‘Tis the season for holiday parties and not to sound like the Grinch, but whether at the office or at home, any host needs to know they can be held liable for the actions of drunken guests.
Indeed, under the laws of more than 40 states, hosts of either an office or home-based holiday party can be held legally responsible for the personal injuries and property damage caused by overserved guests. In some cases, the host can even face criminal charges.
Some states are stricter than others. For instance, New Jersey law allows the victim of a DUI accident to sue and recover damages from a host when:
- Circumstances indicated that serving the guest alcohol created an “unreasonable risk of foreseeable harm.”
- The host provided alcohol to a “visibly intoxicated” guest.
- The host failed to take reasonable measures to prevent the guest from driving (i.e., offered alternative transportation).
Puts a bit of a damper on the idea of throwing a holiday party, right?
A General Liability Policy Isn’t Enough
For business owners, liquor liability is typically covered by a commercial general liability policy, although it wouldn’t hurt to check with your insurance broker, just to be sure.
But a general liability policy isn’t enough. We’ve all heard about the office holiday party that included inappropriate dancing and touching, unwanted mistletoe kisses and the like.
That’s a good reason for businesses to consider purchasing an Employment Practices Liability Insurance policy. An EPLI policy will protect a business from discrimination, sexual harassment, emotional distress, and other workplace-related issues.
Assuming your EPLI includes “third-party” coverage, your business would be protected in case an employee had too much to drink and made an inappropriate overture to a co-worker, client or customer.
An EPLI policy also can help if someone posts a video clip or picture on social media that could result in reputational harm.
The Right Liquor Liability Policy
For bar and restaurant owners, meantime, know that all Liquor Liability policies are not created equally.
Liquor Liability protects these businesses when they are sued for the damages their intoxicated guests cause others. The better liquor liability policies will also include:
- Intoxicated employee coverage, covering the actions of employees the same way policies cover customers.
- Off-premises coverage, providing a bar or restaurant coverage when they cater an office party.
- Mental damages coverage, for lawsuits that arise out of the psychological trauma witnesses suffer after seeing an alcohol-related accident.
Exact figures are hard to come by, but many smaller bars and other businesses that should have this coverage try to go without it. Some do so to save on the expense, others because they wrongly assume their general liability policies will cover alcohol-related incidents.
Whatever their reason, they soon discover that paying out of pocket for big damage claims is not good for business. And even a win in court can cost tens of thousands of dollars in attorney’s fees.
Being a Responsible Host
Long before the party at your home gets started, speak with your insurance agent about your homeowner’s coverage and any exclusions, conditions, or limitations your policy might have for this kind of risk.
Homeowner’s insurance usually provides liability coverage for personal injuries or property damage claims, though coverage is typically limited and may not be enough. To protect yourself and your guests, you might also consider:
- Hiring a professional bartender who is trained to recognize signs of intoxication and can better limit consumption by partygoers.
- Promoting designated driving. Encourage guests to choose a designated driver who can drive other guests home.
- As the host or hostess, be sure to stay attentive so you can gauge your guests’ sobriety.
- Offer non-alcoholic beverages and always serve food.
- Don’t rush to refill their glasses when they are empty, and never serve alcohol to guests who are visibly intoxicated.
If guests drink too much or seem too tired to drive home, call a cab or ride-sharing service, arrange a ride with a sober guest or have them sleep over.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. An employee-owned organization, we’ve been providing our clients with the confidence to face whatever lies ahead for more than 100 years. For more information, contact us online or call 877-440-3304.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.