In “Alabama Song,” Jim Morrison and The Doors asked to be shown the way to the next whiskey bar. Now, if he found it, the bar’s insurance premiums and possible liability are likely to be reduced thanks to recent changes to dram shop liability law in Alabama.

The Alabama Legislature recently passed the Dram Shop Liability Act (SB104) to amend Alabama’s 1909 Dram Shop Act, Ala. Code § 6-5-71. The law became effective on April 19, 2023 when signed by Governor Kay Ivey.

SB104 establishes a new general rule that any person who sells, furnishes, or serves alcoholic beverages to “an individual of lawful drinking age” is not liable for injury, death, or damage caused by or resulting from the intoxication of that individual, including injury or death to other individuals. SB104 then amends the original liability section of the Dram Shop Act to eliminate the former “strict liability” standard and to impose a new “knowing” liability standard.

Under the law, a spouse, child, parent, or other individual injured in person, property, or means of support by an intoxicated individual has a cause of action against any person who “knowingly sells, furnishes, or serves alcoholic beverages to an individual, contrary to the provisions of law, who was visibly intoxicated, when the sale, furnishing, or serving is the proximate cause of such injury or damage.”

SB104 retains the long-standing prohibition against a consumer of intoxicating beverages from suing for or recovering for any damages caused to the consumer caused by the consumer’s own ingestion of alcohol.

According to SB104, a person “knowingly” engages in prohibited conduct if the person “knew or should have known under the circumstances” that an individual was visibly intoxicated and the sale, furnishing, or service of alcoholic beverages was contrary to law. SB104 further provides that sufficient proof the individual was visibly intoxicated must “be based on the totality of the circumstances present at the time of service of the alcoholic beverages to the individual.”

According to the Alabama Retail Association, one of eleven backers of SB104, a significant reason for their support of the new law involved the high cost of liquor liability insurance in Alabama. Two months after passage of the new law, the Insurance Services Office (ISO) issued a revised hazard risk grade of “5” for liquor liability in Alabama, reducing by half from its former rank of “10,” the worst rating. According to the ISO, the new lower rating will be applicable to all policies written on or after August 1, 2023.