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Liquor Liability Insurance Law in Texas

A newly-proposed bill seeks to require bars in Texas to adequately insure themselves against DWI accident lawsuits.

A new bill (House Bill 409) has been proposed by Rep. Chris Turner which would require all Texas bars and restaurants that receive more than 50% of their revenue from alcohol sales to obtain liquor liability insurance. This type of insurance covers the bar’s portion of liability for those injured by someone who was negligently overserved alcohol by bar employees.

Liquor Liability Insurance Law in Texas
Liquor Liability Insurance Law in Texas

State legislators know that their citizens do not wish for area bars to put profits over the safety of the community, which is why most states legally require bars to ensure that they are not endangering the community by over-serving patrons. After all, serving alcohol is not a right; it is a privilege and a serious responsibility.
The laws regarding the service of alcohol are known as “dram shop” laws. Dram shop laws do not exist to remove liability from the drunk driver. Rather, they serve to ensure that bars which break the law are held financially responsible for their negligent actions.
House Bill 409 is a legislative attempt to further that public policy interest. It is meant to ensure that bars carry liquor liability insurance so that those who are injured or killed by a drunk driver (who was illegally overserved at a bar) can recover compensation from the at-fault establishment. HB 409 attempts to address issues that arise when bars do not carry dram shop liability coverage and cannot pay their portion of damages to the victim of a drunk driving accident. While the victim will likely receive a portion of the damages from the drunk driver (assuming the driver is solvent), the objective of a claim or lawsuit is to try to make the victim whole—as best the court can—through monetary compensation from all those determined to be liable.

Why House Bill 409 was proposed.

This new bill attempts to prevent certain establishments from taking advantage of a marketplace where they are not required to carry such insurance. While the majority of bars in Texas have general liability insurance, it’s estimated that only 33% of bars carry liquor liability insurance. Simple general liability insurance generally does not cover dram shop claims.
As mentioned earlier, a common misconception is that by going after the bar, you’re removing blame from the driver. This is completely untrue. The drunk driver is still liable for his portion of the damages. If a bar and/or drunk driver does not have insurance and thus cannot pay its portion due to insolvency, the victim is the one who has to bear the financial burden. Liquor liability laws are already well-established; this bill simply requires that bars act financially responsible when their own negligence leads to someone being hurt or wrongfully killed.
This public policy initiative can also be observed in situations where companies and manufacturers are held strictly liable for abnormally dangerous activities and defective products. The legislature believes that citizens’ lives and health should not be jeopardized through attempts to increase profits – whether that is through over-serving alcohol to a customer, or through the manufacturing of a potentially dangerous product.

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