phrase
dram shop
In plain English
Liability coverage for businesses that serve alcohol — protects against claims arising from over-serving a customer who then causes harm.
Standard GL excludes liquor liability for businesses in the liquor business. If you serve alcohol, you need dram shop endorsement or a separate liquor liability policy. Critical for bars, taverns, and restaurants.
What it covers
Bodily injury or property damage caused by an intoxicated patron, where liability arises from serving alcohol to that patron in violation of dram shop laws.
What it does not cover
It does NOT cover liquor sales by a non-licensed seller, or claims by the intoxicated patron themselves in most states.
Where it trips people up
States vary heavily on dram shop laws — some are strict (Missouri), some are more limited (Kansas). Limits should match the state's actual exposure profile.
The technical version
Insurance coverage for liability arising under state dram shop laws or common law for bodily injury or property damage caused by intoxicated persons served alcohol by the insured.