Legislature passes DRAM shop reform legislation
On Tuesday, April 11, the Alabama Legislature passed legislation that sponsors hope will lower insurance costs for bars and restaurants serving alcohol. Senate Bill 104 (SB104) was sponsored by State Senator Chris Elliott. It had 15 Republican cosponsors in the Senate, including Majority Leader Clay Scofield. SB104 was carried in the Alabama House of Representatives by State Representative David Faulkner. Under current law, if a person becomes intoxicated at a bar, nightclub, or restaurant that serves alcohol and then is involved in an accident afterward, Alabama has a “strict liability” in place where the owner of the establishment that served the alcohol can be held civilly liable for that accident by the persons harmed or killed by the intoxicated person. This is the strongest standard under the law in the nation. Because of this high liability standard, only three insurers are willing to sell liability insurance in Alabama. This insurance is called DRAM shop coverage. The law requires that coverage as a condition of having a liquor license, but the required $100,000 coverage can cost as much as $35,000. One insurance carrier has threatened to pull out of college towns, including Auburn and Tuscaloosa. SB104 replaces that strict liability standard in the law with a new standard that lessens the liability on the owners of bars, nightclubs, and restaurants. SB104 creates a standard under which a server would have to knowingly serve a visibly intoxicated person, and for that service to be the proximate cause of an injury or death for the business to be liable. This legislation is being passed at the urging of the hospitality, insurance, retail, and tourism industries. 11 trade associations came together to press for this legislation. That alliance includes the: Alabama Beverage Licensees Association, Alabama Brewers Guild, Alabama Grocers Association, Alabama Independent Insurance Agents, Alabama Restaurant and Hospitality Association, Alabama Retail Association, Alabama Tourism Partnership, Business Council of Alabama (BCA), Gulf United Metro Business Organization (GUMBO), National Federation of Independent Businesses, and the Petroleum and Convenience Marketers of Alabama. Dothan Attorney Pamela Halford said, “In Alabama, if you have served alcohol to a person who later becomes intoxicated and causes damages, you are responsible for those damages whether or not the person was intoxicated at the time of sale or not. This is a strict liability scheme and resulted in only three insurance carriers willing to write liability insurance coverage for liquor liability. Obviously, this is problematic for those in the retail and hospitality industry. Accordingly, several organizations got together and lobbied for what passed yesterday – which was Senate Bill 104, which removes the strict liability scheme and instead requires knowingly to someone who is visibly intoxicated before you can be responsible for any resultant damages. This removes the strict liability scheme and hopefully make it easier for you to get liquor liability insurance in the State of Alabama.” House Bill 158 was the companion bill introduced in the House. SB104 passed the House of Representatives 104 to 0. It has already passed the Senate and will head to the Governor’s desk for her signature. Tuesday will be day 11 of the 2023 Alabama Regular Legislative Session. To connect with the author of this story or to comment, email brandonmreporter@gmail.com.
