Beyond the potential for ordinary civil liabilities arising out of negligent conduct, there is an elevated legal duty imposed upon individuals and organizations that engage in dispensing alcoholic beverages. Generally, these liabilities fall into two main categories: 1) those associated with commercial distribution of alcoholic beverages, including production, storage, sales, and service; and 2) those associated with a party host or property owner serving alcoholic beverages to guests.
Though dependent on the jurisdiction, entities engaging in commercial distribution, generally interpreted to include producers, wholesalers, and service venues such as restaurants, bars or tavern owners and the like, are covered by dram shop laws and owe a legal duty to their patrons as well as to members of the general public to exercise reasonable care in the responsible practice of serving alcohol. Criminal and civil actions can be taken against those distributing alcohol for damage done by their patrons to third-parties and even, in some instances, to themselves. Case law suggests that assault and battery against other patrons and wait-staff account for a majority of all claims against owners of establishments that sell alcoholic beverages. Additionally, holders of a liquor license and servers/sellers who possess a permit to serve or sell alcohol can face administrative liability penalties (fines, suspension of the license/permit or even revocation of the license/permit) for non-compliance of government regulations associated with the issuance of a liquor license/permit.
For those establishments with this exposure, prudent measures, such as comprehensive policies for employee training, supervision, inventory control, and event security, can partially mitigate the associated risks and liabilities. Special liability insurance, separate and in addition to other types of business insurance, is a common (financial) mitigation tool to protect University establishments / hosts.
In most states, the law allows for criminal penalties (fines, imprisonment, or both) to be imposed for violations of the regulations controlling the dispensing of alcoholic beverages (e.g. service to minors). Responsible persons, both commercial operations and social hosts, can face civil lawsuits, in addition to criminal charges, for breach of their duty to adequately oversee alcoholic beverage service. Most civil suits arise when innocent victims are injured or killed by the actions of an intoxicated person; suits from the intoxicated person themselves against the host or servers are also not out of the ordinary. Awards in civil suits can be in the form of monetary damages to 1) compensate victims (compensatory damages), and 2) to punish the offender (punitive damages).
An important note: in 2010, Massachusetts lawmakers passed an amendment to M.G.L. c. 138, §12 (which sets forth the rules for alcoholic beverage licensing) to require restaurant and bar owners to carry liquor liability insurance. The law specifies that establishments must carry a minimum of $250,000 per person/$500,000 per accident coverage. In other words, policies must provide a minimum $250,000 for bodily injury or death of one person and a total of $500,000 per incident involving bodily injury or death.
Most, if not all, Commercial General Liability insurance policies don’t provide liability coverage for legal damages and injuries that result from the negligent service of alcohol by dram shops, therefore Harvard’s Risk Financing and Insurance Department has created a Liquor Liability Insurance Program for eligible departments to manage their liability exposure and comply with the Massachusetts licensing statutes. The nature of your department’s liquor activities dictates the side of the University-sponsored program for which you may be eligible.
Like those laws governing the sale of alcohol, there are specific laws establishing when social hosts can be held responsible for the actions of their guests (simply by providing alcohol to them or permitting it to be consumed on their premises). The University's Master Liability program is intended to address such situations by providing liquor liability coverage for social hosts in most settings.
If you have special circumstances or are uncertain how the insurance programs might apply, we encourage you to email or call the Risk Financing and Insurance Department at 617-495-7971 for details and to obtain a clarification.