Since the end of prohibition, Iowa’s hospitality establishments have been the sole source of protection and financial compensation for innocent victims hurt by the irresponsible behavior of individuals who over imbibe. This burden is born through a specific category of innocent victim insurance called “DRAM”— an exclusive requirement for restaurants and bars who serve alcohol.
Unfortunately this liability insurance model has not kept pace with the huge increase in both format (eg. single serve mixed drinks sold in pouches) and points of sale (from convenience and box stores to pharmacies.) As a result, restaurants and bars — even those who have not “over served” or may have even refused service to a patron — are often drawn into legal and insurance battles for which they played no actual part. However, because these businesses are the only group required to carry this category of liquor liability/innocent victim insurance — legal teams are incented to connect the dots back to a hospitality venue.
The result has created a hospitality landscape that has become so cost prohibitive for some that they simply close or, in many border communities, move their businesses across state lines to Wisconsin, Illinois, Kansas or Nebraska. Equally troubling is the decreasing chance that an innocent victim will have a mechanism to receive compensation. Despite the fact there are record alcohol sales and profits in the state, fewer and fewer people are consuming those adult beverages in restaurants or bars – so if something tragic were to happen, there is little recourse back to the point of sale.
The Iowa Restaurant Association is working with its partners to seek reform.