What is Liquor Bond?

A liquor bond is a type of surety bond that’s made for retailers that sell alcohol. Like other surety bonds, these bonds are akin to a line of credit (even though they’re often offered by insurance companies). In the case of liquor bonds, the line of credit is used to pay the state if the retailer fails to pay all required sales taxes or makes certain other infractions.

A liquor tax bond involves three parties:

  • The insurer that issues the bond
  • The retailer, which is the obligee
  • The state, which is the principal

What Businesses in New York Need Liquor Bonds?

Retail businesses that want a liquor license so they can sell alcohol to customers in New York State usually need a liquor bond. This is a requirement of the state’s licensing criteria. In order to get a license from the state’s Liquor Authority, the business must maintain a Bond Form L-9 with $1,000 worth of protection.

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Some examples of businesses that may need a liquor license (and, therefore, a liquor tax bond) include:

  • Liquor and wine stores
  • Restaurants that serve alcohol, bars, and nightclubs
  • Cafes that offer both coffee drinks and adult beverages
  • Caterers and event venues that offer alcoholic drinks 

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How Much Do Liquor Bonds Cost?

Liquor bonds are typically very affordable. Exact costs may vary, but they’re often a nominal expense for businesses that are investing in the infrastructure, inventory, and staffing necessary to operate a business. Even compared to other insurance expenses, liquor bonds usually don’t cost much.

Do Insurers Perform Credit Checks When Issuing Liquor Bonds?

Some insurers don’t perform credit checks when they’re issuing credit bonds, although they may check a prospective policyholder’s credit for other insurance products. If a credit check is a major concern for a business owner, they can discuss this concern with an independent insurance agent who will be able to help them determine the best way to secure both a liquor tax bond and any other insurance products their business should have.

How Long Does It Take to Get a Liquor Tax Bond in New York?

Applying for a liquor tax bond is a simple process that requires just some basic information. A decision from an insurer typically comes quickly, but submitting the necessary paperwork to the state and waiting to hear back from them can take a little longer. An insurance agent who has helped other businesses through this process will be able to share what the timeline is typically like for a business’ particular situation.

How Can Businesses Save on a Liquor Tax Bond?

Businesses should make sure the bond they purchase has a license effect date that exactly matches the date they need protection. Ensuring that a bond doesn’t become effective before a business opens or while another one is in effect will keep a business from paying for more coverage than they need.

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 How Can Businesses Get a Liquor Tax Bond?

Businesses can also ensure they get the best possible rate by working with an independent agent, who is able to compare rates from multiple insurers that offer liquor bonds in New York. An agent will also be able to help a business make sure that the liquor bond they select meets the state’s requirements and the business’ needs.

Meet Your Industry Specialist

Jeff Kroeger

Principal, Senior Vice President, and Head of Commercial Lines, Mr. Kroeger also manages the company's hospitality book of business and is that unit's primary producer. He is a graduate of Montclair State University and was named a 2015 Young Gun Insurance Business America.

Jeff has been providing exceptional insurance for restaurants, bars, nightclubs, and more for many years. He understands the unique challenges this industry faces and delivers the right coverage at an affordable price.

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