Chicago Basset On-Premise Server Practice Test

In the context of Dram Shop Liability, what is needed for licensees to have coverage against lawsuits?

1. A license to serve food

2. Insurance

3. A health permit

4. A membership in a trade association

The correct answer is: Insurance

For licensees to have coverage against lawsuits related to Dram Shop Liability, having insurance is crucial. Dram Shop Liability refers to the legal responsibility that establishments serving alcoholic beverages may hold if they serve intoxicated individuals or minors, leading to harm or damages. Insurance is an essential safeguard that provides financial protection against potential lawsuits arising from such situations. It can cover the costs of legal defenses, settlements, and any court-ordered damages arising from claims related to the service of alcohol. Having a license to serve food, a health permit, or membership in a trade association does not provide the same level of protection from legal claims as insurance does. While these other factors may contribute to the operational legitimacy and compliance of the establishment, they do not specifically address the financial liabilities that could arise from incidents related to the serving of alcohol. Therefore, securing appropriate insurance is the most effective way to mitigate the risks associated with Dram Shop Liability.