Plan Your Liability When You Plan Your Party

Plan Your Liability When You Plan Your Party

The holiday season brings with it company-sponsored parties for employees and/or customers, and parties often mean the serving and consuming of alcoholic beverages. Before you plan your events this season, consider your liability. Can a business be held responsible for injuries or damages that result from serving alcohol? Is the current insurance program sufficient to address this concern? Is it necessary to purchase special insurance? The answer is not straightforward as state alcohol laws determine a business entity’s liability for injury or damage arising from serving alcohol. Laws vary, but most assign liability for serving persons who are minors or are visibly intoxicated.

The Commercial General Liability (CGL) policy provides coverage for Liquor Liability EXCEPT for businesses ‘in the business of’ selling, serving, or manufacturing alcoholic beverages. If the event offers alcohol without a charge, it could be stated that the insured is not ‘in the business of’ selling or serving. If persons have to pay, even if the charge is only to offset the alcohol’s expense, that fact could create a different legal situation.

When hosting an event that includes liquor, some businesses have decided that hiring a bartender will reduce their risk of being held liable. This step at least offers the benefit of another party being held primarily responsible and reducing the amount the business might be required to pay. The main issue is obtaining proof from the bartender to confirm that he or she carries an adequate level of Liquor Liability insurance. Proof should be obtained PRIOR to the event. Otherwise, it may be too late when you find out that there isn’t a policy or that the limits are insufficient.

Today, tolerance for drunk driving is low and an impaired driver who causes an auto accident is much more likely to be sued. Besides the driver, a lawsuit will likely include a business that provided alcohol to the driver. Why, because such a business is considered as contributing to the loss and is called on to share (or fully bear) the cost of injury or damage. In some cases, the Commercial General Liability policy might provide the necessary defense for the business.

If you have any questions, contact Cavignac and Associates to discuss the types of events your business sponsors or hosts to determine if you need to purchase special coverage. This discussion may also help you take steps to reduce potential lawsuits. Some businesses may find it easiest and safest to ban drinking during business hours, including business lunches, dinners or other events