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Mar 30
NYC Liquor Bond Insurance

What You Should Know About NYC Liquor Bond Insurance

If you own a business that manufactures or sells liquor or products with liquor, you are required by the New York State Liquor Authority to acquire and maintain a valid liquor bond at all times to keep your liquor license.

A liquor bond ensures the government is safeguarded if you or your business is not able to pay liquor tax funds previously collected or if you are maintaining records that are fraudulent.

Basically, liquor bond insurance guarantees that your business can pay for its liquor taxes. If for some reason you can’t pay the taxes, the insurance company or provider of your bond will pay the state for your debt and will then expect repayment by you for the money they paid for your liquor taxes.

Different Names for NYC Liquor Bonds

There are a number of different names for a liquor bond which include:

  • Alcohol bond
  • Alcohol Beverage Control Bond
  • Wine Bond
  • Brewer’s Bond
  • On-premise Beer Bond
  • Liquor License Bond

There are more and it doesn’t really matter which name is on your bond form,  as they all offer the same benefits to you and to the government.

Your Binding Alcohol Bond Contract

Your liquor bond is considered a legal contract involving three entities:

1. The Principal: This is the individual (you) or business that will be selling the liquor.
2. The Obligee: This is the government agency that is requiring you to get the bond.
3. The Surety: This is your insurance company, provider or underwriter that is agreeing to pay on your behalf if you can’t pay your liquor taxes appropriately.

When you obtain your alcohol bond, whether it’s required by the New York state agency or the Alcohol and Tobacco Tax and Trade Bureau (TTB), you are stating that you agree to fulfill your professional responsibilities and obligations that are stated in the bond. This particular type of bond is your responsibility of paying all liquor taxes that are due. If you fail to fulfill your obligations of your liquor bond, a claim on the bond can be made by the government to recover the unpaid taxes.

The Process of Obtaining a Liquor Bond

If your NYC business is selling liquor to consumers, no matter what capacity, you are always at risk of a liability. You are required to obtain a liquor bond and liquor liability insurance if your establishment is any one of the following:

  • Restaurant
  • Bar
  • Convenience Store
  • Nightclub
  • Liquor Store
  • Tavern
  • Fraternal Club

Your alcohol bond is typically written to concur with your license period. Liquor bonds don’t normally involve underwriting and or a credit check. You simply fill out a simple form, make your payment, and that’s it. Your bond is mailed or emailed to you.

How Difficult it is to Obtain a Liquor Bond in NYC?

The surety bond industry can often be hesitant about issuing financial guarantee bonds or surety bonds; however, the exception seems to be a liquor bond when you qualify. This is due to a couple of reasons.

1. Risk is lowered since the taxes are normally held aside and assures the money is there.
2. The state requires the bond which helps elevate the risk of the bonding company.

Cost of the NYC Liquor Bond

You can purchase a liquor bond for 1, 3 or 5 years. The state of New York determines what you will pay for your liquor bond insurance and what type of liquor tax bond you have to obtain.

Of course, you will also have to ensure your business has adequate insurance such as liability insurance, property damage insurance, workers’ compensation insurance, and other types of insurance. This is standard for all businesses, however, if you own a tavern, bar or any other establishment that sells liquor, you have to add on that required liquor bond as well. Your insurance provider or underwriter will be happy to sit down with you and help you apply.

Obtaining a liquor bond in NYC typically requires very minimal paper and is an easy and quick online process.

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