Most states have a dram shop law to deter providers of alcoholic beverages (servers, liquor stores, bars, restaurants) who sell or serve alcoholic beverages under authority of a license or permit from selling or serving alcoholic beverages to obviously intoxicated individuals.

These laws generally eliminate any liability of servers, liquor stores, bars, and restaurants when a person to whom they sell or serve alcohol causes personal injury or property damage—whether in an automobile accident, a fight, or other incident—unless the person to whom they sell or serve alcohol is obviously intoxicated.

Laws regarding dram shop liability vary from state to state and are usually located in a state’s statutes.

In Indiana, the dram shop law is codified under Indiana Code 7.1-5-10-15.5. This statute holds that a person who provides alcoholic beverages is not liable for damages caused by an intoxicated person unless it can be shown that the provider furnished the alcohol to a visibly intoxicated person at the time of service, and the intoxication was a foreseeable cause of the injury. This means that bars, restaurants, liquor stores, and other licensed establishments may be held liable if they serve alcohol to someone who is clearly intoxicated, and that person goes on to cause harm to others, such as through a car accident or physical altercation. It is important for establishments that serve alcohol to be vigilant in observing patrons and to refrain from serving those who exhibit signs of obvious intoxication to avoid potential liability under Indiana's dram shop law.