03-27-1991 Council Agenda - Laserfiche WebLink

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0 :3. 2 0. :=I 1 ci := : S F; FL'l *LEAGUE OF MN CITIES Did you know? Peter Tritz Liability insurance for temporary wine and beer licensees Should temporary beer or wine licensees carry liquor liability insurance even though the statutes don't require that they do? Since 1985, Minnesota statutes have required that most beer, wine, and liquor licensees have liquor liability insurance as a condition of being eligtle for a license. However, certain licen- sees with relatively small volumes of liquor sales are exempt from the insur- ance requirement. Specifically, the statutes do not require insurance for on -sale beer licensees whose sales were less than $10,000 in the previous year; off -sale beer licensees whose sales were less than $20,000 in the previous year; on -sale wine licensees whose sales were Less than $10,000 an the previous year; or any temporary wine licensee. These exceptions mean that most of the time the statutes would not require insurance for a beer garden or wine bar that a non - profit corporation operates in connection with a community celebration or special event. Because a city can be more restric- tive than the statutes in establishing requirements for beer and liquor licen- ses, a city can require licensees to have dram shop insurance even when the statutes do not. One good reason for doing so is that it provides protec- tion to innocent members of the public who may be injured as a result of an illegal sale of liquor. However, if the city requires a non -profit organization to have liquor liability insurance, it increases the costs and decreases (or perhaps even eliminates) the organiza- tion's profits. Because these organiza- tions often use the proceeds for community projects, many city councils are reluctant to impose these additional costs when state law doesn't require the insurance. But even when the statutes don't require it, this insurance may be a good idea for several reasons. First, small- volume beer or wine sellers are not exempt from being sued or from being held liable for damages arising out of a sale of beer or wine to an under -age person or to an intoxicated person. Even though they do not need to have insurance, they can sail be sued. And if a court finds that they have made an illegal sale, there is no limit on the amount of damages for which they can be held liable. Of course, some organizations tnay be willing to run that risk, If they are sued and held liable, they would simply turn over the corporation's assets and file bankruptcy. While that might be an acceptable result from the organization's stand- point, it doesn't necessarily solve all of the problems. First, this strategy would only work for an incorporated organization. It is apparently possible for an unincorporated organization to receive a temporary beer license. Members of an unincorporated organi- zation may well find themselves per- sonally liable for the association's activities. Another problem remains even with an incorporated organization. The prob- lem is that any person who makes an illegal sale can be held liable. An injured party might choose to sue the individual bartender who made the illegal sale, instead of (or in addition to) suing the licensed organization. This might be particularly attractive to the injured party if he or she knew that the organization had no insurance and min- imal assets. The result could be that an individual member of the organization who volun- teered to help tend bar may wind up facing substantial legal fees to defend the suit, and possibly having his or her personal assets at risk if the court finds that he or she made an illegal salt that resulted in an injury. (In some cases, the liability section of a homeowner's policy or a personal liability policy might protect the individual—provided, of course, that the limits in the policy were adequate.) In short, even though liquor liability insurance is not always required by statute, the city may wish to consider requiring all beer and liquor sellers to have insurance anyway. Any non -profit organizations and their members who plan to sell beer or wine as a fund- raiser should consider the possible implications for personal liability if they do so without insurance. ■ Post It" brand fax transmittal memo 767 SIMS ISMS 'ISMS • nondestructive tests • environmental studies • quality assurance • water tank inspections • fire damage evaluations Mankato (507) 6254211 Rochester (507) 288 -7060 St, Cloud (612) 255 -9014 St. Paul (612) 645-3601 32 PAGE 76F Minnesota Cities