Restaurant Risk

Page 7 of 10

Liquor Liquor licensing If a restaurant wants to sell a complete line of alcoholic beverages, (or in some cases, off-sale beer and wine), they must buy a license from a private seller. Since hard liquor licenses are no longer issued by the state, getting a hard liquor license requires finding someone who is selling their license. A liquor license broker can find a license or the restaurant can find their own private seller. Either way, the state requires an escrow to be open for the transfer of the liquor license. The average escrow fee for a a beer and wine license is $500.00 and for hard liquor license is $700.00. Concerning ABC Permits (Department of Alcoholic Beverage Control), "On-Sales" means a license to sell alcoholic beverages for consumption ON premises, such as a restaurant or bar. On-sale applications normally require a one-time publication of a Notice of Application in a newspaper of general circulation. The application fee is $l2,000. A new on-sale general "public premises" license may not be issued except on a showing of substantial public demand. Such a license may be obtained only by transfer. "On-Sale Beer and Wine" has the same requirements as the On-Sale General. The application fee is $300.00 Legislation that became effective January 1, l995 severely restricts the issuance of new retail licenses in areas deemed to have an over concentration of alcoholic beverages outlets or high crime. ABC licenses may be transferred person-to-person in the same county. Ownership transfer fees range from $50.00 to $1,250.00 depending on license type. To obtain a liquor license in California, once the restaurant has established a business location for their liquor license, they may need a zoning permit that allows them to sell alcoholic beverages. This permit is different from the liquor license. If a zoning permit is required, the restaurant will need to prepare and file a complete zoning application with the city or county. This requires the drafting of specialized maps, careful research, notification of local residents of the application pending, and preparation of the written application. A public hearing before a zoning administrator is required where testimony is presented as to why the business should have the right to sell alcoholic beverages and answer any objections that may be raised by planning staff or neighbors. Insurance companies require that restaurants that serve alcohol must have appropriate controls in place to limit exposures to liquor liability claims. This includes liability arising from the selling, serving, or distribution of alcoholic beverages. The extent of the restaurant operator's liability varies based on state laws. Contributing exposures are: Serving liquor to minors Serving liquor to intoxicated persons Underwriting liquor exposure The following list is a list of considerations for underwriting liquor exposure for restaurants: Total annual gross receipts Total annual hard liquor receipts Total annual beer and wine receipts Total annual food receipts How long has the risk been under present ownership? What are the restaurant's business hours? Is there entertainment? Is there live music? Are there coin-operated amusement devices? Are there pool tables? Are there bouncers, doormen, ID checkers, armed guard, security guards? Are there any contests or exhibitions? Are there any audience participation events? Are there any special promotions such as: happy hour, two-for-one nights, drink and drown nights, all-you-can-drink nights, half-price nights, ladies nights? If so, what is the explanation for the promotion. What is the population of the area where the risk is located? What is the percentage of patrons arriving or departing by auto? Has the applicant's liquor license ever been suspended? What is the full procedure for handling intoxicated patrons? Are there firearms on the premises? Are there any mechanical devices (bulls, surfboards, arcade machines)? Have any claims been made within the last (5) years? If yes, explain.

Next Page >

© Copyright CEfreedom.com and Insurance Skills Center. All Rights Reserved.

Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and Insurance Skills Center, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.