Securing a liquor license is a major step in expanding your business, but it also comes with additional financial responsibilities—including the impact on your business insurance costs. Whether you run a bar, restaurant, liquor store, or event venue, having a liquor license can increase your insurance premiums due to the added risks associated with alcohol sales.
Understanding how a liquor license influences your insurance rates can help you plan better, minimize costs, and ensure full coverage. In this guide, we’ll break down the key factors affecting insurance pricing and share tips on how to manage your expenses while staying protected.
Why A Liquor License Increases Business Insurance Costs
Once a business obtains a liquor license, insurers consider it a higher-risk operation. Here’s why:
1. Increased Liability Exposure
Selling alcohol increases the likelihood of incidents such as:
✔ Customer intoxication leading to accidents or fights.
✔ Lawsuits from alcohol-related injuries or property damage.
✔ Dram shop liability claims if alcohol is served to a minor or an intoxicated individual.
Because of these risks, businesses with a liquor license often need liquor liability insurance, which raises their overall insurance costs.
2. Higher General Liability Premiums
Even if you already have general liability insurance, adding a liquor license can increase your premiums. The more alcohol you sell, the greater the perceived risk to your insurance provider. Bars and nightclubs typically see higher rate increases than restaurants with limited alcohol sales.
3. Type Of Liquor License Matters
The type of liquor license you hold also affects insurance pricing. For example:
✔ A 4COP liquor license (full alcohol sales) results in higher premiums than a 2COP license (beer and wine only).
✔ An SRX license for restaurants may have lower rates if food sales make up at least 51% of revenue.
✔ A liquor store license requires coverage for alcohol theft and product liability, increasing costs.
4. Business Location And Crime Rates
Insurance costs vary by location. Businesses in high-crime areas or near nightlife districts may face steeper insurance rates due to a higher likelihood of alcohol-related incidents.
Types Of Insurance Coverage Required For Businesses With A Liquor License
Once you obtain a liquor license, you’ll need specific insurance policies to stay compliant and protect your business. Here are the most common types:
1. Liquor Liability Insurance (Required in Florida)
This covers lawsuits related to alcohol-related injuries, fights, or property damage caused by intoxicated patrons. Without it, your business could face major financial losses from legal claims.
2. General Liability Insurance
Protects against standard risks like customer slip-and-fall accidents. Adding a liquor license increases this policy’s cost due to heightened liability exposure.
3. Workers’ Compensation Insurance
If your business serves alcohol, employees face additional risks (e.g., handling intoxicated customers, working late hours). This increases workers’ compensation insurance premiums.
4. Property Insurance
For businesses that serve alcohol, property damage is more likely due to rowdy customers or accidents. Ensuring your policy covers alcohol-related damages is crucial.
How To Reduce Business Insurance Costs After Getting A Liquor License
While a liquor license raises insurance costs, there are ways to manage expenses effectively:
1. Implement Responsible Alcohol Training
Insurers may offer lower premiums if your staff completes alcohol safety training programs like TIPS (Training for Intervention Procedures) or SafeServe Alcohol Certification.
2. Enforce Strict ID Checks
Demonstrating strong policies for preventing underage sales and over-serving can reduce liability risks and insurance costs.
3. Bundle Insurance Policies
Purchasing multiple policies (e.g., liquor liability, general liability, and workers’ comp) from the same provider can lower overall costs through bundling discounts.
4. Increase Your Deductible
Opting for a higher deductible can reduce monthly premiums, though you’ll need to cover more upfront costs in the event of a claim.
5. Work With A Specialized Liquor Insurance Provider
Standard insurers may charge higher rates due to limited experience with liquor licenses. Finding a provider that specializes in alcohol-related businesses can result in better coverage at lower costs.
Secure Your Liquor License With Liquor License Outlet
Navigating the costs and regulations of a liquor license can be overwhelming. At Liquor License Outlet, we help business owners secure, finance, and transfer liquor licenses in Florida—ensuring a smooth process while keeping compliance in check.
Ready to get your liquor license? Contact Liquor License Outlet today to simplify the process and get expert guidance!