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What Is Dram Shop Liability?

In most states, an individual injured by a driver impaired by alcohol can seek compensation by filing a claim against the drunk driver’s auto liability insurance policy. However, in some states—including Illinois—the injured party could also seek compensation for the expenses and impacts of an injury sustained in an accident caused by a drunk driver from the vendor or social host.

While other state’s dram shop laws apply only to vendors who sold alcohol to a visibly intoxicated or underage person, in Illinois, these vendors can be liable even if there was nothing illegal about the sale.

Here is a look at dram shop liability in Illinois and its impact on the ability of personal injury claimants to seek compensation for the expenses and impacts of their injury. A car accident lawyer can help you determine if you have a case worth pursuing.

What Is Illinois Dram Shop Liability Law?

​What Is Dram Shop Liability?

The Illinois Liquor Control Act (235 ILCS 5/6-21) is commonly referred to as the Illinois Dram Shop Act. A dram is a small amount of liquid commonly used to measure alcoholic beverages. The law states that a person injured within the state due to an intoxicated person has the right to seek compensation from the business that furnished the alcohol that caused the intoxication.

The law applies to:

  • Liquor stores and other retail businesses that sell alcohol
  • Caterers who provide alcohol as part of their services
  • Bars, nightclubs, breweries, wineries, and restaurants that furnish alcohol
  • Hotels that supply alcohol through “mini-bars” in guest rooms
  • Owners or managers who rent a dwelling with the knowledge that it will be used to sell alcohol

The Dram Shop Act calls for the state comptroller to set the liability limits for claims arising due to dram shop liability each year. For example, in a recent year, the maximum payout for any causes of action involving the injury or death of others or property damage due to a person’s intoxication was set at $77,787.30 for each person that incurred damages. The maximum payout for wrongful death claimants experiencing a loss of their means of support or society due to their loved one’s death due to intoxication was set at $95,073.37.

Dram Shop Liability Insurance Requirement

Illinois’s Dram Shop Act requires those who intend to obtain a liquor license to sell alcohol at their establishment to obtain dram shop liability insurance. This type of insurance is separate from the establishment’s business liability insurance policy, as business policies generally exclude damages resulting from the sale or provision of alcohol.

The cost of liquor liability insurance depends on:

  • The volume of liquor sales at the business: For example, a business that only derives about 10 percent of its sales from liquor purchases will likely pay less than one where half of the sales to involve liquor.
  • The type of business establishment. Caterers, for example, generally have lower rates for their dram shop liability policies than restaurants because they have lower risks.
  • Location of the business: Some areas have more dram shop claims than others, and businesses in those high-claim areas generally pay more for their insurance.
  • Claims history. Businesses that have already had claims made against their dram shop liability policy will pay higher premiums.

If the business establishment fails to obtain the required amount of dram shop insurance, they risk facing penalties and other consequences by the state’s Liquor Control Commission, including the potential loss of their liquor license. Additionally, they can be ordered to compensate the claimant out-of-pocket for the expenses and impacts of their injury or loss rather than having those damages covered by insurance.

Seeking Compensation After a Drunk Driving Accident

When an individual is injured or killed due to a drunk driver, they or their loved ones often face high financial and psychological costs due to the accident. These costs can include extraordinary medical expenses, wage loss, loss of earning capacity, property damage, and impacts such as physical pain and suffering, emotional distress, and loss of the enjoyment of life. They could seek compensation for these injuries through the personal injury or wrongful death claims processes.

These processes generally involve filing a claim against the drunk driver’s auto liability insurance policy. The insurance provider who services this policy will assign a claims adjuster to evaluate the claim to determine if the insured was at fault and—if so—how much compensation they to the claimant.

After reviewing the claim, the claims adjuster can decide to either:

  • Admit the insured’s liability and approve the claim for payment;
  • Deny the claim and provide the claimant and their attorney written notification that includes the reason for the denial; or
  • Offer to settle the claim out of court for less than its established value.

If the drunk driver’s insurance provider fails to compensate the claim, the claimant can file a personal injury lawsuit in civil court within the state’s statute of limitations. In Illinois, personal injury and wrongful death claimants usually have two years after the injury or death to file their lawsuit in court.

Failing to file within that period will typically result in the claimant losing their right to use the court process to seek compensation for their injuries. Because insurance providers settle claims to avoid litigation, the insurance company generally has little reason to settle if the claimant no longer has the right to sue.

The Impacts of Illinois’s Dram Shop Liability Law on Claims

All liability insurance policies come with policy limits, which is the maximum the insurer will pay out for a claim. Drunk driving accidents commonly result in significant or even catastrophic injuries that leave the claimant facing expenses and impacts that will continue for the rest of their lives. It is not uncommon for the expenses and impacts incurred by the claimant to exceed the amount of compensation available through the at-fault party’s insurance policy.

Additional sources of liability can result in additional insurance policies that can provide compensation for the claim. Just as the state comptroller sets the maximum payout on dram shop liability claims, they also set the minimum insurance coverage that business establishments must obtain.

In a recent year, the minimum amount of coverage a business must obtain through their dram shop liability insurance policy is more than $250,000. However, the maximum amount a claimant can seek is less than the policy limit.

Having the ability to file a dram shop liability claim against the business that furnished alcohol to the intoxicated driver can be a vital resource for seriously injured individuals who face claims that are larger than the coverage limits of the drunk driver’s policy.

For individuals who an uninsured drunk driver injured, the ability to seek compensation from another liable party and their insurance pool can mean the difference between being able to pay for the expenses of the injury and being responsible for paying those costs out-of-pocket.

Proving Liability in a Dram Shop Liability Claim

The claimant and their attorney must be able to show the following elements to potentially have a successful outcome to a dram shop liability claim:

  • The intoxicated person purchased alcohol from the at-fault business.
  • Someone was injured, killed, or sustained property damage within the state.
  • The injury, death, or property damage resulted from the intoxicated person’s impairment by alcohol purchased from the business.

There are several types of evidence that show that a business is liable for providing alcohol to a person who became intoxicated and caused an accident that harmed others. Eyewitnesses who saw the business selling the alcohol to the individual who later injured others while intoxicated can provide testimony to support the claim, as can the business’ own surveillance footage.

Frequently Asked Questions About Dram Shop Liability in Illinois

Dram shop liability is an often misunderstood aspect of Illinois’s personal injury laws. Here are some answers to the questions we commonly receive about dram shop liability.

Does the state’s dram shop liability law apply to social hosts?

Many states have dram shop laws that include social hosts (those furnishing alcohol to guests in their homes), and those laws mainly focus on providing alcohol to those under 21. However, Illinois typically does not allow dram shop liability claims against social hosts, even when the social host is furnishing alcohol to underage people.

However, there is one circumstance in which a social host can be liable, which involves a person over 21 purchasing a hotel room for individuals under 21 with the knowledge that the underage people will use the room for consumption of alcohol.

Why does the compensation limit on dram shop claims change from year to year?

As the law was written, the comptroller sets the maximum amount of compensation available through a dram shop liability claim each year to account for inflation.

Does Illinois’s dram shop act apply only to drunk driving accidents?

No. While drunk driving accidents are the most common way that the dram shop law comes into play, the law includes any injury resulting from an at-fault party’s intoxication. This can consist of any type of traffic accident—including those that involve cars, commercial trucks, buses, taxis, rideshares, motorcycles, bicycles, or pedestrians—or other types of accident involving a motorized vehicle, such as an aircraft or boating accident; as well as intentional acts, such as physical fights.

If I want to sue a business that sold alcohol to the drunk driver who caused my accident, I have two years to do so, right?

No. The Dram Shop Act requires claimants to file their claim within a year of the date of injury or death. This differs from the statute of limitations in other types of personal injury claims. If you want to seek compensation for the business establishment’s liability after being injured in an accident caused by an intoxicated person, it is important to speak with an experienced personal injury lawyer as soon as possible.

If a driver purchases alcohol in Illinois and causes an accident in a neighboring state, does dram shop liability exist?

When an individual purchases alcohol in Illinois and causes an accident in a neighboring state, compensation can only be sought if the neighboring state has a dram shop law.

For example, if a business establishment in Illinois knowingly serves alcohol to a visibly intoxicated person or a minor who then goes to Michigan and causes a drunk driving accident as a result of intoxication by the alcohol purchased at an Illinois business, that business can be liable under Michigan’s dram shop laws.

However, in neighboring Wisconsin, the law generally immunizes businesses from liability for harm caused to others by an intoxicated patron unless they knowingly sold alcohol to someone under 21.

It is interesting to note that if an individual purchases alcohol from a business in Wisconsin, Michigan, or anywhere else outside of Illinois and the purchaser of that alcohol goes on to cause a drunk driving accident in Illinois, the claimant cannot seek compensation from the business establishment as Illinois’s law explicitly states that the harm must occur within Illinois.

What is this “loss of society” and “loss of means of support” mentioned in the dram shop law?

Loss of society refers to the loss that the spouse of an individual who has been killed or catastrophically injured as a result of another’s intoxication incurs as they are no longer able to have the relationship with their loved one that they had before the accident.

Loss of means of support refers to the loss of future earning capacity that individual experiences if they are catastrophically injured and can no longer work or earn the same income as before the accident.

When an individual is seeking compensation for loss of society or loss of means of support, they cannot claim both. Instead, they must choose one or the other to seek the expanded maximum compensation offered in claims for these types of damages.

Can I seek compensation through a claim against a drunk driver and a business, or do I have to choose one?

You can seek compensation for any source of liability that resulted in your accident, including the drunk driver, the business that supplied them with alcohol, and other potential sources of liability, including other drivers, the manufacturers of vehicle parts, or even government agencies tasked with maintaining public roadways.

A critical service that an experienced personal injury attorney can provide for you is a free evaluation of your case and an investigation into the potential sources of liability to determine not only all parties who had a fault in the accident but all insurance resources held by those parties that can be accessed to provide your compensation.

What is the purpose of dram shop laws?

Dram shop laws were put in place to provide consequences to businesses that dispense alcohol without using reasonable care to ensure that it is not provided to an intoxicated or underage person. Additionally, these laws intend to hold businesses accountable for the impact of their activities on the public.

If my loved one died due to an intoxicated driver, what can I be compensated for through dram shop liability?

An executor or administrator of the deceased’s estate can seek compensation on your behalf for the expenses and impacts of your loved one’s death. These expenses and impacts include the loss of support and services provided by the deceased; loss of love, companionship, comfort, society, instruction, and moral support that the deceased gave to family members; and mental anguish.

Yes. Businesses and their insurers can dispute a dram shop liability claim, alleging:

  • The alcohol was consumed outside of Illinois and beyond the territory of the law.
  • The business had no reason to know that the individual they were providing alcohol to was under the age of 21 (e.g. they had fake identification).
  • The injured party was complicit in the intoxication, meaning they were injured by someone they had been drinking with or providing alcohol to.
  • The injuries incurred by the intoxicated person occurred in a physical fight that the claimant provoked.

I cannot afford an attorney. Can I file a dram shop liability claim on my own?

Adam J Zayed, Founder & Trial Attorney
Adam J. Zayed, Dram shop liability Attorney

Like all liability claims, seeking compensation through a dram shop liability claim is not something a claimant without experience in the law wants to take on by themselves.

An attorney plays a crucial role in the claims process.

  • Claims require extensive evidence held by the at-fault party. A claimant’s lawyer takes quick legal action to preserve evidence, such as surveillance camera footage that would probably be lost or overwritten shortly after the accident. Additionally, the attorney has a team of legal professionals to help gather documentation, which would take a claimant an extraordinary amount of time to do on their own.
  • An attorney knows the dram shop liability claim limits and understands how to properly value their client’s claim to help them obtain the maximum compensation available.
  • The attorney can provide guidance and information for their client to help them understand how their claim is valued, what constitutes fair compensation, and other particulars about the process to help them make important decisions about their claim, such as accepting an offered settlement or filing a lawsuit.
  • An attorney understands the tactics that insurers—including those who offer Ilinois dram shop liability policies—use to reduce the claim’s value. They can manage communication with the insurer to keep the conversation focused on negotiating a settlement that fairly compensates the claimant.
  • The at-fault party and their insurer will have legal counsel guiding them throughout the process. If the claimant does not have their own counsel, they are likely to be outmatched by an attorney familiar with the court process.
  • The attorney can manage the timing of the claim to protect the claimant’s right to use the court process by filing a dram shop liability lawsuit within the short one-year statute of limitations on this type of claim.
  • The attorney can assist their client in receiving compensation from a negotiated settlement or a court award at the conclusion of their claim.

Personal injury lawyers bill their clients for services ensuring that anyone who needs legal assistance has access to it. Personal injury lawyers work on a contingent fee, meaning payment for their services is contingent on their ability to garner a settlement or award on behalf of their client. If the attorney is unable to secure compensation for their claim, the claimant does not owe them for their services.

However, in a claim compensated through a settlement or the court process, the attorney receives a percentage of the award. This ensures that the claimant is not billed by the hour as they are already dealing with expenses related to their injury and can participate in the claims process regardless of financial status.

If you want to know more about dram shop’s liability and whether it applies to your case, contact a personal injury attorney for a free case evaluation.

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