One Bourbon, One Scotch, One Beer = Considerable Corporate Liability
By Tracie Rasmussen, April 20, 2015
It is that time of year again -- when many companies host summer events for clients and colleagues. While summer outings can be a lot of fun, they can also expose the company to additional liability. Does your Commercial General Liability (CGL) policy cover your company (and you personally) for catastrophic events arising from your summer outing? Below is an overview of Liquor Liability coverage and the coverages provided under most Commercial General Liability policies.
The good news is that most commercial general liability policies DO cover your company for incidents resulting from serving alcoholic beverages -- as long as you are not in the business of selling, making, storing, or distributing liquor. As a result, if someone from the party gets injured - or injures others - as a result of being over-served, your commercial general liability policy is likely to respond. If you are in the business of selling, making, distributing, or furnishing alcohol, you will need to purchase a separate liquor liability policy.
Bear in mind that having coverage and having enough coverage are two separate issues. If an accident occurs, it will likely be catastrophic in nature and higher limits will be needed for adequate protection. If you have not had a recent discussion with your insurance broker regarding your liability insurance limits, it would make good sense to place that call BEFORE the event! Another way to further protect your company, colleagues, and clients is to hire a professional bartender who carries their own liquor liability insurance coverage; most catering companies offer this service. This keeps employees from pouring their own drinks and works well to prevent over-consumption.
Keep in mind that if you are selling liquor by the drink, or charging admission for an event, it can create a situation where coverage is excluded under a CGL policy, which would require separate Special Event coverage. Again, it is a good idea to connect with your insurance broker to verify coverage for your specific event.
If you are a landlord with a tenant whose business involves alcoholic beverages, be sure that they have adequate coverage. In some states, the landlord can be held liable for actions of a tenant. While naming a landlord on a CGL as a form of indemnification is often part of a commercial lease, a CGL will not provide liquor liability protection for a landlord due to the exclusion. The landlord will also want to be named on a liquor liability policy with adequate limits provided.
Your personal liability limit on your homeowner’s policy can vary from $50,000 up to $500,000. For increased limits, you should consider a personal excess liability (umbrella) policy. While a company will likely indemnify its executives if a claim occurs, it is a good idea to make sure the executive’s homeowners policy also extends coverage. Further, it is a good practice for executives to have higher personal liability limits for hosting events outside their capacity as an executive.
Additional Steps to Protect Yourself and Your Guests
Make sure you understand your state laws. Before sending out party invitations, familiarize yourself with your state’s social host liability laws. These laws vary widely from state to state. Some states do not impose any liability on social hosts; others limit liability to injuries that occur on the host’s premises. Some extend the host’s liability to injuries that occur anywhere a guest who has consumed alcohol goes. Many states have laws that pertain specifically to furnishing alcohol to minors.
- Consider venues other than your office for the event. Hosting your event at a restaurant or bar with a liquor license will help minimize liquor liability risks.
Hire a professional bartender. Most bartenders are trained to recognize signs of intoxication and are better able to limit consumption.
Encourage guests to pick a designated driver who will refrain from drinking alcoholic beverages so that he or she can drive other guests home.
Be a responsible host/hostess. Limit your own alcohol intake so that you will be better able to judge your guests’ sobriety.
Offer non-alcoholic beverages and always serve food. Eating and drinking plenty of water, or other non-alcoholic beverages, can help counter the effects of alcohol.
Do not pressure guests to drink or rush to refill their glasses when empty. Never serve alcohol to guests who are visibly intoxicated.
Stop serving liquor toward the end of the evening. Switch to coffee, tea and soft drinks.
If guests drink too much or seem too tired to drive home, call UBER or arrange a ride with a sober guest.
Encourage all your guests to wear seatbelts as they drive home. Studies show that seatbelts save lives.