This weekend I had a friend, Amanda, visit for a couple of days. Within hours of arriving she got a call from her daughter’s school saying she (her 15 year old daughter) had to be picked up immediately because she and her friends had been drinking. The drama unfolded with her being picked up, suspended for at least a day and hopefully being an indentured servant at her home for an unlimited time frame. But the question Amanda kept asking in heated tone was “where did you get the liquor”. Finally, after escalating threats, the daughter admitted to getting the liquor from her friend’s parent’s home with whom she was spending the night. Lucky in this case there were not any injuries—no one getting behind a wheel intoxicated—but, it could have happened and what then.
As we look at the holiday season and the parties we give and attend (and those our children are attending) we have to revisit our treatment of this issue from our last holiday newsletter which discussed “Social Host Liquor Liability”.
Most of us are aware of business’s legal requirements to stop serving alcohol to people that are visibly intoxicated. This is especially true for those insureds in the business of serving alcohol. What we are not as aware of is the liability we assume by serving liquor in a social setting referred to as “social host” liability.
We cannot have this discussion without broaching the topic of parents who actually provide alcohol to minors in their homes—who become “social hosts” to under aged people. It may be that they do not serve the liquor to the minors but make it available or they allow alcohol to be brought in their home by their children’s friends. Some parents use a thought process that goes something like this: I would rather my child drink at home than attend a party and either drive home drunk or ride with someone who has been drinking. And here is the flaw in that thought process while you think you are providing a safe haven to your child, your friend’s parents may not share your same philosophy and, in fact, you have contributed to the delinquency of a minor. If that child gets hurt or hurts others and you contributed to that harm by providing alcohol, you will be named in the ensuing lawsuit and you may find yourself being held liable.
This brings us to the discussion of “social host” liquor liability. We become a social host whenever we are hosting an event that serves liquor be it a dinner party for another couple or putting on a wedding in our backyard. Examples of “social host” liability could be cases where our guest gets intoxicated and hurts themselves or causes injury to others; or the situation where our guest leaves our party and is involved in an accident as a drunk driver. Or, it could be a guest that leaves your party and is stopped and ticketed for drunk driving. I know you might be thinking “my friend…my brother in law would never sue me”. Surprise!
State laws differ as relates “social host” liability and not all states recognize social host liability. However there are some guidelines as to when a host serving liquor can be held liable:
-The host did, in fact, provide or serve liquor to the individual in question
-The individual was intoxicated and caused either bodily injury or property damage to a third party
-The host was aware or “should have been aware” that their guest was intoxicated
And now to the question of insurance when you are sued as a result of someone becoming intoxicated in your home and incurring or causing damage be it bodily injury or property damage. The Homeowners Policy? The Umbrella Policy? The answer is a “probably” yes but as always you have to check the policy. While the Homeowner’s Policy may not have a specific liquor exclusion, most policies will have an “expected or intended injury exclusion” that the claims adjuster may or may not want to pursue. Whenever we talk about limits on a policy, these are specifically the type of situations that can take that $300,000 limit trying to respond to a $1,000,000 judgment.
The ISO 2000 edition says the following:
E.1. Expected or Intended Injury “Bodily injury” or “property damage” which is expected or intended by an “insured” even if the resulting “bodily injury” or “property damage”:
a. Is of a different kind, quality or degree than initially expected or intended; or
b. Is sustained by a different person, entity, real or personal property, than initially expected or intended.
Could this exclusion be broad enough to remove coverage for the parents? Perhaps it could. Could you then look to the Personal Umbrella? Better read the form. Some forms have a liquor exclusion that applies when serving liquor to a minor.
Let’s talk for a moment about a business that occasionally or incidentally serves liquor. The Christmas season is the perfect time for this discussion. We go to our hairdressers and they offer us a glass of wine, or eggnog with a little bourbon. The office that decides rather than taking everyone to an expensive restaurant will have pizza and beer brought into the office for the big celebration. Is there coverage on the Commercial General Liability Policy for the liability of the business in these situations? Are these businesses in the “business of serving liquor”? The CGL provides automatic coverage as the exclusion only applies if the named insured is the business of manufacturing, selling, serving or furnishing alcoholic beverages. The result of this language is that a business typically has coverage for these “social” situations involving liquor.