Here’s an interesting opinion out of Connecticut that’s a great reminder to every winery, brewery, distillery and restaurants serving alcohol to ensure that all the members of your team are looking out for your best interests. Your tap room or tasting room is going to be serving drinks like any other bar and will need coverage to make sure your business doesn’t end up paying for a mistake where your insurance should.
Letting your employees know that its not o.k. to serve anyone… anyone… outside the hours you’ve told your insurance company that you’re operating the tasting room or tap room is incredibly important.
In Mount Vernon Fire Ins. Co. v. El Rancho de Pancho, LLC, the employees of El Rancho let a young man and his friends into the bar and served them. The bar had an insurance policy wherein it had warranted to the insurance company that alcohol sales stopped at 2:00 a.m. and that the bar closed by 2:30 a.m. – the young man and his friends were admitted and served after 2:00 a.m. and sometime between 3:30 a.m. and 4:47 a.m., they left and on the way home, the young man had a traffic accident and died from his injuries.
Insurance coverage for a tap room, tasting room or bar is important because over thirty-five states have laws imposing liability on beverage licensees that improperly serve adults.
The warranties and certifications you make about your hours of operation are usually an actual term of your insurance policy – a term that you shouldn’t breach. An insurance company can use service outside those hours of operation as a reason to void coverage and to claim it doesn’t need to afford you a defense.
Coverage for that liability is the difference between having to pay out of pocket, and for a small business, risking a loss that could be irreversibly detrimental to your business.
The insurance company in this case pressed the issue and won. Arguing that it owed El Rancho, no defense and no indemnification because, while it normally would have afforded coverage under it’s policy, it didn’t need to because El Rancho’s employees had served the young man after the 2:00 a.m. time period when El Rancho had said it would cease service and let the young man stay past the 2:30 a.m. time when the restaurant had said it would close.