Any event where alcohol is being served is a risky event. For all events where alcohol will be served, you’ll likely want to verify the entity providing and serving the alcohol not only has a liquor license but also liquor liability insurance. It’s common for chapters to confuse these documents or believe they are interchangeable, but while they sound alike, they mean two very different things for your organization.

Liquor liability insurance offers financial protection when alcohol is involved in an incident or claim. If someone is injured during a chapter’s event, and it’s determined there was negligence in how alcohol was served to the individual, this coverage steps in to help protect the organization by covering legal fees and other financial consequences related to the claim.

A liquor license is a document obtained from the state granting the venue, business or individual permission to serve and/or sell alcohol. Every state has established a division that licenses all venues and individuals. This agency or division regulates every aspect of serving alcohol, from who can pour it to how the business operates. In short, the license is what makes it legal for a venue or vendor to serve at all. You will typically find a copy of a license posted in plain view at the establishment.

Here’s the key takeaway: the license grants permission to serve, while the insurance protects against what happens after. It’s an easy pair to mix up, but they are not interchangeable. Liquor liability is separate coverage from general liability and carries its own separate limit of liability. While we always recommend using only businesses that hold a current liquor license, it is equally, if not more, important to confirm the vendor or venue carries adequate liquor liability insurance coverage. Before your next event, make sure your third-party vendor can show you both: a valid liquor license and proof of liquor liability coverage. MJ Sorority recommends liquor liability coverage be a minimum of $1,000,000 per occurrence.

We are seeing confusion between the two documents. Why? Perhaps it’s because they sound similar or feel like maybe they could be covered on the same document. Or, maybe a venue sent you the wrong documentation and told you it was what you need. Or, potentially the contact with the venue, caterer or entity providing the alcohol doesn’t know the difference. A final reason we see confusion is when an entity doesn’t have liquor liability coverage and they assume you are looking for the license. As a reminder, the preference is to always work with venues who carry at least $1,000,000 in liquor liability coverage.

Knowing the difference is important to protect your organization. Here’s a quick cheat sheet:

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