Chicago Illinois Liquor Control Requirements

by Ed Sneneh, Illinois Insurance Agent

Commercial General Liability (CGL) insurance has specific exlussion pertaining to liquors. Actually the Insurance Service Office, and since the middle of 1980s, made the language very clear about liquor exclusion from the CGL.

Bodily Injury and Property Damage and medical payments coverages of the schedule liability policy exclude liability imposed upon the insured as a person engaged in the business of manufacturing, selling or distributing liquor (or as the owner or landlord of premises used for such purposes) by reason of any statute or ordinance dealing with alcoholic beverages. This exclusion is popularly known as the 'dram shop law exclusion.'

Many states, including the State of Illinois, have laws mandating certain liability insurance rules upon owners of business in which alcoholic beverage is sold, as packaged or consumed on premises, based on the concept of making landlords, owners or operators of such businesses liable for accidents and injury which result from the careless dispensing of alcoholic beverages.  Coverage under liquor liability does not go beyond bodily injury or property damage. For example, a liquor establishment will not be held liable of one of their drunk patrons slanders someone else.

In Illinois, the minimum limits of dram shop or liquor liability is $350,000 Combined Single Limit; each occurrence; or better. Other states may use higher or lower limits. No liquor establishment may be issued a packaged liquor license in Chicago, or tavern license, without showing a valid proof that the liquor licensee has active dram shop insurance in force. The Chicago Liquor Commission issues very specific guidelines that all liquor licensees have to comply with, including specific requirements about Liquor Liability Certificate.

Liquor liability rates vary based on the  following factors:

1. Nature of business (taverns pay more than packaged liquor stores.)

2. Amount of coverage or limits of insurance

3. Annual liquor sales

4. Other characteristics of the business like hours of operations, live entertainments, dance floors, etc.

5. Experience of the business owner and prior insurance claims.

6. Company offering coverage. 

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