Not all alcohol service is created equal. A BYOB tapas restaurant, a wine-and-beer gastropub, and a full-service cocktail bar all serve alcohol, but they face very different liability risks and insurance requirements.
At Anchor Insurance, we help restaurant and bar owners understand how their specific alcohol service model affects their liability exposure and insurance needs. In this post, we'll break down the three most common alcohol service formats and explain how each one changes your risk profile.
BYOB (Bring Your Own Bottle): Lower Risk, But Not Zero
BYOB restaurants allow customers to bring their own wine or beer, typically charging a corkage fee. This model is popular for smaller restaurants that want to offer alcohol without the cost and complexity of maintaining a liquor license.
The Liability Risk
Because you're not selling alcohol, many BYOB operators assume they have no liquor liability. This is not correct. In most states, dram shop laws apply to establishments that "serve, sell, or furnish" alcohol. If you're opening the bottle, pouring drinks, and providing glassware, courts and insurance carriers may treat you as "furnishing" alcohol.
You can still be held liable if:
- Your staff continues to serve wine to someone who is visibly intoxicated
- You fail to stop service to a minor (even if the minor brought the alcohol)
- An intoxicated guest leaves your restaurant and causes harm to a third party
Insurance Considerations
Some carriers offer reduced liquor liability coverage for BYOB operations, often at a lower premium than full-service bars. However, general liability policies typically exclude BYOB activity unless you have a specific endorsement or standalone policy.
At Anchor, we'll help you determine whether your GL policy covers BYOB or whether you need a separate liquor liability endorsement.
Best Practices for BYOB
- Post clear signage about BYOB rules and limits (e.g., wine and beer only, no hard liquor)
- Train staff to monitor guest behavior and stop service if someone appears intoxicated
- Always check ID for anyone who appears under 30
- Consider limiting the number of bottles per table or per guest
Beer & Wine Only: Moderate Risk with Carrier-Specific Rules
Many restaurants operate with a beer-and-wine license instead of a full liquor license. This is common for casual dining, cafes, and family-style restaurants where cocktails aren't part of the brand.
The Liability Risk
Beer and wine service carries less risk than full-bar service because the alcohol content is generally lower and consumption patterns tend to be slower. However, dram shop laws apply equally to beer and wine. If you overserve a patron who causes an accident, you're exposed to the same legal liability as a full bar.
Key risk factors:
- Serving high-ABV craft beers (some IPAs and stouts are 8-12% alcohol, comparable to wine)
- Wine by the glass service that leads to multiple pours
- Happy hour promotions that encourage rapid consumption
- Large-format bottles (magnums, growlers)
Insurance Considerations
Most insurance carriers offer liquor liability for beer-and-wine-only operations, and premiums are typically lower than full-bar coverage. However, carrier appetite varies:
- Some carriers have standalone beer-and-wine policies with reduced limits
- Others require the same limits and underwriting as full liquor operations
- A few carriers will add beer-and-wine coverage to a general liability policy as an endorsement (less common, but worth exploring)
At Anchor, we shop multiple carriers to find the best fit for beer-and-wine-only risks, rather than treating you like a full nightclub.
Best Practices for Beer & Wine Service
- Monitor ABV and serving sizes (especially for high-ABV craft beers)
- Train servers to recognize signs of intoxication and cut off service when needed
- Use pour controls or measured pours for wine by the glass
- Avoid aggressive happy hour promotions (e.g., unlimited wine for a fixed price)
- Maintain clear ID-checking procedures
Full Bar: Highest Risk and Strictest Underwriting
Full-service bars and restaurants with liquor licenses face the highest liquor liability exposure. This includes everything from upscale cocktail lounges to sports bars, nightclubs, and hotel bars.
The Liability Risk
Full bars have higher exposure because cocktails have higher alcohol content, service is faster, and patron behavior is more unpredictable. Risk factors include:
- High-proof spirits and craft cocktails (often 2-3 standard drinks per serving)
- Late-night hours and bar-heavy revenue mix
- Standing-room-only crowds and fast-paced service
- Promotional events (ladies' nights, open bars, drink specials)
- Proximity to other bars (if your area is a nightlife district, you're competing for patrons who may already be intoxicated before they arrive)
Full bars are also more likely to face assault-and-battery claims, which are often excluded from liquor liability policies unless you purchase a separate endorsement.
Insurance Considerations
Carriers underwrite full-bar risks very carefully. Expect to provide:
- Detailed information about hours, revenue mix, and occupancy limits
- Staff training procedures (TIPS, ServSafe Alcohol, etc.)
- Security protocols (bouncers, ID scanners, incident logs)
- Details on entertainment (live bands, DJs, dancing)
- Loss history (any prior liquor liability claims or lawsuits)
Premiums for full-bar liquor liability are higher, and some carriers won't write nightclubs or late-night bars at all. Anchor works with carriers that specialize in hospitality and bar risks to find coverage that fits your operation.
Best Practices for Full-Bar Operations
- Require staff to complete formal alcohol service training (TIPS, ServSafe, or state-approved programs)
- Use ID scanners or manual ID logs to verify age and create a record
- Maintain incident logs for ejections, cut-offs, and disorderly conduct
- Employ security staff during peak hours (and document their presence)
- Avoid high-risk promotions (unlimited drink specials, shot nights)
- Establish clear cut-off and refusal-of-service policies in writing
How Anchor Insurance Approaches Different Alcohol Service Models
At Anchor, we don't treat every restaurant or bar the same. We ask detailed questions about your alcohol service model, hours, revenue mix, and training procedures to match you with carriers that understand your specific risk profile.
Our process:
- 1.Understand your operation (BYOB, beer & wine, or full bar)
- 2.Identify carriers with appetite for your specific alcohol service model
- 3.Present quotes with clear explanations of coverage, exclusions, and risk management expectations
- 4.Help you implement the training and documentation that carriers reward with better pricing
We work for you, not for a single insurance company, so our goal is to find coverage that fits your business rather than forcing you into a one-size-fits-all product.
Frequently Asked Questions
Can I switch from BYOB to beer & wine without changing my insurance?
No. You must notify your insurance carrier immediately if you change your alcohol service model. Operating with the wrong coverage can void your policy and leave you exposed to lawsuits with no protection.
What if I only serve alcohol at private events, not to the public?
You still need liquor liability coverage. In fact, some carriers treat private events (weddings, corporate parties) as higher risk due to open bar setups and less controlled environments. Let us know about your event business so we can structure coverage appropriately.
Do I need higher limits if I operate a full bar vs. beer & wine only?
Potentially. Many landlords and lenders require $1 million per occurrence for any alcohol service, but some may require $2 million or more for full bars or late-night operations. We'll help you determine the right limits based on your contracts and risk exposure.