Summary: The liquor liability exposure is not meant to be insured under the standard general liability policy. The standard (ISO) commercial general liability (CGL) policy and many independently filed liability forms contain a liquor liability exclusion precluding coverage for damages arising out of the sale or furnishing of liquor if the seller or provider is in the alcoholic beverages business. Insureds in the alcoholic beverages industry need specific liquor liability coverage (see Liquor Liability Policy).The liquor liability exclusion has been the frequent subject of coverage misunderstandings, arguments, and litigation, mainly centered around, but not limited to, the meaning of the phrase “in the business.” Who is affected by the exclusion and what activities it reaches depends upon the version of the exclusion included in a policy (there are a few different versions in use, due to the frequent revision of the CGL policy), the laws of the jurisdiction (as the exclusion reaches liability imposed due to state law or liquor regulation), and how the courts of the jurisdiction have interpreted the pertinent exclusion’s scope. This article presents a discussion of these issues.
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