HB 409

84(R) - 2015
House Licensing & Administrative Procedures
House Licensing & Administrative Procedures
Licensing & Administrative Procedures

Vote Recommendation

  • Negative
  • Neutral
  • Negative
  • Negative
  • Neutral


Chris Turner

Bill Caption

Relating to liability insurance for persons holding certain alcoholic beverage permits.

Fiscal Notes

TABC indicates four additional full-time-equivalent positions would be needed to implement the provisions of the bill, at a cost of $200,967 in fiscal year 2016 and $192,391 in fiscal year 2017. TABC reports four License and Permit Specialists would be necessary to insure permit holders submit and maintain the appropriate insurance coverage as described in the bill, review submitted bonds to ensure compliance with the bill's provisions,and complete filing requirements with county clerks as required by the bill.

Although the number of bonds that would be submitted to TABC is indeterminate, this analysis assumes all costs associated with the filing of bonds would be offset by the fee authorized by the bill. 

Bill Analysis

HB 409, being referred to as a "dram shop bill," seeks to mandate that those who hold an alcoholic beverage sellers permit must maintain a liability insurance policy, unless they hold a food and beverage certificate from the Texas Alcoholic Beverage Commission. They must hold an insurance policy that covers $500,000 for each occurrence and $1 million for any annual aggregate limit. HB 409 does, however, allow a surety bond to be filed in lieu of obtaining the required insurance.   

HB 409 would prohibit a person from recovering proceeds of such an insurance policy held by the permit holder damages arising out of the sale or service of an alcoholic beverage to the person if, at the time of the sale or service, the person was obviously intoxicated or a minor. 

The changes proposed by HB 409 would apply to a permit holder for the sale of alcoholic beverages for on-premises consumption regardless of when the permit or license was issued.

Vote Recommendation Notes

HB 409 would mandate that bars and certain restaurants which sell large amounts of alcohol must have insurance, or take out surety bonds, on the people whom they serve in the event they damage or harm someone or someplace as a result of drinking alcohol.

Such a mandate would violate our free market principle and limited government principle because it would make bars buy insurance or take out bonds they may not need -- especially if they do not over serve their patrons. And while we agree that no one should get behind the wheel while intoxicated, this bill oversteps the bounds of personal responsibility (another of our liberty principles) of bar patrons. Requiring such insurance will not prevent bar patrons from choosing to drive irresponsibly after drinking. The consequences of the bar patron's decisions should be borne by the bar patron, not the bar.