Casualty & Liability InsuranceQuestion 89 of 53187% of test-takers answer this correctly

Under California's Dram Shop law, a bar that sells alcohol to an OBVIOUSLY INTOXICATED MINOR who then causes a fatal car crash:

a.Is automatically liable to the injured parties under a strict-liability rule, so no proof of the minor's obvious intoxication is required and no separate Liquor Liability policy is ever needed

b.Is liable only to the minor, not to third parties

c.Has no civil exposure at all, because California abolished dram-shop liability outright and made the drinking of the alcohol, rather than its sale, the sole proximate cause of any resulting injury

d.May be civilly liable to injured third parties; Liquor Liability insurance is needed because the CGL excludes liquor liability for those in the business of selling alcohol

Explanation

California generally bars dram-shop suits (Cal. Bus. & Prof. Code §25602(b)), but §25602.1 carves out a key exception: a licensed seller who furnishes alcohol to an OBVIOUSLY INTOXICATED MINOR may be civilly liable for resulting injuries. Because the standard CGL Liquor Liability Exclusion (CG 00 01) excludes liability of an insured 'in the business' of selling alcohol, a separate Liquor Liability policy is required.

Law Reference: Cal. Bus. & Prof. Code §25602.1 (Dram Shop)

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Under California's Dram Shop law, a bar that sells alcohol to an OBVIOUSLY INTOXICATED MINOR who then causes a fatal car crash:

Explanation

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