LIQUOR LIABILITY COVERAGE FORM (OCCURRENCE BASIS) SAMPLE INSURANCE PROPOSAL LANGUAGE

(November 2022)

REPRINT PERMISSION

PF&M subscribers are permitted to reprint the following sample insurance proposal language when preparing insurance presentations for their commercial insurance customers. Other uses require permission from The Rough Notes Company, Inc.

PROPOSAL DISCLAIMER

The following paragraph or similar language needs to be included in all insurance proposals:

Consult the policy for definitions and limitations. The terms of this proposal do not represent contract terms. The policy is subject to company underwriting practices.

TIPS FOR USING THIS PROPOSAL LANGUAGE

This proposal language is not intended to be an entire insurance proposal. A client specific section that includes the name and address of the insured, the insurance company(s) and the agent, and information about them, a list of locations, limits, deductibles, and similar customer specific items are not included and should be prepared.

The intent of any insurance proposal is not to be a reproduction of the insurance policy but to give a summary of possible coverages.

Paragraphs that explain coverages unique to this coverage form may be the most important addition to your insurance proposal and sales effort. Coverage examples can be tailored to your individual customer. Be careful when altering any proposal language not to broaden coverage beyond what the policy intends.

This proposal should be combined with proposals for other lines of business, such as commercial property, commercial general liability, workers compensation, and umbrella liability for a complete account proposal.

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Liquor Liability Coverage Forms Available Endorsements and Their Uses

Liquor Liability Coverage Forms Endorsements Checklist

SAMPLE PROPOSAL LANGUAGE FOR THE INSURANCE SERVICES OFFICE (ISO) LIQUOR LIABILITY COVERAGE FORM (OCCURRENCE BASIS)

INTRODUCTION

The Insurance Services Office (ISO) Liquor Liability Coverage Forms insure the insured’s liability for damages for bodily injury and property damage that are the result of causing or contributing to a person's intoxication, furnishing alcoholic beverages to persons under the legal drinking age or already under the influence of alcohol, or violating any statute, law, ordinance, or regulation with respect to selling, giving, distributing, or using alcoholic beverages.

LIQUOR LIABILITY COVERAGE

INSURING AGREEMENT

The insurance company agrees to pay amounts the insured is legally obligated to pay as damages because of injury this coverage form insures. The liability for the injury must be imposed on the insured because it sells, serves, or furnishes alcoholic beverages. The insurance company also has the right and duty to defend the insured against any suit that seeks damages but only when coverage applies to the damages the suit alleges. Payments are limited to the limits of insurance and the insurance company's right and duty to defend ends when the limits are used up paying judgments and settlements.

EXCLUSIONS

Exclusions must be examined carefully, because many of them have conditions, exceptions, limitations, or restrictions not shown below.

• Expected or Intended Injury

Coverage does not apply to injury that is either expected or intended by the insured. There is an exception for bodily injury that results from the insured using reasonable force to protect persons or property.

• Workers Compensation and Similar Laws

There is no coverage for any requirement or obligation of the insured that is imposed by any workers compensation, disability benefits, unemployment compensation, or similar law.

• Employers Liability

Bodily injury to an employee of the insured that is result of his or her employment or the performing of duties that relate to conduct of the insured’s business is excluded. Bodily injury to relatives of that employee that are a consequence of the employee’s bodily injury is also excluded. This exclusion applies whether the insured is liable as an employer or in any other capacity. It also applies if the insured must share damages with or repay someone else who must pay damages because of the injury.

• Liquor License Not In Effect

Coverage does not apply to injury if the required liquor license was not in effect at the time of the injury.

• Your Product

There is no coverage for injury that arises out of the named insured's product. However, this does not apply to the liquor liability exposures resulting from that product.

• Other Insurance

Insurance does not apply to any injury that other insurance covers or that it would cover except that its limits are used up. This exclusion does not apply if the other insurance also covers the insured’s liability due to any act of providing alcoholic beverages.

• War

Bodily injury or property damage caused in any way by war, undeclared war, and civil war is excluded. This includes warlike action by a military force and actions a government takes to prevent or defend against attacks that involve military personnel or agents. It also includes rebellion, revolution, insurrection, or unlawful seizing of power and actions taken to prevent or defend against these acts.

SUPPLEMENTARY PAYMENTS

The insurance company pays the following with respect to claims it investigates or settles, or suits against the insured it defends:

• All expenses the insurance company incurs in investigating or settling the claim
• The cost of bonds to release attachments. The costs paid are for only bond amounts within the limit of insurance. The insurance company is not required to furnish these bonds.
• Reasonable expenses the insured incurs when the insurance company asks it to help investigate or defend a claim or suit if the insured must be away from work. It pays up to $250 per day for time away from work.
• Court costs from a suit that are the insured’s responsibility. This does not include attorney fees or expenses that are the insured's responsibility.
• Prejudgment interest on the part of any judgment the insurance company pays that is the insured’s responsibility
• Interest that accrues on the full amount of any judgment after it is entered and before the insurance company pays, offers to pay, or deposits with the court the part of the judgment within the limits of insurance that is its responsibility
• Expenses the insured incurs for first aid administered to others at the time of an accident for bodily injury that this insurance covers

WHO IS AN INSURED

If named or designated as an insured on the declarations:

• Individual. The individual and the individual's spouse are insureds.
• Partnership or joint venture. The partnership and the joint ventures are insureds. Members and partners of the insured and their spouses are also insureds but when conducting the named insured’s business.
• Limited liability company. The limited liability company is an insured. Members of the company are also insureds but when conducting the named insured’s business. The named insured's managers are also insureds but only while performing their duties as managers.
• Any other organization. That organization is an insured. Executive officers and directors are also insureds but only when acting as such. Stockholders are also insureds but only for the very limited liability they have as stockholders.
• Trust. The trust is an insured. The named insured’s trustees are also insureds but this is limited to their duties as trustees of the trust.

The following are also insureds:

• The named insured's employees who are not executive officers of an organization or managers of a limited liability company are insureds but only for acts that are within the scope of their duties and that are part of conducting of the named insured’s business. There are restrictions and no employee is an insured for injury:
• To the named insured or the named insured's partners or members
• To a co-employee in the course of his or her employment or while that co-employee is performing duties in the conducting of the named insured's business
• To a relative of that co-employee as a consequence of the paragraph above
• Where there is an obligation to share damages with or to repay another party that must pay damages because of the injury described in the co-employee paragraphs above

No employee is an insured for property damage to property owned or occupied by, or rented or loaned to that employee, any other employee, or by any partner or member of a partnership, joint venture, or limited liability company.

• Any party that has proper temporary legal custody of a deceased named insured’s property. However, this is only with respect to liability that arises out of or is caused by maintaining or using that property and until a proper legal representative is appointed.
• A properly appointed legal representative has all the named insured's rights and duties if the named insured dies but only to the extent of its duties as a properly appointed legal representative.

Any newly formed or acquired organization that the named insured owns or has majority interest in is a named if there is no other insurance available. This does not apply to newly formed or acquired partnerships, joint ventures, or limited liability companies. The coverage this provision provides does not exceed 90 days after the formation or acquisition or the end of the policy period, whichever occurs first. Coverage also does not apply to injury that occurred before the named insured formed or acquired the organization.

No one is an insured with respect to conduct of any current or previous partnership, joint venture, or limited liability company that is not listed on the declarations as an insured.

LIMITS OF INSURANCE

The limits apply separately to each consecutive annual period and to any remaining period of less than 12 months. This begins with the inception date on the declarations, unless extended after issuance for any additional period of less than 12 months. If that occurs, the additional period is treated as part of the last preceding period in order to determine the limits of insurance.

• The most the insurance company pays are the limits of insurance on the declarations. This is regardless of the number of insureds, claims made, suits brought, or number of parties that make claims or bring suits.
• The most the insurance company pays for the total of all injury as a result of providing alcoholic beverages is the Aggregate Limit on the declarations. Coverage ends when this limit is used up by paying or settling claims and judgments during the policy period.
• Subject to the Aggregate Limit, the Each Common Cause Limit is the most the insurance company pays for all injury that one or more persons or organizations sustain due to alcoholic beverages being provided to a person.

LIQUOR LIABILITY CONDITIONS

• Bankruptcy

The insurance company is not relieved of its obligations if the insured or its estate becomes bankrupt or insolvent.

• Duties in the Event of Injury, Claim, or Suit

The insured must perform certain duties if there is a claim or demand for coverage:

• Inform the insurance company of any occurrence that may result in a claim. At a minimum, include information about how, when, and where the event took place and the names and addresses of all injured parties and any witnesses. Include the nature and location of any injury or damage as a result of the occurrence. The notice must be given as soon as practicable.
• Immediately record the details of the claim or suit, the date on which it was received. The insurance company must be notified as soon as practicable. The notice must be followed up with written notice of the claim or suit on a timely basis.
• Every insured involved in or with the claim must immediately send the insurance company copies of demands, notices, summonses, and other legal documents it receives in conjunction with the claim or suit and help the insurance company obtain records and other needed information. Every insured must also cooperate with the company as it investigates or settles the claim or defends against the suit and help the company enforce any rights against any person or organization that may be liable to the insured for injury or damage that this insurance covers.
• No insured may voluntarily make any payments, assume any obligations, or incur any expenses other than first aid without the insurance company's consent. If it does, it does so at its own cost or expense.

• Legal Action Against Us

No one has the right to bring or join the insurance company into a suit that claims damages from an insured. The insurance company also cannot be sued unless all terms and conditions have been met. The insurance company can be sued to recover on an agreed settlement or on a final judgment against the insured. However, the insurance company is not liable for damages that are not subject to payment under this Coverage Form’s terms or that exceed the limit of insurance that applies. An agreed settlement is a settlement and release of liability that the insured, the insurance company, and the claimant or the claimant's legal representative sign.

• Other Insurance

The insurance company's obligations to pay are limited if there is other valid and collectible insurance that applies to the loss, as follows:

o Primary Insurance

This insurance is primary. The insurance company's obligations are not affected unless any other insurance that applies to the loss is also primary. In that case, this insurance shares with that insurance as outlined under Method of Sharing.

o Method of Sharing

If the other policy permits contribution by equal shares, this insurance does as well. Each insurance company contributes equal amounts until its limit of insurance is used up or the loss is paid, whichever occurs first.

If the policy does not include contribution by equal shares, contribution is by proportional limits. With this approach, each company's share is the ratio of its applicable limit of insurance to the total applicable limits of insurance by all insurance companies.

• Premium Audit
• All premiums are calculated according to the insurance company's rules and rates.
• The advance premium is only a deposit premium. At the end of each audit period, the insurance company determines the actual earned premium for the period and notifies the first named insured. The premium is due on the date indicated on the billing notice. If the advance and audit premiums are more than the earned premium, the insurance company refunds the excess to the first named insured.
• The first named insured must keep the records and information the insurance company needs to do the premium calculations and send copies of them to the company when requested.
• Representations

When the named insured accepts this policy as issued, it agrees that the statements on the declarations are complete and accurate. It also agrees that the statements are based on representations it made to the insurance company and that the policy is issued based on those representations.

• Separation of Insureds

Other than the limits of insurance and any rights and duties that apply specifically to the first named insured, the insurance provided applies to each named insured as if it was the only named insured and separately to each insured against whom claim is made or suit is brought.

• Transfer of Rights of Recovery Against Others to Us

Any rights the insured has against others to recover all or part of any payment the insurance company made transfer to the insurance company. The insured must preserve those rights and not do anything after the loss occurs to impair them. The insurance company can request that the insured bring suit or transfer those rights to it and help it enforce them.

• When We Do Not Renew

If the insurance company decides to not renew, it mails or delivers written notice to the first named insured on the declarations at least 30 days before the expiration date. If the notice is mailed, proof of mailing is sufficient proof of notice.

DEFINITIONS

Refer to the coverage form for a list and description of definitions.