What is a Dram Shop?


If you’re a bar or restaurant owner, you’re privy to the term dram shop, but if you’re just thinking about starting up a business that serves libations, you may have never heard this term before.

A dram shop simply refers to an establishment that sells or serves alcohol. As most alcohol-serving companies know, many things can go wrong when selling alcohol to patrons.

A patron may drink too much and start a fight or drive drunk and get into an accident. That is why most states have dram shop laws in place. 

So…what is a dram shop law?

Dram shop laws were written in the 1800s to impose a certain amount of liability, criminal or civil, on a business or individual who serves or has served alcohol. Right now, 43 states have dram shop laws, which means a business which serves alcohol could be in danger of lawsuit should things go south with a drunk patron.


Drinking age in the United States is 21, so it’s no surprise that the most common dram shop liability is selling alcohol to minors. Some states even allow the minor who was served to sue the dram shop for their own injuries, should an accident have happened.

Serving alcohol to an overly intoxicated patron who leaves the bar and causes death or injury to an innocent 3rd party holds equal liability. However, many states require evidence that the server knew the patron had a few too many and chose to serve them anyway.

I’m throwing a party, and the booze are free. Am I at risk?

In some states, such as New Jersey, dram shop laws extend to social hosts. Over the years, courts have been extending liability to social hosts who knowingly serve alcohol to clearly intoxicated guests.

It’s important to be careful and limit alcohol consumption at your event, even if you don’t live in a state that holds the host or hostess liable. Sure, alcohol can help your guests to relax, but it can also be dangerous.

So, if you are hosting a party and serving alcohol, consider taking car keys from guests before they start drinking and don’t, under any circumstances, serve alcohol to a minor. No one likes a babysitter, but everyone loves a clean conscience.  

My business serves alcohol! How do I protect it?

The first step in protecting yourself against alcohol-related incidents is having the right insurance. Any establishment that serves alcohol should have a Liquor Liability Insurance policy in place to help protect them against potentially business-ending lawsuits.

Businesses should also take great care in hiring the right staff. It’s no secret that alcohol is both a cruel and tempting mistress, so it’s important to make sure that your employees are trustworthy and not drinking on the job. Those who serve alcohol need to be sharp, so they can parse out too-drunk patrons from the rest of the crowd.

Running a business is tough, but with the right insurance in place, you will have fewer things to worry about. If you’re considering starting a business that is known for its craft beers, imported wine, and cocktail concoctions make sure that you’re completely covered before the first drop is served.