South By Southwest Deaths Highlight Alcohol Issues For Texas Restaurants


Three people are now confirmed dead in the recent car crash tragedy at South By Southwest. (Click here for the article by Quita Culpepper from According to the article, these people were “injured on Thursday, March 13 outside The Mohawk when Rashad Owens, 21, is said to have barreled into a crowd of festival-goers while fleeing from police.” This horrific event leads many restaurant owners to reevaluate their alcohol serving policies and to wonder exactly how much insurance they need.

What Alcohol Serving Precautions Should Restaurant Owners Require?

To answer this question, a related article from states,

“Texas law allows the victims of a drunk driving accident or alcohol related accident to pursue a claim for “Dram Shop” liability against the bar for breaching their duty. . . .  If a patron is over-served by an establishment that possesses a Texas alcoholic beverage license, beyond the point where he or she are an obvious danger to themselves and others, and then they get behind the wheel of a vehicle, a business can be held responsible for the consequences. . . .”

Click here for the article.

So what does this mean to restaurant owners? It means that the standard is actually very high to prevail on an alcohol related (a/k/a “dram shop”) claim. Nonetheless, it also means that Texas restaurants should make sure that their insurance coverage for these claims fully covers them. Insurance is the prime way to both defend Texas restaurants from these claims and to make victims whole for their damages. This leads to the next question.

How Much Insurance Should A Texas Restaurant Keep For Alcohol Related Claims?

There is no magic formula to determine exactly how much insurance restaurants should keep. In fact, some restaurants take the position that the less insurance they have, the less likely they could be targeted for a lawsuit.

Clearly, we take the opposite position, which is that restaurants should keep a significant amount of insurance commensurate to the amount of alcohol served. We recommend this for several reasons. First, it is important to have assets to cover claims. Second, insurance not only pays claims, it can also cover legal defense costs. Third, it is much less expensive to buy insurance than to pay claims or legal defense costs in the event of litigation.

Clearly, the events of this tragedy dictate that restaurants should be careful both in how they serve alcohol and in the insurance carried to cover terrible incidents like the one at South By Southwest.

Are you a restaurant owner that’s experienced alcohol liability? Do you have “war stories” about the benefits of insurance?

Topics:  Dram Shop Laws, Restaurant Industry, Wine & Alcohol

Published In: General Business Updates, Insurance Updates, Personal Injury Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Gray Reed & McGraw, P.C. | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »