The Role of Insurance Coverage in a Kentucky Dram Shop Lawsuit

Kentucky’s dram shop law provides a limited civil cause of action against a bar, restaurant, or liquor store that over-serves alcohol to a drunk driver who subsequently causes an accident. In other words, the accident victims can file a personal injury claim against both the drunk driver and the bar that served them past the point of intoxication. This can potentially lead to a substantial settlement or award, as commercial liquor establishments generally carry commercial general liability policies that far exceed the typical driver’s auto insurance.

KY Supreme Court: Umbrella Policy Excludes Accident That Killed Entire Family

That said, insurance disputes in dram shop cases are quite common. No insurance company wants to pay out a potential multi-million dollar claim if it can avoid it. So both victims and alcohol serving establishments need to be aware of the limits of commercial insurance in these situations.

A recent decision from the Kentucky Supreme Court, Georgetown Chicken Coop, LLC. v Grange Insurance Company, is a case in point. In January 2019, a drunk driver going the wrong way in his pickup truck on I-75 collided head-on with an SUV. The impact killed the drunk driver and all five occupants of the SUV. The victims were all members of the same family; they were returning home to Michigan after a vacation in Florida.

Subsequent investigation determined that the now-deceased drunk driver had been served alcohol at two restaurants in the hours before the crash. This case involved one of the restaurants, which is called “Rooster’s.” The estates of the deceased family filed a Kentucky dram shop lawsuit against Rooster’s and its various corporate owners.

At the time of the fatal accident, Rooster’s held two commercial liability insurance policies from Grange Insurance Company. The first was a standard businessowners policy, which provided up to $1 million in coverage for bodily injury or property damage “arising out of the selling, serving, or furnishing of alcoholic beverages.” This policy would cover any wrongful death judgment arising from a dram shop lawsuit.

The second policy, however, was the subject of the legal dispute. Rooster’s also had a commercial umbrella policy with Grange. Umbrella policies are commonly used to provide additional coverage on top of an existing policy, in this case the businessowners policy. The umbrella policy stated it would follow the same coverage as the businessowner’s policy “unless otherwise directed.” And in fact, there was a separate endorsement to the umbrella policy that “replaces” and excludes alcohol-related liability.

Litigation followed between Rooster’s and Granger over whether this endorsement unambiguously excluded umbrella policy coverage of the pending wrongful death lawsuits. The Kentucky Supreme Court, upholding an earlier decision by the Kentucky Court of Appeals, held that it did. The Court said there was no question the endorsement was meant to exclude umbrella coverage of a dram shop lawsuit.

Contact a Madisonville Dram Shop Liability Lawyer Today

Anytime that a personal or wrongful death case implicates a commercial insurance policy, there are likely to be potential legal complications that can affect an accident victim’s right to compensation. That is why you should always work with a skilled Madisonville dram shop liability lawyer. Contact Whitfield Crosby & Flynn today to schedule a free consultation. We have offices in Madisonville, Kentucky; Chattanooga, Tennessee; and Indianapolis, Indiana.

Source:

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