Liquor liability the cover general liability excludes.

Liquor liability exists because standard general liability policies contain a liquor exclusion. Anyone in the business of manufacturing, distributing, selling or serving alcohol is carved out of the cover they might reasonably assume protects them — restaurants, bars, hotels, caterers, grocery and convenience stores, breweries and event venues alike.

What the Texas Dram Shop Act actually says

Chapter 2 of the Texas Alcoholic Beverage Code allows an injured party to pursue a provider where it was apparent that the recipient was obviously intoxicated to the extent of presenting a clear danger to themselves and others, and that intoxication was a proximate cause of the damage.

The practical effect is that a venue can face a claim arising from an accident that happened miles away, hours after the customer left. That distance between the service and the loss is why the exposure is so much larger than owners expect.

Host liquor is not the same thing

Businesses that are not in the alcohol trade but occasionally serve at an event — an office party, a client evening — usually have limited host liquor liability inside their general liability policy. That is a genuinely different and narrower cover.

The moment alcohol is sold, or a charge is made that amounts to a sale, host liquor cover typically stops applying. Caterers and venues in particular should not rely on it, and one-off events can be covered by a short-term special event liquor policy instead.