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ALCOHOLIC BEVERAGES DIVISION [185]
Adopted and Filed
Pursuant to the authority of Iowa Code section 123.21, the Alcoholic
Beverages Division of the Department of Commerce hereby amends Chapter
5, "License and Permit Division," and Chapter 12, "Forms,"
Iowa Administrative Code.
The Alcoholic Beverages Division amends rule 185—5.8(123) and adopts
new subrule 12.2(12) to better interpret Iowa Code section 123.92. Under
this statute, a person who is injured in person or property or means of
support by an intoxicated person, or as a result of the intoxication of
a person, has a right of action for all damages actually sustained,
severally or jointly, against any licensee or permittee who sold
intoxicating liquors to the intoxicated person, when the licensee or
permittee should have known that the person was intoxicated.
In August of 2000, five-year-old Cassidy Mahedy was killed in Des
Moines when an intoxicated driver struck her. In light of this tragic
event and many similar incidents across the state, the Division decided
to review the dramshop liability insurance requirements set forth in rule
185-5.8(123). Upon review of the rule, the Division found that the minimum
requirements for insurance in Iowa had not been altered since inception of
the rule and that the requirements were drastically low when compared to
many other jurisdictions. The Alcoholic Beverages Division, in consultation
with the Insurance Division of the Department of Commerce, undertook this
rule making to amend Chapter 5 to change the minimum dramshop insurance
requirements to more accurately reflect today's cost of living and to
conform to the statutory guidelines of the Iowa Code.
The amendments to Chapter 5 make technical and editorial changes,
as well as make the rule more consistent with Iowa Code section
123.92. The Division examined a number of factors when considering
the impact the proposed amendments would have on insurance premiums
for licensed liquor establishments. The Division sought input from
industry members in addition to public comments as required by Iowa
Code section 17A.4. A telephonic meeting was held by the Alcoholic
Beverages Commission at 3 p.m., Wednesday, March 6, 2003, in the
Conference Board Room, Alcoholic Beverages Division, 1918 S.E.
Hulsizer Road, Ankeny, Iowa, at which time the Commission approved
the amendments for adoption by the Administrator. The Administrator
adopted the amendments on March 6, 2003.
Notice of Intended Action was published in the August 8, 2001, Iowa
Administrative Bulletin as ARC 0854B. A public hearing was held at
2 p.m., Tuesday, August 28, 2001, in the Conference Board Room,
Alcoholic Beverages Division, 1918 S.E. Hulsizer Road, Ankeny, Iowa,
at which time both written and oral comments were received. Representatives
of the Division met with members of the Administrative Rules Review
Committee during its meeting in September 2001. The Committee requested
the Division to prepare a regulatory analysis of the proposed amendments
in accordance with Iowa Code section 17A.4A. The regulatory analysis was
published in the Iowa Administrative Bulletin on August 21, 2002. On September
10, 2002, representatives of the Division met with Committee members to discuss
the results of the regulatory analysis.
A second public hearing was held at 2 p.m., Tuesday, September 10, 2002,
in the Conference Board Room, Alcoholic Beverages Division, 1918 S.E. Hulsizer
Road, Ankeny, Iowa, to discuss the regulatory analysis and to address concerns
of both the licensee and insurance communities. Both written and oral comments
were received during the hearing.
The following changes were made as the result of comments received.
Nonsubstantive changes were made to subrule 5.8(1) to clarify the text.
In subrule 5.8(2), the word "incident" was deleted at the suggestion of the
Insurance Division. Paragraph 5.8(2)"c" was deleted and the remaining paragraphs
renumbered because the added requirement would likely result in rate increases
when claims involving property damage would most likely be covered by an alternate
form of insurance. In relettered 5.8(2)"c," the minimum amount of coverage was
reduced from $50,000 to $25,000, and in relettered 5.8(2)"d," the minimum amount
of coverage was reduced from $100,000 to $50,000.
Nonsubstantive changes were made to subrule 5.8(4) to clarify the text. Subrule
5.8(5) was deleted and the remaining subrules renumbered in response to concerns
expressed by the insurance industry. In renumbered subrule 5.8(5), language was
restored to allow ordinary or customary exclusions that might also be found in
a commercial liability policy. In subrule 5.8(7), the word "electronic" was added
at the request of the Alcoholic Beverages Commission. The implementation date cited
in renumbered subrule 5.8(10) was changed from "January 1, 2002" to "September 1,
2003." Licensees and permittees applying for new and renewal licenses and permits
during the 12-month period beginning September 1, 2003, and ending August 31, 2004,
shall be required to have the requisite amount of insurance set forth by these
amendments. The Division and members of the insurance industry agreed that, without
adequate time to study and rate the amendments to rule 185-5.8(123), companies
would discontinue writing dramshop insurance in the Iowa market. Fewer companies
would result in a less competitive market, thereby raising dramshop insurance
rates.
Although comments were received suggesting deletion of the "assault and battery
" provision found in renumbered subrule 5.8(9), the Division determined that
the provision should remain in the subrule since assault and battery claims are
statutorily covered under the Dramshop Act. Unlike property damage, for which
there is typically alternative insurance coverage that can make an innocent
injured third party whole, assault and battery claims are excluded from most
general liability policies. Thus, if insurance companies were allowed to
exclude assault and battery claims, most innocent third parties would have
little or no protection.
These amendments are intended to implement Iowa Code sections 123.92,
123.93 and 123.94.
These amendments will become effective May 8, 2003.
ITEM 1. Amend rule 185—5.8(123) as follows:
185—5.8(123) Dramshop liability insurance requirements. For the purpose of
providing proof of financial responsibility, as required under the provisions of
Iowa Code section 123.92, a liability insurance policy must shall
meet the following requirements.
5.8(1) Current certificate required. It The
dramshop liability certificate of insurance shall be issued by
a company holding a current certificate of authority from the Iowa
insurance commissioner authorizing the company to issue dramshop liability
insurance in Iowa or issued under the authority and requirements of
Iowa Code sections 515.147 to 515.149. The dramshop policy must
shall take effect the day the license or permit takes effect and
must run shall continue until the expiration date of the license or permit. A new dramshop
liability certificate of insurance and a new bond shall be
provided each time the division issues a new license with a new license
number or a new permit with a new permit number.
5.8(2) Countersigned. It must be countersigned by a resident insurance
agent licensed by the issuing company.
5.8(3) (2) Limits of liability. Minimum coverage required. It
must The dramshop liability insurance policy shall provide the following
limits of liability minimum liability coverage, exclusive in interests
and cost of action, per accident occurrence: (For the
purpose of this subrule, the word "accident" shall mean any one occurrence,
or any one accident, or series of accidents or occurrences arising
out of any one event, or any one case of intoxication.)
a. Ten Fifty thousand dollars in respect to any one person
who shall be injured in person or killed for bodily injury to or
death of one person in each claim or occurrence.
b. Subject to limitation stated above as respects any one person,
$20,000 in respect to all persons who shall be injured in person
or killed One hundred thousand dollars for bodily injury to or
death of two or more persons in each incident or occurrence.
c. Five thousand dollars in respect to any and all persons
who shall be injured in means of support
Twenty-five thousand dollars for loss of means of support of
any one person in each occurrence.
d. Fifty thousand dollars for loss of means of support of two or more
persons in each occurrence.
5.8(3) Permitted policies. All dramshop policies issued under
this rule shall be occurrence- based policies, not claims-made-based
policies.
a. Claims-made-based policies. Claims-made-based policies provide
liability coverage only if a written claim is made during the policy
period, or any applicable extended reporting period.
b. Occurrence-based policies. Occurrence-based policies provide liability
coverage only for injury or damage that occurs during the policy period
regardless of the number of written claims made.
5.8(4) Cancellation. A surety An insurance company or a principal
an insured may cancel a bond liability policy by giving a minimum
of 30 days' prior written notice to this the division of the party's intent
to cancel the bond liability policy. The 30-day period shall begin
on the date that this the division receives the notice of cancellation.
The party seeking to cancel a bond liability policy shall mail written
notice of such cancellation to the division in Ankeny, Iowa, by certified
mail, and further shall mail a copy of the notice of cancellation
to the other party licensee or permittee, at that party's post office address. The notice
of cancellation shall contain: the name of the party to whom the copy
of the notice of cancellation was mailed, the address to which the
copy of the notice of cancellation was sent, the date on which the
notice of cancellation was mailed, the date the bond liability policy
is being canceled, and the liquor control license or permit number
of the licensee or permittee to be affected by such cancellation.
The cancellation or notice thereof shall have no force or effect in
the event that the principal's liquor control license or permit has
been revoked during the period of the policy, or where an administrative
hearing complaint has been filed, and charges are currently pending
against the licensee or permittee which could result in revocation
of the license or permit after an administrative hearing on the complaint.
5.8(5) Civil tort liability. Subject to these the conditions
and exclusions ordinary or customary exclusions usually found in a policy of dramshop liability
insurance, the policy must shall contain coverage to insure against
all civil tort liability of the insured, created under Iowa Code sections
123.92, 123.93 and 123.94, as they those sections now exist or may
hereafter be amended.
5.8(6) Proof of financial responsibility. A licensee or permittee
shall be deemed to have furnished proof of financial responsibility
as contemplated under the provisions of Iowa Code sections 123.92,
123.93, and 123.94 when it the licensee or permittee has filed with
the division at its offices in Ankeny, Iowa, a properly executed form
as described by 185-subrule 12.2(8) 12.2(12).
5.8(7) Signature required. Copies of the form described
above shall not be deemed properly executed unless the authorized
company representative executing the same shall first have filed with
the division a sample of the representative's signature. Facsimile
Electronic and Facsimile signatures will be acceptable.
5.8(8) Multiple establishment insurance policies. Any licensee
that holds multiple licenses throughout the state may purchase an
aggregate dramshop insurance policy for all locations provided that:
a. The amount of coverage for the aggregate policy is equal to the
minimum required coverage multiplied by the number of establishments
covered under the dramshop policy.
b. The aggregate policy provides at least the minimum level of coverage
required under this rule for each and every location covered by the
policy.
c. All other provisions of this rule are met by the aggregate policy.
5.8(9) Assault and battery policy requirement. Any dramshop
insurance policy issued under this rule shall not contain an exclusionary
clause for assault and battery or intentional force with regard to:
a. Employees, agents or any person acting as an agent of the establishment.
b. All patrons or visitors to the establishment.
5.8(10) Implementation dates. During the 12-month period commencing on
September 1, 2003, all licensees and permittees applying for or renewing a license
or permit shall obtain a dramshop insurance policy that conforms to the provisions of
rule 5.8(123). This rule is intended to implement Iowa Code sections 123.4, 123.21(11),
123.92, 123.93 and 123.94.
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