Party Hosts Face Serious Liabilities If Actions Cause Injury to Guests, Third Parties
NOVEMBER 2, 2021
Whether throwing a New Year’s Eve soiree, a family get-together on Thanksgiving, or cocktails for a small group of friends, a homeowner may be held liable for alcohol-related incidents that occur during and after an event they host.
Both criminal and civil ramifications may be imposed for furnishing liquor to underage guests, or guests who become injured due to intoxication, among other scenarios. Hosts should also consider the many premise liability risks that could bring them legal troubles. These include accidents related to slip-and-fall incidents, falling objects, swimming pools, trampolines, and food poisoning, to name just a few.
Typical Coverage for Social Host and Premises Liability Risks
Homeowners insurance provides limited coverage — typically $100,000 to $300,000 (depending on the policy) — for both social host and premises liability risks. Unfortunately, these policy limits may barely cover the medical costs associated with most major injuries. Further, if the injured party retains counsel, the funds on the policy would be inadequate for defense costs, personal injury damages and potential civil penalties. A personal risk analysis is often recommended to assess whether current insurance policies provide adequate coverage for serious injuries.
For example, USI Insurance Services’ personal risk team recently conducted a personal risk analysis for a client who was concerned about the various exposures associated with hosting a big party. After the analysis, the client followed the team’s advice to hire an insured and professional bartender to help create a responsible drinking environment and prevent overconsumption. In addition, the client was advised to purchase an inexpensive event liability policy and to increase limits on an existing excess liability policy. The USI team also checked for any exclusions in the policy that would have prevented coverage in the event of a claim.
The actions taken per USI’s recommendations helped the client maximize coverage protection and ensured the policies were sufficient to cover potential liabilities of up to $5 million. By managing the amount of alcohol consumed, the client potentially avoided injury or loss of life caused by guests on and off the property.
Drunk-driving claims more than 10,000 lives annually, approximately 28 people each day or an individual every 51 minutes, according to the National Highway Traffic Safety Administration. These deaths and related damages contribute to a cost of $52 billion a year.
When considering whether to host a social gathering in your home, it is important to think about the liability exposures associated with alcohol related accidents. For example, social host liability laws, which vary widely from state to state, allow the victim of a drunk driver to sue the party-throwers who served the alcohol.
Having a plan in place, such as hiring a professional bartender, securing ride-sharing services for guests or providing breathalyzer checks, is always the best course of action. A host also needs to know whether their existing homeowners policy provides appropriate coverage for a major alcohol-related accident. The liability limits need to be sufficient to cover the cost of a protracted litigation, medical expenses, lost wages, wrongful death, and pain and suffering of injured person — all of which could easily exceed $1 million. In many cases, existing policies will need to be reviewed for exclusions or limitations that would affect liability risks or increase uninsured risks for the policy owner.
In the U.S., it’s essential to understand state laws that pertain to social host liability. A total of 48 states and the District of Columbia currently have enacted laws or existing case law that permit social hosts who serve liquor to people who cause accidents to be held liable for any injury or death. There are a few states that do not impose any liability on social hosts, whereas others extend liability to injuries occurring anywhere an inebriated guest travels. In most states, the laws are particularly severe when the accident involves alcohol provided to a minor.
Premises Liability Risks
Not all incidents that create liability for party-throwers are alcohol-related. Guests at parties can sustain injuries from unsafe conditions at the home, like icy walkways, uneven floors, broken staircases, or falling debris from a damaged ceiling.
Take this case: Prior to engaging USI, a client hosted a holiday party at his home. A guest tripped over an extension cord affixed to holiday decorations and broke an ankle. The injured guest sustained $8,000 in medical expenses, but unfortunately the host’s standard homeowners policy only had $1,000 in coverage for guest medical expenses, leaving them with a $7,000 out-of-pocket expense.
This event was a major learning experience. After partnering with USI for personal risk services, the client secured additional medical payments coverage under his homeowners policy to avoid future exposure.
Remember, before hosting a party at your home, remove, repair or eliminate trip hazards such as loose carpets, children’s toys, cracks in the driveway or stairs not up to code.