What is Dram Shop Liability?

Dram shop liability is legal liability that holds businesses responsible for harm caused by customers who were served alcohol while visibly intoxicated or served to minors.

What you need to know

If your restaurant serves alcohol to an intoxicated patron who then causes a drunk driving accident, your business can be held financially responsible for resulting injuries and deaths. This applies even if you didn’t directly cause the accident.

Why it matters for restaurant owners

Dram shop claims are among the most expensive risks restaurants face—settlements regularly exceed $1 million for serious accidents. Your liquor liability insurance specifically addresses this exposure, which is why it’s mandatory for any establishment serving alcohol.

Rigorous staff training on responsible alcohol service (TIPS certification), cutting off intoxicated patrons, and offering ride alternatives all reduce both your liability risk and insurance costs.