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Commercial General Liability vs Liquor Liability: What’s Covered and What Isn’t

For restaurant and hospitality operators in the United States, understanding the difference between Commercial General Liability (CGL) and Liquor Liability is essential to avoid catastrophic financial and legal exposure. This guide explains what each policy covers, typical exclusions, cost expectations in major U.S. markets (New York City, Los Angeles, Chicago, Austin), and practical next steps when placing insurance for restaurants and bars.

At a glance: the core differences

  • Commercial General Liability (CGL) — Protects against third‑party bodily injury, property damage, and advertising injury caused by everyday business operations (e.g., slip-and-fall, a patron injured by falling signage).
  • Liquor Liability — Covers claims arising from the service or sale of alcohol (e.g., injuries to third parties caused by an intoxicated patron; dram shop exposures).

Both are essential for many hospitality businesses, but they address distinct risks and are often purchased separately or added as endorsements.

What Commercial General Liability (CGL) typically covers

CGL is the foundational liability policy for restaurants and hotels. Typical coverages include:

  • Bodily injury to third parties from on-premises hazards (slip/trip/fall).
  • Property damage to customers’ property (e.g., spilled wine ruins clothing).
  • Personal and advertising injury (libel, slander, copyright infringement in promotions).
  • Legal defense costs for covered claims.

Common CGL exclusions for hospitality:

  • Foodborne illness (often falls under product liability or specialized food contamination/recall policies).
  • Liquor-related liability (if the business sells/serves alcohol, many CGL policies explicitly exclude alcohol-related bodily injury unless an endorsement is added).
  • Professional liability (errors in medical/medical-like services).
  • Employee injuries (covered by Workers’ Compensation, not CGL).

For more on related coverages that restaurants must consider, see Product Liability, Food Contamination and Recall Insurance: Are You Properly Protected?.

What Liquor Liability covers — and why it’s different

Liquor Liability (sometimes called Dram Shop or Host Liquor Liability) responds to claims when the sale, service, or furnishing of alcohol is alleged to have caused or contributed to a third party’s injury or property damage. Typical claims include:

  • A customer leaves intoxicated and injures a pedestrian or causes a motor vehicle accident.
  • Over-service or serving a minor results in bodily injury claims.
  • Bar fights where alcohol is a contributing factor.

Key legal backdrop: many U.S. states have statutory “dram shop” laws that create additional legal exposures for establishments that serve alcohol irresponsibly. The precise liability standard varies by state — see the National Conference of State Legislatures overview of dram shop laws for state-by-state differences: https://www.ncsl.org/research/financial-services-and-commerce/dram-shop-laws-and-liability.aspx

Typical exclusions in Liquor Liability

  • Intentional illegal acts by staff (e.g., knowingly serving minors).
  • Employee injuries (covered by Workers’ Compensation).
  • Contractual liability unless specifically endorsed.
  • General liability perils not related to alcohol consumption.

Cost expectations: U.S. market and city examples

Insurance costs vary by location, revenue, number of seats, type of service (full‑service vs fast‑casual), claims history, and local state laws.

Industry sources report typical ranges:

Examples in major markets (illustrative estimates):

  • New York City (full‑service, 100 seats, high alcohol sales): CGL $1,500–$4,000/yr; Liquor Liability $2,000–$8,000/yr.
  • Los Angeles (high foot traffic, nightlife exposures): CGL $1,200–$3,500/yr; Liquor Liability $1,500–$6,000/yr.
  • Chicago (urban nightlife; state law exposure): CGL $1,000–$3,000/yr; Liquor Liability $1,200–$5,500/yr.
  • Austin, TX (busy bar scene; Texas dram shop rules): CGL $800–$2,500/yr; Liquor Liability $1,000–$6,000/yr.

Insurers targeting small businesses advertise entry-level general liability pricing: for instance, Hiscox lists small-business general liability starting at roughly $27/month for eligible low-risk businesses, and Next Insurance offers online quotes for GL and liquor liability with competitive entry price points for certain low-risk operations. See:

Note: those advertised entry prices often apply to low-risk, non-hospitality businesses; restaurants typically pay more because of elevated premises and liquor exposures.

Side‑by‑side comparison (CGL vs Liquor Liability)

Feature Commercial General Liability (CGL) Liquor Liability
Primary purpose Premises, operations, advertising injury Liability from sale/service of alcohol
Typical covered losses Slip-and-fall, property damage to customers, advertising claims Injuries/property damage caused by intoxicated patrons
Common exclusions Foodborne illness, liquor-related injury (unless endorsed) Employee injury, intentional illegal acts, unrelated GL perils
Often required by Landlords, event contracts, vendors Liquor licensing authorities, event venues, municipalities
Cost drivers Revenue, seating capacity, claims history, location Alcohol sales volume, hours of service, dram shop laws, ID/training programs
Purchase form Standalone policy or package (BOP) Standalone policy or endorsement on GL (sometimes)

How insurers price these policies (what underwriters look for)

Underwriters evaluate:

  • Annual gross receipts and share attributable to alcohol.
  • Seating capacity and occupancy type (bar vs restaurant vs nightclub).
  • Hours of operation (late-night hours increase risk).
  • Security measures (ID checks, trained staff, security personnel).
  • Liquor control compliance and licensing history.
  • Claims history (prior liability or liquor-related incidents).
  • Location-specific legal environment (state dram shop exposure).

For more detail on premium drivers and ways to lower costs, see How Premiums Are Determined and Practical Steps to Lower Insurance Costs in Hospitality.

Practical endorsements and complementary policies to consider

  • Liquor Liability endorsement or standalone liquor policy.
  • Product liability / food contamination insurance for foodborne illness exposures. Learn more in Product Liability, Food Contamination and Recall Insurance: Are You Properly Protected?.
  • Workers’ Compensation (required in almost every state for employee injuries).
  • Assault & battery coverage (important for bars/nightclubs).
  • Excess/Umbrella liability for large limits.
  • Cyber liability for POS breaches and customer data exposures.

Also review common policy exclusions and red flags in hospitality policies: Insurance Exclusions and Red Flags in Hospitality Policies: What to Watch For.

Practical steps for restaurants & bars when buying coverage

  • Inventory your risks: hours, alcohol sales %, occupancy, security protocols.
  • Ask carriers about whether liquor-related liability is included or excluded from the CGL.
  • Obtain separate liquor liability quotes from multiple carriers; ask about available risk-control discounts (TIPS, ServSafe, security training).
  • Consider umbrella/excess limits if high exposure exists (late-night venues, valet parking).
  • Maintain incident logs (controls mitigation during renewal and audits).

Example small-business quoting pathway (real-world insurer options)

Always compare coverages (limits, defense outside limits, sublimits for assault & battery) — price alone is not sufficient.

Quick FAQ

  • Q: Will my CGL cover a customer I overserved who causes a DUI?
    A: Generally no. Liquor Liability or a liquor endorsement is required for alcohol‑related third‑party claims.

  • Q: Do I need Liquor Liability if I only sell a few beers?
    A: If alcohol is sold or served, you face potential dram shop exposure. Even limited alcohol sales can create large liability—check state law and insurer requirements.

  • Q: Can liquor liability be added to a CGL policy?
    A: Sometimes as an endorsement; often it’s a separate policy. Underwriting will determine the best form.

Sources and further reading

Checklist: confirm liquor permit status, document staff alcohol training, get multiple quotes (GL, Liquor Liability, umbrella), and verify policy exclusions and limits before signing.

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