A small sushi restaurant in Delray Beach has no liquor license, so the owner lets customers bring their own wine and sake. The staff open the bottles, bring glasses and ice, and on busy nights charge a small corkage fee. One Saturday, a group celebrating a birthday finishes four bottles over dinner, and one of the guests rear-ends a car on Atlantic Avenue on the way home. When the claim reaches the restaurant, the first question is whether the restaurant was serving alcohol, and the answer is less obvious than the owner thought.
BYOB Does Not Mean No Alcohol Risk
Many restaurant owners assume that if they do not sell alcohol, alcohol is not their problem. In a BYOB restaurant, the customer brings the bottle, but the restaurant controls the room, the staff and how the evening goes. Servers open the wine, pour it, refill glasses and decide whether to keep doing so. When a customer who drank on the premises causes an injury, the restaurant is likely to be named in the lawsuit along with everyone else connected to the night.
Whether a BYOB arrangement is allowed at all, and on what terms, depends on state licensing rules and local ordinances. Some cities and counties restrict it, and charging for alcohol in any form can bring licensing requirements into play. Before offering BYOB, check with the Division of Alcoholic Beverages and Tobacco and your city or county.
Where the Insurance Question Gets Complicated
A commercial general liability policy excludes liquor liability for businesses that are in the business of selling, serving or furnishing alcoholic beverages. Businesses that are not in that business, such as an office holding a holiday party, generally keep some protection under the general liability policy for alcohol-related claims, which is often called host liquor liability. A BYOB restaurant sits between those two positions.
A restaurant that simply allows customers to drink wine they brought, without charging for it or serving it, has a stronger argument that it is not in the business of furnishing alcohol. A restaurant that charges a corkage fee, provides set-ups, pours for customers or advertises BYOB as part of its draw looks more like a business that furnishes alcohol. How a carrier and a court view that line can determine whether the general liability policy responds or the exclusion applies. Our article on host liquor versus liquor liability explains the distinction.
Tell Your Insurer About BYOB
The most important step is to disclose BYOB on the application. A carrier that knows about the practice can decide how to cover it, and some will add liquor liability or confirm host liquor coverage in writing. A carrier that finds out after a claim may argue that the operation was misrepresented. Disclosure also gives you a chance to buy liquor liability coverage, which for a small restaurant is usually inexpensive and removes the argument entirely.
House Rules That Reduce the Risk
Restaurants that allow BYOB should set rules and follow them. Limit the number of bottles per table, check identification for anyone drinking, and train staff to stop pouring and decline to open additional bottles when a customer shows signs of intoxication. Avoid promoting BYOB as an all-night party, and do not allow it for private events where the restaurant cannot watch the room. Write the rules down, post them and make sure every server knows them. If a claim comes in, those written rules and a record of how staff followed them will matter.
When a Liquor License Makes More Sense
Some restaurants start with BYOB and find that customers expect it. At that point, a beer and wine license may be simpler than managing a BYOB policy, and it makes the insurance question straightforward: the restaurant is in the business of serving alcohol and buys liquor liability for it. Our article on liquor liability for restaurants that only serve beer and wine explains how that coverage works and why it usually costs less than owners expect.
Worth Confirming If You Allow BYOB
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Is BYOB permitted at your location under state rules and local ordinances?
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Have you disclosed BYOB on your insurance application?
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Does your general liability policy provide host liquor coverage, and has the carrier confirmed it applies?
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Would adding liquor liability coverage remove the uncertainty for a modest premium?
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Do you charge corkage or provide set-ups, and has your carrier been told?
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Are your BYOB house rules written, posted and followed by staff?
This article is general information and not legal advice. Alcohol rules vary by city and county; confirm your situation with the Division of Alcoholic Beverages and Tobacco, your local government or qualified counsel.
Talk to Prestige Insurance Group
We help Florida restaurant owners sort out alcohol exposures that do not fit neatly into a standard policy, including BYOB, catering and private events.
Call the office nearest you. Se habla español.
Orlando: 407-993-2331
Miami: 305-969-8776
Stuart: 772-247-3788
Prestige Insurance Group, License L057894
