LIQUOR LIABILITY INSURANCE? I'LL DRINK TO THAT
A Complete Guide to Serving and Hosting Responsibly

Chapter 1: What Is Liquor Liability & Who Has It?
Part 1: A Brief History of Dram Shop Laws & Social Host Liability

 

Alcohol has been a social troublemaker since its inception, but it's also a lucrative business and a darn good time. So while it's been the culprit for many behavioral wrongs in our society, there's plenty of incentive to keep alcohol available. Though dram shop laws and social host liability ordinances may seem outdated and kooky today, they are meant to impose a sort of checks-and-balances system to make sure things don't get too out of hand at the public's expense.

Here's a crash course in how these laws came about (we promise it's interesting!).

Early Beginnings

 

Shortly after claiming independence, the young United States had a new problem: alcohol. By 1779, Connecticut had penned and passed 80 major laws governing alcoholic beverages inspired by the teachings of the church.

But Americans were rambunctious and thirsty. Communities began to distill their own spirits, and excessive drinking was taking its toll on the colonies. The government attempted to impose taxes and controls on these businesses, but that was met with swift rebellion.

In 1794, the Whiskey Rebellion in Pennsylvania proved how powerful the liquor industry could be. After all, it took 13,000 troops (dispensed by President Washington, no less) to quell the uprising.

The Prohibition Era

Our country has long history of temperance movements, leading all the way up to the Prohibition Era in the 1920s. The 18th Amendment banned the sale, production, importation, and transportation of alcohol, but largely, the Prohibition just tested Americans' ingenuity to bootleg booze.

Speakeasies became popular underground drinking venues, and organized crime filled the demand for illegal alcohol. Needless to say, it wasn't the most popular law the U.S. has passed.

So before Christmas of 1933, Congress repealed the 18th Amendment with the adoption of the 21st. Bye, bye, Prohibition! Since its repeal, states have taken control of alcohol sales and manufacture.

Modern Laws for a Modern Time

 

With the advent of new transportation technologies in the 20th Century – chiefly, the widespread use of the automobile – people began to reconsider where they should place the blame for the destruction and loss alcohol caused. Society began to appreciate the dangerous and often deadly consequences of drunk driving. So both state legislators and courts began to rethink the public policy behind exempting licensed vendors and social hosts from liquor liability.

And that's why dram shop laws came to pass. These gave the states a way to hold liquor-licensed establishments responsible for their (potentially destructive) wares and their role in drunk-driving accidents. After dram shop laws were established, some states branched out to hold social hosts liable for their provision of alcohol, too.

According to an article in the Marquette Law Review, the New Jersey Supreme Court blazed the trail for social host liability in 1984. It ruled that social hosts could be liable for injuries resulting from the negligent driving of their intoxicated adult guests. Slowly, numerous other states adopted similar statutes.

Perhaps these laws are for the best. After all, each year more people die from alcohol-related incidents and health complications than deaths by obesity, high blood pressure, illicit drugs, or unsafe water. According to the World Health Organization's "Global Status Report on Alcohol and Health," which analyzes available evidence on alcohol consumption, the harmful use of alcohol is a global problem that claims 2.5 million lives annually. As it turns out, of 19 leading health concerns, alcohol is the third deadliest. Given this evidence, you can start to see why liquor liability laws have stuck around in the U.S.

Keep reading to delve deeper into what "liquor liability" means to small businesses and social hosts today.

Next: Part 2: The Legal Scoop Behind Liquor Liability

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