Dram Shop Law

What Does Dram Shop Law Mean?

The Dram Shop Law holds businesses that sell alcohol accountable if they serve liquor to someone who is visibly intoxicated, and that individual subsequently causes harm or damage within a specified timeframe. To manage this risk, restaurants and bars are required to purchase liability insurance.

Insuranceopedia Explains Dram Shop Law

The Dram Shop Law is widely used in the United States, though not all states enforce it, as proving that a particular establishment’s alcohol service caused a specific loss can be challenging. For instance, a person might consume drinks at a bar but then take additional shots in their car before driving and causing an accident, complicating the establishment’s liability.