OAR 845-005-0400: Liquor Liability Insurance or Bond Requirement

Certain licensees are required to maintain liquor liability insurance or a bond. Failure to maintain the required liquor liability insurance or bond constitutes a serious threat to public health and safety. This rule explains the liquor liability insurance or bond requirement and sanctions. (1) Requirement. The Commission will refuse to license any applicant, may cancel or suspend the license of any licensee, and may sanction any licensee that is subject to the requirements of this rule and fails to: (a) Maintain liquor liability insurance of not less than $300,000 and designate and maintain the Commission as a certificate holder on the certificate of insurance; (b) Maintain a liquor liability bond with a corporate surety authorized to transact business in this state in the amount of not less than $300,000; or (c) If a governing body of a local public body, maintain self-insurance as allowed by ORS 30.282, maintain liquor liability insurance of not less than $300,000, or maintain a liquor liability bond with a corporate surety authorized to transact business in this state in the amount of not less than $300,000. (2) Applicability. This rule applies to the following license types: (a) Full on-premises sales license; (b) Limited on-premises sales license; (c) Brewery-public house license; (d) Temporary sales license, special events winery license, special events grower sales privilege license, special events brewery-public house license, special events brewery, and special events distillery licenses if the licensed event is open to the public and attendance at the event is anticipated to exceed 300 individuals per day; and (e) Winery license, brewery license and grower sales privilege license unless the applicant or licensee submits an affidavit to the Commission stating consumption of alcoholic beverages will not occur on the licensed premises. (3) Providing Proof of Insurance or Bond at Issuance of a License. An applicant for the issuance of a license listed in subsection (2) must provide to the Commission: (a) Proof of Insurance. The applicant must provide to the Commission a certificate of insurance that shows the applicant as the named insured, the premises address, liquor liability insurance coverage in the amount of at least $300,000, that coverage is current, and lists the Commission as a certificate holder. Notwithstanding this requirement, the Commission may require an applicant for a license issued on a non-annual basis to provide to the Commission the name of the insurance company and insurance policy number; (b) Proof of Bond. The applicant must provide to the Commission the corporate surety with a valid bond identification number; or (c) Proof of Self-Insurance. When the applicant is the governing body of a local public body, the applicant may provide to the Commission proof of self-insurance as allowed by ORS 30.282. (4) Providing Proof of Insurance or Bond at License Renewal. An applicant for the renewal of a license listed in subsection (2) must provide to the Commission prior to the Commission renewing the license: (a) Proof of Insurance. The applicant must provide to the Commission the name of the insurance company and the insurance policy number. Notwithstanding this requirement, the Commission may require the applicant to provide a certificate of insurance showing the applicant as the named insured, the premises address, liquor liability insurance coverage in the amount of at least $300,000, that coverage is current, and lists the Commission as a certificate holder; (b) Proof of Bond. The applicant must provide to the Commission the corporate surety and a valid bond identification number; or (c) Proof of Self-Insurance. When the applicant is the governing body of a local public body, the applicant may provide to the Commission proof of self-insurance as allowed by ORS 30.282. (5) Providing Proof of Insurance or Bond Other Than at Licensing or License Renewal. (a) The licensee must maintain valid and current proof of insurance or bond as described in section (3) of this rule at the licensed premises and: (A) Post the proof of insurance or bond in full public view; or (B) Make the proof of insurance or bond available at any time for immediate inspection by any Commission employee. (b) Failure to post or provide proof of insurance or bond as required in this section is a Category V violation, and if the licensee also has a lapse in insurance or bond coverage, the Commission may assess a separate sanction as per subsection (7) of this rule. (6) Immediate Suspension. If a licensee fails to provide to the Commission proof of insurance or bond the Commission may immediately suspend the license pursuant to ORS 471.168. The Commission may rescind the Order of Immediate Suspension once the Commission determines that the licensee has provided proof of valid and current insurance or bond as per subsections (5 (a) and (7)(c) of this rule. (7) Failure to maintain insurance or bond as required is a violation. The sanction for the first lapse in coverage within a two year period is as follows: (a) If the lapse in coverage is no more than 30 days the sanction is $1,650 or a 10 day license suspension. (b) If the lapse of coverage is 31 days to no more than 60 days the sanction is $4,950 or a 30 day license suspension. (c) If the lapse of coverage is 61 days to no more than 90 days the sanction is $4,950 and a 90 day license suspension. In addition, the licensee must provide to the Commission proof of premium payment for at least a 12-month period for the statutory minimum insurance and/or bond limits set forth in ORS 471.168. (8) The sanction for any lapse in coverage not described in section (7) is cancellation of the license. (9) Aggravating or mitigating circumstances. In addition to the Commission’s other aggravating and mitigating circumstances, when the Commission discovers a lapse in coverage, the Commission may mitigate the sanction if the Commission determines that the cause for failure to maintain liquor liability insurance or bond as per subsection (1) of this rule was beyond the reasonable control of the licensee. One method for showing the cause for failure to maintain liquor liability insurance or bond was beyond the reasonable control of the licensee is for the Commission to determine that the licensee has provided sufficient proof to the Commission that the licensee has continued to pay for coverage during the period of the lapse. (10) Cessation of Coverage. A licensee may elect not to maintain liquor liability insurance or bond coverage, but only if the licensee will cease the sale and service of alcohol and prohibit the consumption of alcoholic beverages on the licensed premises for at least 90 contiguous days and the licensee provides the Commission with prior written notice of the start and end date of the cessation of the sale and service of alcohol. Failure to notify the Commission is a Category IV violation and is in addition to separate violations that may be charged for operating without coverage.