The hospitality industry, including bars and restaurants, is still reeling from the coronavirus pandemic. However, 2021 brought the beginnings of a rebound as governments lifted restrictions in most states.

Since the start of the pandemic, the industry has been forced to reinvent itself to survive. Establishments that lived to see another year in business were compelled to embrace game-changing tactics that included everything from online ordering to curbside order pickup and to-go beer and cocktails.

To support this hard-hit sector, “many states changed their laws to allow businesses to temporarily sell alcohol on a pickup and delivery basis," says John Mahoney, president, EverGuard Insurance Services Inc. “This was very helpful to the hospitality industry during the pandemic, allowing many businesses to stay afloat by generating more pickup and delivery revenue while their operations were mandated to be closed."

As a result, “because a typical liquor liability policy would apply to these expanded operations, carriers had to make sure that they were evaluating the emerging and expanding exposures appropriately," says Brian Gerritsen, hospitality industry practice leader, Travelers. “The need to maintain the same on-site liquor service and sales controls during deliveries created a challenge for both business owners and underwriters. Written safety programs, employee training and age verification at the point of delivery needed to continue."

In 2020, alcohol consumption increased, according to the Beverage Information Group. Sixty percent of surveyed participants reported that their drinking had increased compared to before COVID-19. Meanwhile, 45% reported that their drinking had increased because of increased stress, 34% reported that their drinking had increased because of the increased availability of alcohol, and 30% reported that their drinking had increased because of boredom, according to a May 2020 survey by the National Center for Biotechnology Information.

“People have responded favorably to alcohol delivery services and states that have attempted to try to reign that back in have gotten significant opposition from the restaurant and hospitality associations," says Richard Welch, president and CEO of Hospitality Insurance Group. “Other states have extended the services to be more permanent—I really do see this as a change that the coronavirus pandemic caused in the market that's going to stay."

Many states are continuing to allow alcohol delivery services under an existing liquor license, which looks set to cause a permanent shift in the marketplace. “It certainly is a newer part of the industry," says Christian Enwright, area president, Risk Placement Services. However, “it's not something that all of the liquor liability carriers want to cover."

Nevertheless, “the result of this change heightens the liquor liability exposure, both for the restaurant or the bar selling it, as well as any independent delivery service," Mahoney says. “Both operations should carry liquor liability insurance protection, as it is likely future liquor liability claims will name everyone involved in the sale and delivery of the alcohol that may have contributed to an accident."

In a recent case, the New Mexico Supreme Court found that gas stations can be held civilly liable for selling gas to intoxicated drivers. “There are many unresolved questions regarding how to determine who is responsible for alcohol consumption that occurs off-premises," Mahoney says. “These issues will be litigated in the courts in the future, thereby elevating the need for liquor liability insurance protection."

Today, as bars and restaurants selling alcohol reopen and return to full capacity, “it is critical to have liquor liability insurance," Welch says. “Anybody out there can have a liquor liability claim even if you run the cleanest business with the best of controls."

“If somebody leaves your establishment and is found responsible in an accident, there's a very good chance that your establishment is going to be sued under the liquor liability laws," Welch adds. “Once you're accused, the legal process is complex, and it is going to cost money if you're ever found responsible."

Olivia Overman is IA content editor.