Dram Shop Laws

Drunk or impaired driving can have devastating effects on both the driver and other people on the road. A DUI exposes a drunk driver to lawsuits for damages arising out of a victim’s injuries or death. However, the drunk driver may not be insured, or may not have adequate insurance to address the severe injuries that result in a drunk driving collision.

Forty-three states and the District of Columbia have enacted dram shop laws in response to the large number of DUIs that cause catastrophic injuries or wrongful deaths. States that do not have dram shop laws include Virginia, South Dakota, Nevada, and Maryland. California has enacted a law specifically prohibiting civil liability of people, bars, and alcohol retailers that serve alcoholic beverages to those that subsequently cause injury or death to others.

“Dram shops” were originally establishments that sold gin in 18th-century England. Dram shop laws make a business or person strictly liable to a plaintiff if the business or person sold or gave alcoholic beverages to someone who was obviously intoxicated or close to being intoxicated, and the drunk patron caused injuries to the plaintiff. This means that an injured plaintiff can sue the bar, alcohol retailer, or private citizen who served the drunk driver.

In many cases, a bar, alcohol retailer, or individual is covered by insurance that more adequately compensates the plaintiff than the drunk driver’s automobile insurance. For example, a host of a wedding who continues to serve someone who is clearly drunk may have party insurance that will cover the damages.

In some cases, insurers for commercial businesses expressly exclude coverage for “liquor liability,” and this coverage will need to be added to the business’ coverage by endorsement for an additional premium. Generally, social host liquor liability is included in personal liability and commercial general liability policies, but you should check your specific policy or ask the entity catering your event for proof of insurance for liquor liability to make sure.

Liability in a Dram Shop Case

It can be difficult to prove the fault of a business or social host under dram shop laws because different people have differing tolerance levels. A bartender may not know that someone is drinking on an empty stomach, or may believe based on past experience with a patron that he or she is walking home, rather than driving a car.

What must be proved in a dram shop case varies depending on the state statutes. In Alabama, anybody hurt by a drunk person can sue a person who sold or gave liquor to the drunk person and caused his or her intoxication. The person who gave or sold liquor to the drunk person can be held liable for all compensatory damages, as well as exemplary damages. Alabama follows the rule of joint and several liability, so the alcohol vendor may be held responsible for 100% of the damages.

In Indiana, an alcohol vendor is not liable for damages caused by a drunk patron unless it had actual knowledge that the drunk patron was visibly intoxicated at the time the alcohol was served, and the drunk patron’s intoxication was a proximate cause of a death, injury, or other damage alleged by a plaintiff. In most states, to recover under a dram shop law, the retailer must have known or should have known that the patron was so drunk that more alcohol would increase the risk of danger to the patron or others with whom he or she came into contact.