be a contributing factor.

How Can Liquor Liability Insurance Protect Your Business?

Liquor liability insurance protects businesses that manufacture, serve, distribute, or sell alcohol, including restaurants, bars, pubs, breweries, cafes, grocery stores, and convenience stores. 

This type of policy covers costs associated with claims against your establishment alleging third-party bodily injury or property damage due to an intoxicated patron. If one of your customers becomes intoxicated at your establishment and injures themselves or others, you or your employees may be liable.

5 Ways to Reduce Your Liquor Liability Risks and Insurance Premium

Holiday and year-end parties typically involve customers imbibing alcohol. You and your staff have a legal responsibility to make sure your guests get home safely. That’s where your business’s liquor liability risk comes into play. It’s essential to have adequate liquor liability coverage as part of your overall restaurant insurance or bar and pub insurance policy. 

A general rule to keep your insurance premium reasonable is ensuring that no more than 40% of your sales derive from selling alcohol. Here are five ways to mitigate your liquor liability risks​:

1. Limit your customers’ alcohol consumption, offer food service, and do not serve patrons past the point of intoxication.

2. Train your employees and document their training. They must be licensed to serve alcohol by provincial liquor service and sales programs such as Smart Serve in Ontario or ProServe in Alberta. Don’t permit them to serve alcohol to intoxicated individuals; ensure they know what to do if a customer has too much to drink.

3. Remind your customers not to drink and drive and provide them with options to get home safely, such as hailing them a taxi or ridesharing service.

4. Display posters from Mothers Against Drunk Driving (MADD) Canada wherever alcohol is served.

5. Implement a mandatory customer identification policy and never serve alcohol to anyone under the legal age in your province.

Taking these precautions and talking to a licensed Zensurance broker about reviewing your existing policy may help reduce your annual premium.

Our insurance experts can help identify gaps in your coverage and shop our partner network of more than 50 insurance providers to see if they can get you a better rate. Above all, a broker can make sure you’re not underinsured. A single third-party liquor liability lawsuit could bankrupt you if you lack adequate insurance protection.

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About the Author: Jon Hogg

Jon Hogg is the Senior Team Lead, Renewals, at Zensurance.