By Arthur L. Flitner, CPCU, ARM, AIC, AU
An ISO revision of the Commercial General Liability Coverage Form, which took effect in most states in April 2013, changes the Liquor Liability exclusion to address how the exclusion applies to “bring your own” (BYO) establishments, typically restaurants.
The revised exclusion clarifies that allowing patrons to bring their own bottles does not, in and of itself, mean that the insured is in the business of selling, serving, or furnishing alcoholic beverages, even if the insured charges a fee or is required to be licensed for such activity.
This means that the question of whether the insured is in that business must be answered by considering additional factors. Unless the insured is found to be in the business of selling, serving, or furnishing alcoholic beverages, the exclusion does not apply.
According to ISO, this revision may be considered a broadening in CGL coverage because it is an exception to the exclusion that allows customers to bring alcoholic beverages for consumption on the insured’s premises.
To provide an underwriting tool for insurers that are unwilling to cover BYO operations under a CGL policy, ISO has also revised endorsements CG 21 50, Amendment of Liquor Liability Exclusion, and CG 21 51, Amendment of Liquor Liability Exclusion -- Exception for Scheduled Activities. The revised versions of these endorsements now exclude bodily injury or property damage caused by intoxication resulting from BYO operations.
If you are an agent or a broker with BYO establishments in your book of business, the change in the Liquor Liability exclusion will be good news for your customers, but watch out for the revised versions of CG 21 50 or 51, which could be added to the policy.
Arthur Flitner, CPCU, ARM, AIC, AU is the Senior Director of Knowledge Resources at The Institutes.