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Published March 24 2014

Forum editorial: Mandated insurance is overkill

Fargo bar and restaurant owner Randy Thorson asked the right question when he wondered why city and/or state government needs to be “involved in running my business.”

He’s concerned about a proposal under consideration by the city of Fargo that would require liquor store and bar owners to carry liquor liability insurance. The state of North Dakota and the city do not require such coverage. Other states and cities do.

Thorson, one of the more successful food and drink place operators in Fargo, does not have government-mandated liquor liability insurance for his several liquor-selling enterprises. Instead he sets aside reserves to self-insure, and he documents every incident. In 17 years in business, he hasn’t had to pay out one claim.

It’s a sound practice that protects the business but does not invite frivolous lawsuits, as Thorson and others believe, is the case with government-required insurance. He’s right. It’s routine for an insurance company to settle a claim when pressed by an aggressive lawyer, rather than go through the legal hoops an expensive court challenge would entail. Lawyers know a payday is more likely if an insurance company is involved, rather than a self-insured business.

Thorson and other like-minded business owners are willing to assume the risk – the potential liability – which does not go away simply because insurance is not required. Smart operators do what Thorson has done to protect his businesses without a state or city mandate.

Keep in mind that requiring insurance is not the same as a smoking ban or food services health regulations. Those things go directly to the health of customers, so government regulators have an obvious role to play, and have played it correctly.

But forcing a business to take on liquor liability insurance is in a different category. In the alternative, the business assumes all the risk and, if it chooses, the cost of insuring itself. Smart business people will protect their businesses. Responsible liquor shop and bar owners will act responsibly when it comes to serving alcohol because it is their interest to do so. They don’t need the heavy hand of government to force liability insurance on them.

Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.