We do allow alcohol to be served as long as it is served by our caterers, who have a liquor license and we have their COI on file, where we are listed as an additional insured.
If you wanted, you could maybe require that guests that want to BYOB purchase a COI with host liquor liability, but I have found that still BYOB events are the messiest, worst events I work! Nobody truly knows how to bartend, and people get over-served. I believe that you do not need a liquor license/permit if you are not selling alcohol, only host liquor liability. However, I may be wrong on this so definitely take some time to research the laws, and make sure you are protected. Peerspace also has coverage for liquor, but I prefer to get my own in place in addition to that.
We do not allow BYOB. Even for smaller events that want to get wine donated or bring in their favorite beer, I still regulate that our caterers must serve the alcohol to adhere to safe liquor policies. Most people understand this and have no problem pitching in the money to hire our caterers. Plus, many hosts do not realize the complexity of bringing in your own bar (cups, ice, straws, cut lemons and limes, mixers, how to transport to and from) and appreciate the additional support.
Hope this helps!! Cheers!