If you sell or serve alcohol in Texas, this is the risk that can end a business in a single incident.
Texas's dram shop laws allow a business that serves alcohol to a visibly intoxicated patron to be held liable if that person then causes harm -- to themselves, a third party, or property. A single serious incident (a DUI accident, a fight, a fall) can lead to a lawsuit well into six or seven figures.
Any business that manufactures, sells, or serves alcohol -- bars, restaurants with a bar program, nightclubs, event venues, caterers pouring at private events. It doesn't matter if alcohol sales are your main business or a small part of it; the exposure exists either way.
Liquor liability isn't universally mandated by Texas law the way auto insurance is for drivers, but in practice it's effectively required: most commercial landlords, TABC-related permits, and event/venue partnership agreements will require proof of coverage before you can operate. Even where it's not contractually required, going without it means every dram shop claim comes directly out of business and personal assets.
Legal defense costs, settlements, and judgments tied to claims arising from alcohol service -- separate from your general liability policy, which usually excludes alcohol-related claims entirely. This is why venues need both, not one or the other.
Carriers look at your hours of operation, whether you're primarily a bar vs. a restaurant with incidental alcohol sales, your claims history, staff training (TABC certification programs can help), and security measures. This is exactly the kind of detail a broker who specializes in F&B risk knows how to position well -- generic commercial insurers often don't price this accurately.
Find out what coverage you actually need