Liquor, Libations, and Liability – Your Business Could Be At Risk
Bars and restaurants are not the only businesses that need to be concerned about liability related to liquor exposures. Even if your organization is not in the “liquor business,” it isn’t unusual to have alcohol served at company functions.
Guests who drink too much at your holiday party, open house, or summer picnic and later cause an accident, may leave you contending with a liquor liability lawsuit. In the worst-case scenario, someone may lose their life. It is estimated the average cost of wrongful death lawsuits is $500,000 according to the Insurance Information Institute.
If you host any events where alcohol is served, it is possible you could get involved in a lawsuit resulting from an alcohol-related accident.
Imagine a situation where you held a party and served alcohol to guests. One of the guests has a few too many. On the way home, the guest crossed the centerline of a highway causing injury to a third party. The third party learned the guest was last know attending your party and not only brought a lawsuit against the guest, but your business as well.
Ultimately, it is up to the court system to determine if a business is liable for any alcohol-related damages, injuries, or death. In general, courts have ruled a business may be liable if:
- You invited or required employees to attend the event.
- You held the event to promote your business’
- The employee who caused the accident knew they would be driving.
When it comes to alcohol, everyone plays a role in responsibility. But much more responsibility is assumed by businesses who may be viewed as having deeper pockets than an individual who causes an accident.
The Role of Insurance
Under a typical commercial general liability (CGL) policy, there would be coverage if the insured is sued because of serving alcohol. The injured party would have to prove your business was negligent, but in addition to paying for damages, the CGL policy also would provide coverage for defense.
The reason most CGL policies will provide coverage for a business is defined under the definition of “host liquor” exposure. This only holds true if the organization is not in the business of:
- Manufacturing alcohol.
- Distributing alcohol.
- Selling, serving, or furnishing alcohol.
At a typical business party where the employer provides alcohol without any charge, some caution does need to be taken in these situations. But, this is generally okay since the company’s daily operations do not involve alcohol. However, if the employer, not the event facility, were to charge for the alcohol, it is possible coverage could be excluded as the business could be deemed to be “in the business” of selling alcohol.
It is also important to carefully review your CGL policy with your insurance agent for any potential “absolute alcohol exclusions.” In some instances, insurance companies may include an exclusion which would eliminate coverage for any alcohol-related situations. Normally, such exclusions can be removed without charge so long as your organization is not in the alcohol business.
From a risk management standpoint, the best way to avoid a liquor liability lawsuit is to leave alcohol out of any of your company functions. For a myriad of reasons, this may not always be possible or desired. Fortunately, most commercial liability policies provide coverage for this exposure. However, if you are considering an event which is outside the “host liquor” definition found in your policy, you may purchase a special host liquor liability policy which will provide complete protection.
In addition to having the proper insurance coverage, it is important to make every effort possible to protect your employees and their families to prevent a liquor liability lawsuit. Courts may take a very broad view on a business’ liability related to alcohol. As such, following a few tips may help in avoiding the courtroom:
- Limit your guests to only those you know. Open houses and guest appreciation events should be non-alcoholic if guests may be those whom you have never met.
- Host the event at a restaurant or bar. These establishments are required to be licensed to serve alcohol. This usually means their staff are trained to avoid overserving and can assist you in getting guests home safely if someone should have a few too many.
- Arrange for transport ahead of time. If offered in your area, make sure you have a driver service app such as Uber or Lyft installed on your phone, or have the phone number of local taxi companies on hand.
- Don’t serve guests who are visibly intoxicated. This is a no-brainer, but if someone appears to be tipsy, stop serving. Since your business is not in the business of serving alcohol, you may not be trained in identifying when someone has had too much to drink. Always be safe and call for a ride home for your guest.
- Provide food, water, and non-alcoholic beverages. Food does assist in the processing of alcohol in one’s system, but should never be relied upon for sobering up. Offering water and non-alcoholic beverages provides an alternative for your guests.
- Stop all alcoholic drinks one-hour before the event is over. This can usually be done quietly so the event, when the bar is closed, doesn’t appear to be ending on itself.
- Consider hiring off-duty cops. They can handle any alcohol-related problems during the event or when guests leave.
Liquor liability lawsuits not only cost money, but also lost staff time and possibly your company’s reputation. If you choose to serve alcohol at your company’s next event, make sure you take responsible steps to ensure everyone’s safety.
Furthermore, to review your commercial general liability policy for liquor liability coverage or anyone of our personal or commercial risk management solutions, contact our office at (850) 942-7760 and speak with one of our licensed agents.
The Demont Insurance Agency, Inc. The Insurance You Need. The Assurance You Deserve.