Insuring Your Holiday Revelry

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Partying is part of the holiday season – a big part. And, as everyone knows, alcohol is a big factor in car wrecks and other mishaps. So how liable would you be if one of your guests has an accident?

In many places, you're liable enough that it’s worth considering an umbrella liability policy, which would kick in to pay damages after you reach the limit on your homeowner’s coverage. Umbrella policies are a good backup to auto liability policies as well.

A host’s liability for a guest’s mishap varies from state to state, according to InsWeb, the insurance shopping site.

“Some states do not impose any liability on social hosts,” InsWeb says. “Others limit liability to injuries that occur on the host’s premises. Some extend the host’s liability if the person who was provided the alcohol is killed or injured, or kills or injures another person. Many states have laws that pertain specifically to furnishing alcohol to minors.”

Violating these laws can lead to criminal and civil fines, even imprisonment.

However, hosts can reduce their risk with the following steps to avert drunkenness, InsWeb says. Take a look:

  • Use a bartender rather than allowing guests to mix their own drinks. This can keep the drinks from getting too strong, and the bartender can cut off a guest who’s had too much.
  • Hosts should minimize their own alcohol intake, both to set a sensible tone and to maintain their judgment concerning the guests.
  • Provide non-alcoholic drinks and food, which can minimize the effects of alcohol.
  • Stop serving alcohol an hour before the end of the party, and offer coffee, tea and other beverages.
  • Be in a position to say goodnight to each guest, so you can tell if they are in a condition to drive. Call a cab for anyone who isn’t, or find someone else to drive.

Homeowner’s insurance does cover many mishaps that occur to guests on your property, but it pays to re-read the policy every so often to see what else is covered. If a drunken guest gets hurt in a wreck after leaving, the homeowner’s policy may not give you any protection against monetary damages.

That’s where an umbrella policy might kick in. Typically, these cover damages up to amounts of $1 million, $2 million of $5 million, and they can be surprisingly affordable. A $1 million umbrella policy may cost only a few hundred dollars a year, InsWeb says.

They’re cheap because they take over only after your other insurance coverage is exhausted, and ordinary homeowner’s or auto policies are usually sufficient to cover the most common events. Umbrella policies are for the big events which, though unlikely to occur, could be devastating.

They have big deductible – often around $300,000 – and they require that the policy holder have other insurance to pay damages up to the deductible amount.

As with any insurance, be sure to read the terms carefully. Many liability policies exclude protection for policy holders convicted of criminal acts, for instance. So if you knowingly serve alcohol to an underage drinker who later gets hurt or killed in a drunken-driving accident, you could then be wiped out, despite having good insurance.

You may be able to get a discount on your umbrella policy if you get it from the same company that insures your car and home.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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