Both host liquor liability and liquor legal liability protect your business in the event an intoxicated person causes bodily injury or property damage as a result of being served liquor by your business. However, the circumstances under which the liquor was served will determine which coverage in needed.
- Host Liquor: Provides protection for businesses against bodily injury or property damage suits brought by parties injured as a result of an intoxicated guest who was served alcohol at an event you hosted. Host liquor liability is a coverage that is included under the commercial general liability policy for those businesses not 'in the business of' serving, manufacturing, distributing, selling, serving or providing alcohol.
- Liquor Legal Liability: Provides coverage for bodily injury or property damage for which you may become legally liable as a result of contributing to a person's intoxication. This coverage is provided by a separate policy and will only cover insureds 'in the business of' manufacturing, selling, distributing, serving alcoholic beverages for charge or no charge if a license is required for the activity. This exposure is not covered under the general liability policy.
Sounds simple and straightforward. If you're not in the business of selling, manufacturing, distributing or providing liquor all you need is host liquor liability, right? Well, that is a loaded question. It's important to understand that although the definition of the two coverages seems separate and distinct, real life isn't so neatly compartmentalized.
You must check your exposure. If you host an event and are required by the establishment in which you are hosting the event to have a liquor permit, it can be construed as being 'in the business of' selling, serving or providing alcohol. Similarly, if you provide liquor at a company-sponsored event for which a fee is charged it may be construed that you are 'in the business of'.
The line between liquor legal and host liquor can be fuzzy. However, to avoid clearing the fuzzy interpretation of your legal liability in the courtroom, it is best to discuss the insurance requirements with your agent/broker before you host the event. It is also wise to discuss and your legal responsibility with your attorney.
Here are a few tips for reducing your liquor liability exposure:
- Hire a licensed and insured vendor to serve the alcohol. Make sure you obtain a certificate of insurance naming your business as an additional insured for the event.
- Serve drinks rather than offer a self-service bar
- Serve food. Adequate amounts of food slow down the affects of alcohol.
- Keep the drinks moderately or above moderately priced. Low priced alcohol means more alcohol consumption.
- Stop serving drinks early
- Offer non alcoholic drinks for free
- Hold the event earlier in the day to discourage excessive drinking
- Have a policy for intoxicated guests. This can be touchy and must be handled tactfully. An intoxicated VIP may prove to be a challenge.
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