Hosting a holiday party? You could be liable if guests are naughty rather than nice
Daniel Workman
One-third of homeowners fail to realize they can be found legally liable if an intoxicated guest causes a car crash, according to a survey by the Independent Insurance Agents & Brokers of America.
Courts in most states will rule against hosts of holiday parties where alcohol is provided to minors. Also, liquor must not be served recklessly to any guest who clearly has had too much to drink.
Generally, inebriated guests cannot successfully sue party hosts. But third parties victimized in alcohol-related accidents can and do, particularly when the drunk driver has little or no insurance.
Drunken driving lawsuits can lead to financial ruin to the party found liable. This past February, for example, a Colorado man won an $18.5 million settlement after a drunken driver ran him over in his own driveway.
Other party liabilities
Hosts also can be liable for losses that happen at the party. Consider an underage guest who was served alcohol and whose cigarette sets a Christmas tree on fire. If the resulting blaze destroys neighboring homes, the Christmas party host can be held responsible.
Depending on state social host liability laws, party hosts may be liable even when no alcohol is involved.
A guest who falls on the front sidewalk of the host's property can sue the host. A costly lawsuit also can result if partygoers become seriously ill after eating food served at the party. Items on the host's property, such as swimming pools, trampolines, gun collections and pet dogs, expand the list of potential charges.
Insurance for home parties
The first step in planning a holiday party is to verify that the host's homeowner's insurance (or renter's or condo dweller's insurance) policy provides enough coverage for party-related mishaps. Hosts should ensure there are no policy exclusions related to serving alcohol.
Another survey by the Independent Insurance Agents & Brokers of America reveals another serious issue: two-thirds of renters have no renter's insurance at all.
After a careful assessment of the financial risks, holiday party hosts may decide to buy an umbrella liability policy that offers much higher maximums than the underlying coverage. For a relatively low premium, umbrella liability policies usually provide an extra $1 million or more of coverage.
Adequate insurance can be a godsend for hosts who face devastating legal settlements.
Insurance for work parties
Work-related holiday parties must abide by stricter codes of conduct. Attorney Russell J. Thomas points out that because a holiday party is a company-sponsored event, "all legal requirements and all policies in the employer handbook remain in force."
The Insurance Journal reports a spike in sexual harassment claims immediately after the holiday season. Fueled by alcohol, offensive behavior at office parties can result in complaints -- against companies and hosts -- of a hostile work environment or of harassment.
According to the Independent Insurance Agents & Brokers of America, employers should:
- Ensure their comprehensive general liability (CGL) policies provide coverage for third-party liquor liability through a special endorsement.
- Purchase special event coverage or a separate liquor liability policy before hosting a holiday office party.
Hosts holding holiday parties off-site should ask the venue's owner for copies of insurance certificates for liquor liability.
Businesses also are eligible for million-dollar umbrella liability policies.
Substituting fun for alcohol
Risk-averse party hosts may decide that legal responsibilities that accompany serving liquor are too daunting.
One option is to shift the focus of the holiday party away from alcohol by hiring improvisational comedians to emcee events. Other alcohol-free alternatives include inviting guests to compete in interactive video games or participate in a theme night.
Party hosts also might want to replace alcoholic beverages with a range of exotic soft drinks with flavors such as cherry wine and citrus peppermint.
