PANTA FAMILY: Are You Liable if Your Guests Get Too Jolly?

Whether you're rockin' with Dick Clark on New Year's Eve or cooking a Thanksgiving dinner for 25 of your closest friends, you need to be careful when it comes to serving alcohol. In many states, you could be held legally responsible for the actions of anyone who drinks in your home.

Your responsibilities as host

As the "social host," you may have a duty under the law to prevent your partygoers from drinking too much and then getting behind the wheel or engaging in other possibly hazardous activities. For instance, if your friend hurts someone because he drank too much at your party, the person he injured could sue you for things like medical expenses, vehicle repairs, lost wages, and pain and suffering, simply because the driver drank at your party. In some states, you can also be held criminally responsible. You could also be held liable for property damage. So if your guest breaks a window or runs over a tree in someone's front yard, you could end up paying the bill for that as well.

Once your guests begin to drink, their judgment may become impaired. It is up to you as the host to either take away their car keys and call a cab, or take away their beer and brew some coffee. And although it probably goes without saying, never serve alcoholic beverages to guests who are younger than your state's legal drinking age.

Note: Laws vary from state to state. Whether you could be held liable for the actions of an intoxicated guest depends upon state law and individual facts and circumstances. Contact an attorney to find out more about your legal responsibilities in your state.

Insurance considerations

Protecting yourself against liability claims

Before you throw your next party, check your insurance policy (e.g., homeowners, renters, condominium) to be sure you are covered for property damage and liability. You'll be glad you did if one of your partygoers decides to get behind the wheel after one too many cocktails. Ask your insurance agent to interpret the policy language and explain what coverages you have and what coverages you might need. Your agent may suggest that you purchase a personal liability umbrella policy for added protection.

An umbrella policy is referred to as an "excess policy." This means that if you were to suffer a loss, your homeowners policy (primary policy) would pay first. Typically, umbrella policies require that you carry a minimum liability limit of $100,000 per individual and $300,000 per event (even higher in some states) on your primary policy. Once damages exceed this limit, your umbrella policy should kick in to cover the excess. Umbrella policy liability limits generally start at $1 million and can climb to $10 million or even $20 million. Based on some of the large verdicts being handed down by juries today, these limits are not unreasonable--especially if you possess sizable assets. Remember, it doesn't matter whether you invite 1 guest or 100 guests to your gathering--you'll want to be sure you have adequate coverage.

Special considerations for renters/condominium owners

If you rent an apartment or own a condo or co-op apartment, don't assume that you'll be covered by the building policy. In most cases, the building policy covers common areas for liability and physical damage. It will not provide coverage for your personal property or protect you against personal liability claims that result from a party you've held.

If you are a renter, consider purchasing renters insurance. It is generally less expensive than a homeowners policy, because you are not paying to insure the building. The policy you choose should protect both you and your belongings in case of theft, damage, personal injuries, and lawsuits (e.g., personal injury), up to the limits you select.
If you own a condominium or a co-op, you'll need to purchase a homeowners policy tailored to your needs (type HO-6). You should also review your condominium or co-op association's master policy to find out what your responsibilities are in the event an accident occurs.

Hiring professionals

Most professional party workers (e.g., bartenders, caterers) have liability insurance to protect them, but those policies may not protect you. Typically, these policies state that you must be specifically named on the policy to be covered in the event of an accident. For instance, if one of your guests has too much to drink and goes out and injures someone, the injured person could sue you, your guest, and the bartender who served the drinks. But if you are named on your bartender's liability policy, your bartender's insurance company should defend you in the event you are sued. Otherwise, you would need to rely on your homeowners and umbrella liability policies.

Before hiring professional party workers, find out how much insurance coverage they have and whether you can be named as an additional insured on their policy. You should also determine what specific situations are covered and what exclusions may apply. Don't take their word for it--ask to see a certificate of insurance, then call the insurer to confirm that the information is current.

Should an incident occur, make sure you notify your insurer right away, even if you believe you are covered under a professional liability policy. If you don't provide "timely notice," your insurer may have grounds to disclaim coverage. This means you could be left with no protection against a pending lawsuit.

Preventing accidents
Accidents happen every day. But even though you can't plan for every eventuality, you can take some precautions. Consider the following when planning your next social gathering: