1. Forms
2. CG
3. CG-24-06

What the form is

The CG 24 06, titled "Liquor Liability - Bring Your Own Alcohol Establishments," is an endorsement used with a standard Liquor Liability Coverage Form (such as CG 00 33 or CG 00 34). Its primary function is to extend liquor liability insurance to businesses that do not sell alcohol themselves but allow patrons to bring their own alcoholic beverages onto the premises for consumption (often referred to as BYO or BYOB establishments). This endorsement specifically amends the insuring agreement of the Liquor Liability policy to clarify that an insured who permits this activity is considered to be "selling, serving or furnishing alcoholic beverages," thereby triggering coverage under the Liquor Liability policy for exposures arising from such BYO activities.

Classes of business it applies to

This endorsement is designed for any commercial operation that allows patrons to bring and consume their own alcohol on its premises. Real-world examples include:

• Restaurants: Establishments that do not have a liquor license to sell alcohol but allow customers to bring their own wine or beer to accompany their meals.
• Event Venues: Banquet halls, party rooms, or other rental spaces that permit hosts or guests to supply their own alcohol for private events like weddings, parties, or corporate functions.
• Recreational Businesses: Art studios (e.g., "paint and sip" nights where participants bring their own wine), cooking schools, or similar businesses where consuming personal alcohol is part of the social experience.
• Social Clubs and Organizations: Clubs or non-profit organizations that may host gatherings or events where attendees are permitted to bring their own alcoholic beverages.

Special considerations

• Necessity due to CGL Exclusions: Standard Commercial General Liability (CGL) policies typically contain a liquor liability exclusion that bars 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, or furnishing alcohol to a minor or someone already intoxicated, if the insured is in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. While a BYO establishment might not consider itself "in the business" of selling alcohol, this endorsement provides clarity and necessary coverage.
• Interaction with CGL Endorsements: Endorsements to the CGL policy, such as CG 21 50 (Amendment Of Liquor Liability Exclusion) or CG 21 51 (Amendment Of Liquor Liability Exclusion - Exception For Scheduled Premises Or Activities), can further restrict or clarify the CGL's liquor exclusion, potentially making it explicit that BYO activities are excluded. In such cases, a separate Liquor Liability policy endorsed with CG 24 06 becomes essential for BYO establishments.
• Use with Liquor Liability Policy: The CG 24 06 is not a standalone policy. It must be attached to a Liquor Liability Coverage Form (e.g., CG 00 33 or CG 00 34) to be effective.
• Regulatory Compliance: State and local laws regarding BYO practices vary significantly. These can include permit requirements, limitations on types or amounts of alcohol, server training mandates (even if not directly selling), and hours of operation. Compliance with these regulations can be a key underwriting consideration.
• Historical Context: The introduction of this endorsement and revisions to related liquor liability exclusions in CGL forms (around 2013) were partly in response to court cases that highlighted ambiguities in coverage for BYO establishments.

Key information for agents and underwriters

• Risk Assessment: Underwriting BYO establishments requires a thorough evaluation of their operational controls. Key factors include:
• Policies for handling intoxicated patrons (e.g., refusing entry, cutting off further BYO privileges, arranging safe transport).
• Staff training in recognizing intoxication and responsible alcohol management, even if they are not serving the alcohol directly.
• Procedures for age verification to prevent underage consumption.
• The type of establishment, typical clientele, and the general atmosphere (e.g., a quiet restaurant vs. a lively event venue).
• Security measures in place, especially for larger venues or events.
• Pricing Considerations: The premium for liquor liability with this endorsement will be influenced by the assessed risk, desired liability limits, the volume of patrons, hours during which BYO is permitted, and the strength of the insured's risk management practices.
• Identifying Coverage Gaps: Agents should be vigilant in identifying potential coverage gaps for clients operating BYO establishments. Relying solely on a CGL policy, especially if it contains restrictive liquor liability endorsements like CG 21 50 or CG 21 51, can leave the business uninsured for liquor-related claims. The CG 24 06, attached to a dedicated Liquor Liability policy, is designed to fill this specific gap.
• Policy Structure: It is crucial for agents and underwriters to ensure the correct policy structure. The CG 24 06 endorsement affirms that the BYO activity falls within the scope of the Liquor Liability policy's insuring agreement.