Risks associated with entertaining during the holidays

Risks associated with entertaining during the holidays:

Many people don’t understand or quantify the risks associated with entertaining during the holidays. They get caught up in the holiday spirit or are excited to see loved ones they don’t see regularly. However, the holidays and end of year can be stressful periods of time (personally/professionally) and one of the ways people deal with stress is to consume alcohol (as unhealthy as it may sound, it is a reality).

Not all – but many parties and gatherings include alcohol. It is essential to be a responsible host when serving alcohol at parties, after all, it’s your assets on the line if you don’t. Whether you are hosting a Christmas party, family reunion, or greeting the New Year with friends in your home, if you are planning to serve alcohol at any type of party, it is important to take steps to limit your liquor liability and make sure you have the proper insurance.

The Risk

Social host liability, the legal term for the criminal and civil responsibility of a person who furnishes liquor to a guest, can have a serious impact on party throwers. Social host liability, also known as “Dram Shop Liability” laws vary widely from state to state, but 43 states have them on the books. Most of these laws also offer an injured person, such as the victim of a drunk driver, a method to sue the person who served the alcohol. There are circumstances under these laws where criminal charges may also apply.

While a social host is not liable for injuries sustained by a drunken guest (as they are also negligent), the host can be held liable for third parties, and may even be liable for passengers of the guest who have been injured in their car.

This applies to homeowners as well as renters.

Preparation

Before planning a party in your home, it is important to speak with your insurance agent or company representative about your homeowners coverage and any exclusions, conditions or limitations your policy might have for this kind of risk. Homeowners insurance usually provides some liquor liability coverage, but it is typically limited to $100,000 to $300,000, depending on the policy, which might not be enough. Especially if you live in an affluent area or your guest has an accident with a high net worth or high earning individual/family.

Most importantly, whether you are hanging out with a small group of friends for cocktails or throwing a big family bash, remember that a good host is a responsible host, and takes steps to ensure guests get home safely if they have been drinking. With all the technology available, Uber, Lyft, using Amazon Echo Dot to order either, it’s easier and easier to get guests home safely. It’s worth the extra costs.

Risk management techniques to Protect Yourself and Your Guests

According to the Insurance Information Institute, if you plan to serve alcohol at a party the following tips to promote safe alcohol consumption and reduce your social host liability exposure:

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 home for the party. Hosting your party at a restaurant or bar with a liquor license, rather than at your home, 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 by partygoers.
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. And 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 a cab, arrange a ride with a sober guest or have them sleep at your home.
Encourage all your guests to wear seatbelts as they drive home. Studies show that seatbelts save lives.

Conclusion

I am sometimes seen as the Grinch or a buzzkill around the holidays, but that’s probably because I recognize the increased exposure when we are hosting parties around the holidays. The hazard is host liability and the risk can be calculated based upon the probability of your guest injuring another party.

Keep in mind, a loss associated with a guest DWI or MVA due to negligence and operating a vehicle under the influence will not be taken lightly in a jury award. Although the guest is partially responsible, expect high severity loss potential and a higher frequency the more and more guests/parties you host. For example, 10 guest vehicles all out on the road at similar times leaving our house after a party. Varying speeds, varying vehicle weights, distances to travel, etc. but high severity and although the EV is low, the volatility associated with the expected value can be quite high.

You can calculate the increased risk or probability of an event occurring but this risk is best served by risk management techniques of avoidance (don’t host), loss prevention (limit the amount of alcohol served and above techniques), and risk transfer (make sure your insured appropriately).