Liquor Liability: Taking a Brief Trip Back in History

Court decisions coupled with new state statutes are holding sellers of alcoholic beverages increasingly responsible for damages under liquor liability laws. Nevertheless, liquor liability insurance continues to be a quiet, if not dwindling, market throughout the U.S. In fact, more than half the risks choose to operate without liquor liability insurance. Licensed beverage, intoxicating drink, liquor…despite the names, alcohol, since the dawn of history, has been an important source of income, both private and public, as well as a never-ending source of social problems.

Alcohol exists in nature as part of the living process for plants and animals, although since before the first stirrings of history, man had learned to enhance the natural processes. The earliest record of alcohol production is found on Mesopotamian pottery dating from 4,200 BC. The art depicts the process of fermentation. In 2,300 B.C., the Code of Hammurabi referred to a number of price-fixing and dispensing controls for alcoholic beverages.

By the mid-1700s, England had gone to great lengths to encourage the production of gin after the more expensive and less potent ale and port fell out of favor. Not long afterward, England regretted its gin policy and began imposing taxes and ever-stiffer regulations governing the production and sale of “hard liquor.”

Meanwhile in the fledgling United States, alcohol was fast becoming a serious problem as well. Connecticut was typical. By 1779, the state had passed 80 major laws concerning alcoholic beverages based mostly on the teachings of the church. Despite the teachings and the laws, drinking excesses mounted throughout the colonies as communities distilled their own spirits. Attempts to impose taxes and controls on the financially lucrative enterprise gave rise in 1794 to the Whiskey Rebellion in western Pennsylvania. The uprising was brought under control only when then-President Washington amassed 13,000 troops to restore law and order.

Temperance movements have since come and gone with the likes of hatchet-swinging Carry Nation in Kansas to the creation of the Prohibition Party to the Prohibition Era in the early 20th Century under the 18th Amendment.

Just before Christmas in 1933, Congress adopted the 21st Amendment which repealed the 18th, thereby bringing an end to Prohibition and federal control of alcohol. Since then, states have been largely responsible for control of alcoholic beverages through enactment of dram shop liability laws. “Dram shops” refers to establishments that served alcohol by the dram, a unit of liquid measure used in the United States during the colonial period.

These laws stipulate that people who serve alcoholic beverages may be liable under state laws for damages resulting from the consumption of those beverages. Liability may be imposed either under specific state laws (“dram shop acts”) or under the general law of negligence.

Despite the laws defining responsibility and the number of drunk drivers involved in or killed in motor vehicle crashes, few alcoholic beverage sellers purchase liquor liability insurance. Larger, more expensive restaurants are inclined to carry liquor liability cover, while smaller or newer establishments may go without.

Topics USA