Description of operations: Package liquor stores and liquor retailers offer many types of bottled and packaged liquors and alcohol, including wines and beer. Kegs of beer may be available. Sources can be domestic or imported.

Operations must be licensed for the items sold. Sales may be limited to liquor and alcohol only, or the store may also sell soft drinks, nonalcoholic mixers, snacks, or gift items. Some items may be offered refrigerated for the convenience of customers.

Property exposures are primarily electrical. The wiring must be adequate for the equipment that is in place and up to code. All equipment, especially refrigeration units, should be well maintained and in good condition. Once started, a fire can often cause a total loss because the stock is highly flammable. Even a small fire can cause all stock to be condemned due to contamination from smoke and firefighting materials.

Theft is a major exposure. Appropriate security measures should be in place, such as keeping more expensive items behind the counter and inaccessible to customers, and having security mirrors prominently displayed throughout the store. Premises alarms should report to a central station or police department after hours.

Crime exposures from both employee dishonesty and theft of money and securities are high. The inventory is attractive to employees as they can steal it and sell it illegally at an attractive rate. If there is a 24-hour exposure or even late night/early morning hours, liquor stores can be a target for holdup. Employee dishonesty is controlled through background screening of employees, inventory monitoring, control of the cash register, disciplined controls and division of duties. Money and securities theft through holdup is high because of the significant cash on hand. To prevent theft of money and securities, money should be regularly stripped from the cash drawers and irregular drops made to the bank during the day if there is substantial accumulation.

Inland marine exposures can include accounts receivables from customers and valuable papers and records for suppliers. Computers may be used. Backup copies of all records, including computer records, should be made and stored off premises.

Premises liability exposure comes from slips and falls due to public access to the premises. Floor covering must be in good condition, with no frayed or worn spots on carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked. During inclement weather, snow, mud, and water will continually be tracked into the facility because of the high traffic exposure. There should be monitoring of the entrances and self-serve areas for outside influences, spills and breaks that can lead to slips and falls.

Sufficient exits must exist and be well marked, with backup lighting systems in case of power failure. Parking lots and sidewalks need to be in good repair, with snow and ice removed, and generally level and free of exposure to slip and falls. Security of visitors in parking areas is rapidly becoming the responsibility of the owner or operator of the premises. Outdoor security and lighting must be consistent with the area.

Products liability for this type of operation is normally low as long as a reputable manufacturer makes all of the liquor that is sold.

Liquor liability exposures are mainly from selling liquor to underage individuals and those already intoxicated. Carding must be carried out in order to control the situation, and consumption of alcoholic beverages on premises should be prohibited. Employees must be trained to recognize signs of intoxication.

Automobile liability exposure may be limited to hired or nonownership liability exposures from employees using their vehicles to perform errands. If delivery services are provided, MVRs and driving records should be obtained for any employee delivering products to customers. Vehicles should be properly maintained and records retained.

Workers compensation exposures come from lifting that can cause back injury, hernias, sprains, strains, slips and falls. Employees should be provided with safety equipment, trained on proper handling techniques, and have conveying devices available to assist with heavy lifting. Injury or death during holdup is a major cause of loss. Employees should be trained to respond in a prescribed manner. Other workers compensation concerns may result from unskilled labor, high turnover, and language problems. Workers must also be able to deal with unruly customers who are refused the purchase they desire.

Refrigerant leaks can be a potential cause of injury. The injury potential is determined by the type of refrigerant used and the reason for the leak.

Minimum recommended coverage:

Business Personal Property, Business Income, Equipment Breakdown, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Liquor Liability, Umbrella, Hired and Nonownership Auto, Workers Compensation

Other coverages to consider:

Building, Leasehold Interest, Real Property Legal Liability, Forgery, Computer Fraud, Employment Related Practices, Business Auto Liability and Physical Damage

Reprinted copyrighted material with permission by the Rough Notes Company, Inc.