What is a Liquor License Bond?

A Liquor License Bond is a type of surety bond that may be required by your state or local government before they will issue or renew your liquor license. The bond is a guarantee that you will comply with all laws and regulations governing the sale of alcoholic beverages, including not selling to minors, not over-serving intoxicated patrons, paying all required taxes, and following all licensing requirements.

If you violate the terms of the bond, the government can file a claim to recover fines, penalties, or other damages up to the bond amount. The bond is issued by a surety company in exchange for a premium (typically a percentage of the bond amount), and if a claim is paid, you are responsible for reimbursing the surety company. Bond amounts vary by state and can range from $1,000 to $50,000 or more depending on your location and the type of license.

What You Need to Know

How Liquor License Bonds Work:

The bond protects the government and the public by ensuring there’s a financial resource available if you violate liquor laws, but you need to understand that you’re ultimately responsible for any claims paid under the bond—it’s not insurance that protects you, but rather a guarantee of your compliance that you have to pay for.

The Cost:

The cost of a liquor license bond is typically modest (often a few hundred dollars per year for a $10,000 bond, for example) and is just one of the many costs of doing business when you serve alcohol.

Critical Warning:

If you violate liquor laws and a claim is filed against your bond, you’ll have to reimburse the surety company for whatever they pay out, plus their legal and administrative costs. This could cost thousands of dollars on top of any fines or penalties imposed by the liquor control board.

Why It Matters for Restaurant Owners

If your restaurant serves alcohol, you likely need a liquor license, and many jurisdictions require a liquor license bond as a condition of granting that license. Without the bond, you cannot legally serve alcohol, which would eliminate a major revenue stream for most restaurants.

Protecting Your Bond:

Maintaining compliance with all liquor laws, training staff on responsible alcohol service, checking IDs consistently, and refusing service to intoxicated patrons helps protect both your liquor license and your bond.

Important Distinction:

Note that a liquor license bond is separate from liquor liability insurance—you need both to be properly protected. The bond guarantees your compliance with liquor laws, while liquor liability insurance protects you from lawsuits related to serving alcohol.