Liquor Liability: Carrier Quality is Paramount
Liquor liability losses are significantly different from typical general liability losses. General liability losses often involve slip and falls or food poisoning, which result in low payouts and relatively high frequency. Liquor liability losses are the reverse. Significant injuries and even death can result from the auto accidents allegedly caused by over service of alcohol. Claims are rare, but, when they do occur, high severity (six- or seven-figure) settlements are commonplace.
Your hospitality customers can easily be lulled into a false sense of security by the low frequency of liquor liability losses. With low odds of a claim, customers can convince themselves to go without liquor liability coverage or pick the lowest price for substandard coverage. While affordability will always be a consideration, too much emphasis on affordability often leaves policyholders with incomplete, or even non-existent, coverage for difficult and emotional claims. These claims can financially ruin a business and a lifetime of work.
Liquor liability claims are also complicated and time consuming. Establishing whether a patron was “visibly intoxicated” at the time of service or if the establishment knowingly served someone underage takes extensive litigation, discovery and often expert witness testimony. This adds to the significant cost associated with investigating and defending these claims.
At the same time, we have seen carriers enticed into the liquor liability market at inadequate rates due to the ready availability of business and the low claim frequency. Ample early premium combined with long tail claim resolution attracts carriers who learn after a few years that the premium is insufficient to overcome the cost of the risk when they are paying large amounts to grievously injured claimants in a few years’ time. Carriers are likely to exit just as quickly as they entered the market, leaving insureds and their insurance agents hastily remarketing the business. Moreover, insureds with claims covered by a carrier no longer writing liquor liability (i.e. runoff carriers) generally do not receive the same level of service from an insurer that is still writing this business.
USLI offers a rare combination of experience, technical knowledge and financial security critical to success in the liquor liability marketplace. For more than 30 years, USLI has been writing liquor liability countrywide. We understand the liquor liability legal environments in each state and underwrite accordingly. Over the years, we have paid multiple six- and seven-figure claims but maintained underwriting discipline to continue in all viable markets and support our insureds and agents.
Our specialized claims team has vast experience litigating and settling claims to our insureds’ best advantage. Six experienced claims examiners devote most of their time to handling liquor liability claims around the country working with experienced defense counsel. Furthermore, our insureds are secure in the knowledge that USLI is an A.M. Best A++ rated carrier and part of the Berkshire Hathaway group. With large long tail claim payouts, it is critical to have a financially secure carrier should a severe liquor liability claim arise.
When you are considering which carrier deserves your hospitality business, please remember that the quality of the carrier is essential for providing the most complete, effective and financially secure coverage for your insured in this long tail, severity-driven business. USLI is in this market for the long term and will be there to support your efforts to develop hospitality business and support your insured should a claim arise.
Please contact your Hospitality and Liquor Lines underwriter for more information or a quote.
As always, thank you for your support and business!
Contact Patrick Bethel,
Senior Vice President, Product Team Leader | 888-523-5545 Ext. 2564
Written by Jeff Estabrook
December 6, 2018