1. Forms
2. BP
3. BP-04-88

What the form is

The BP 04 88 Liquor Liability endorsement is an Insurance Services Office (ISO) form used to modify the standard Businessowners Coverage Form (BP 00 03). Its primary function is to add liquor liability coverage by deleting the liquor liability exclusion typically found in the Businessowners policy. This provides coverage for bodily injury or property damage for which an insured may be held liable by reason of: causing or contributing to the intoxication of any person; furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or violating any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages. This endorsement is specifically intended for businesses with limited liquor liability exposures.

Classes of business it applies to

This endorsement is suitable for businesses that have an incidental liquor exposure, rather than those whose primary operation involves the sale or service of alcohol. Examples include:

• A flower shop that includes a bottle of wine in gift baskets.
• A grocery or convenience store that sells packaged liquor but is not a liquor store.
• A professional office (e.g., law firm, accounting firm) that occasionally hosts social events where alcohol is served to clients.
• A bed and breakfast that might offer a complimentary glass of wine to guests.

It is generally not appropriate for businesses like bars, taverns, nightclubs, restaurants with significant alcohol sales, or dedicated liquor stores, as their exposure is more substantial.

Special considerations

There are several important considerations when using the BP 04 88:

• Limited Exposure Only: This form is strictly for insureds with minimal or incidental liquor liability exposures. If the exposure is more significant, a broader form like BP 04 89 (Liquor Liability Coverage) or a separate Commercial General Liability policy with specific liquor liability coverage (e.g., CG 00 33 or CG 00 34) should be considered.
• Not to be used with BP 04 89: The BP 04 88 should not be used concurrently with the BP 04 89 endorsement, as BP 04 89 provides more comprehensive liquor liability coverage for businesses with greater exposures.
• Licensing Requirements: Coverage may be contingent on the insured complying with all applicable state and local liquor laws and licensing requirements. Operating without a required license could jeopardize coverage.
• Policy Limits: The coverage provided by this endorsement will be subject to the limits of liability shown in the Businessowners Policy declarations or on the endorsement itself. It's crucial to ensure these limits are adequate for the potential exposure.

Key information for agents and underwriters

Agents and underwriters need to carefully evaluate the insured's operations to determine the appropriateness of this endorsement:

• Thorough Exposure Analysis: Agents must conduct a detailed assessment of the insured's activities involving alcohol. This includes the frequency of service/sale, types of alcohol, volume, customer demographics, employee training (e.g., TIPS certification), and controls in place to prevent service to minors or intoxicated individuals.
• Distinguishing Incidental vs. Primary Exposure: Underwriters need to clearly distinguish between an incidental exposure (suited for BP 04 88) and a primary business activity involving alcohol (requiring BP 04 89 or a standalone liquor policy). Misclassifying the exposure can lead to significant coverage gaps.
• Pricing Considerations: The premium for this endorsement will typically be lower than that for broader liquor liability coverage, reflecting the limited nature of the exposure it's intended to cover.
• Potential for Coverage Gaps: If a business's liquor-related activities expand beyond an incidental level, the BP 04 88 may no longer provide adequate protection, potentially leaving the insured exposed to uninsured losses. Regular reviews of the insured's operations are advisable.
• State-Specific Regulations: Liquor liability laws (dram shop laws) vary significantly by state. Underwriters and agents must be aware of the specific legal environment in which the insured operates, as this can impact the potential severity of claims.