The office of General Counsel issued the following informal opinion on April 25, 2002, representing the position of the New York State Insurance Department.
Re: General Liability Insurance Policy, Exclusion for Liquor Liability
May a general liability insurance policy issued to a tavern owner contain an exclusion for liquor liability?
Yes. A general liability insurance policy issued to a tavern owner may validly contain an exclusion for liquor liability.
The inquirer stated that they represent a client who was injured by a drunk driver. They contemplated a Dram Shop liability action against the tavern that served alcohol to the intoxicated driver. They obtained a copy of the general liability insurance policy for the tavern and found out that the policy contains an exclusion for liquor liability. The inquirer wonders if this is a permissible exclusion.
A general liability insurance policy may contain an exclusion for liquor liability. Liquor liability insurance is not a statutorily required insurance coverage and therefore an insurer may validly choose to exclude it in a general liability insurance policy.
Furthermore, the New York courts, in numerous cases alleging a violation of the Dram Shop Act, have upheld and relieved an insurer of any duty to defend or indemnify based on the liquor liability exclusion in the general liability insurance policy. See, for e.g., Handlebar Inc. v. Utica First Insurance Company 735 N.Y.S.2d 249 (3d Dept 2002), in which the Court, in granting a summary judgement motion to defendant insurer, Utica First Insurance Company and, dismissing the complaint against said insurer, stated that, "allegations concerning a violation of the Dram Shop Act -- that alcoholic beverages were continually served to Greaves while he was visibly intoxicated -- fall squarely within the Dram Shop exclusion relieving the insurer of any duty to defend or indemnify (see, Coles Rest. v. North Riv. Ins. Co., 85 A.D.2d 894, 894-895, 446 N.Y.S.2d 734)."
For further information you may contact Senior Attorney Adiza Mohammed at the New York City Office.