The festive season is upon us, which means you might well be thinking about organizing an office Christmas or New Year's Eve celebration or have been invited to a client party.

With the festive cheer and alcoholic beverages being consumed, there are many questions that arise, such as:

  • Could our company be held responsible for any injuries or damage that occurs from serving alcohol?
  • Is our current insurance program sufficient to cover these concerns?
  • Will I need to purchase any special insurance?

Who determines liability?

A business's liability for injury or damage that arises due to alcohol is determined by the alcohol laws (otherwise known as Dram Shop Laws) of the state they reside in. Although these laws do vary across the country, in the vast majority, legal liability is assigned to entities who serve alcohol to minors or who are visibly intoxicated.

A Commercial General Liability (CGL) policy does provide coverage for Liquor Liability, except for those operations that are in the business of selling, serving, or producing alcoholic beverages. This means that an event that is offering alcohol for free is covered, whereas an event that charges guests, no matter how nominal the amount, will find themselves in a legal situation.

Many businesses are opting to hire a bartender at their events in order to reduce the risk of liability. By having another party primarily responsible, it helps to reduce the potential payments that your company might face should something go wrong. Prior to the event, you will need to obtain proof from the bartender that they carry sufficient Liquor Liability coverage.

Of course, while free alcohol will be popular with your colleagues and help to reduce your liability, it is not the end of the potential risks you face. If someone then decides to drive home intoxicated and is involved in an auto accident, then the related lawsuit will likely include the business which provided the alcohol. This is because the business will be considered as having contributed to the loss and will therefore be called on to share any injury or damage costs incurred. A Commercial General Liability policy could provide this business with the necessary defense required in this instance.

An example of this would be two companies with CGL policies and have recently sponsored their organization's Christmas party. After each party, an intoxicated employee drives home and is involved in a collision, with the injured driver then suing the drunken employee and their company. Business A, an accounting office, would be able to have the CGL handle the lawsuit, while business B, a tavern, would have their CGL deny the claim.

If you are planning on hosting a party, then the solution would be to serve responsibly. However, you should also consider any special coverage that you might require and discuss methods to reduce any potential lawsuits, such as banning drinking during working hours or business dinners.

If you are looking to host a party this year and want to ensure you are fully protected, speak with your insurance agent today to discuss how you can protect your assets.


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