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Understanding Dram Shop Laws in Illinois

Posted On October 05, 2018

Under dram shop laws in Illinois, third parties can sue establishments that sell and serve liquor for damages caused by drunk driving accidents, if the driver was served alcohol at that establishment.

Understanding Illinois Dram Shop Laws

A dram shop is a tavern, bar, nightclub, or similar commercial establishment where alcoholic beverages are sold. In the state of Illinois, dram shop laws govern liquor liability as it applies to establishments that sell and serve alcohol. Illinois law states that only a third party may sue an establishment, the second party, for damages caused by a drunk driver if the drunk driver was a customer at that establishment and became intoxicated. The third party is the person who suffers damages and injuries caused by the intoxicated customer.

According to provisions found in the Liquor Control Act of 1934, Illinois dram shop laws allow injured third parties to sue for damages caused by drunk drivers. The Liquor Control Act requires the State Comptroller to determine the liability limits for causes of action each year based on the consumer index during the preceding calendar year. The law has three limits under which the person may collect damages: injury to a person; injury to property; and injury to means of support or loss of society.

Illinois Dram Shop Liability Limits for 2018:

  • For causes of action that involve persons who incur property damages, injuries, or death, the judgment recovery shall not exceed $68,777.44 for each person.
  • For causes of action that involve either loss of means of support or loss of society resulting from the injury or death of any person, the judgment recovery shall not exceed $84,061.32.

Dram shop laws make businesses that sell and serve alcoholic beverages to customers liable in cases where intoxicated customers cause harm to another person/persons after they leave that business. Currently, dram shop laws exist in 43 states, but liability laws vary in each state. States without dram shop laws include Virginia; South Dakota; Nevada; Nebraska; Maryland; Louisiana, Kansas; and Delaware.

In Illinois, most business insurance policies exclude liability coverage for damages caused by selling or serving alcohol. For protection against personal injury lawsuits, businesses that sell and serve alcohol can purchase liquor liability insurance (dram shop insurance) under a separate policy. Illinois businesses are required to have dram shop insurance before they can obtain a liquor license. This insurance doesn’t cover cases of willful neglect, only claims involving alcohol-related accidents.

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