By Paul Pukis Mosaic Insurance Alliance
As the holiday season approaches, many businesses will host parties for their employees, clients or both. At many of these parties, there is punch with and without cheer, if you know what I mean. If the punch is full of cheer or you operate a BYOB establishment to any degree, do you need liquor liability? In this column, we’ll consider coverage for a business. In the next column, we’ll consider what happens when the party is at your house.
Let’s start with the basic language and look at the exclusion in the commercial general liability portion of the policy. The ISO (most common policy form) for general liability says that coverage may apply for the following situations:
• Causing or contributing to the intoxication of any person;
• The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
• Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.
Here’s the kicker. This coverage only applies if you are NOT “in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.” When I read that language, I wonder when coverage would apply. Perhaps a couple of scenarios would help clarify.
You’re the owner of a fine dining restaurant that carries nonalcoholic drinks on the menu. However, they allow patrons to bring their own liquor. A common thought would be that since the restaurant doesn’t carry liquor that there’s no need for liquor liability. Let’s take a look at an average Friday evening in the hypothetical restaurant. One of your wait staff who’s always going the extra mile for diners picks up a wine bottle to find a little left and tops off a glass before throwing the bottle away. Are you now serving alcohol? I would argue you are and would advise that prosecuting attorneys have a knack for establishing a routine of this type of behavior in your business.
What about some of the new spas and salons popping up that provide a glass of wine during the relaxing treatment? Before you open a new window and try to find one in the area, is it realistic to think that serving alcohol is part of their business and coverage is needed? I believe so. I sure wouldn’t want my clients without the coverage and leave it up to a jury to decide.
What happens if you own a property and rent it to clients who plan to have alcohol on the premises? If the client who rents the property from you fails to secure proper insurance, could the owner of the property get dragged into a liquor liability claim because someone had a little too much to drink at the party and injures someone in an auto accident on their way home? If all you do is rent the building and provide no other services, you may be good to go.
The bottom line is, before any toast happens at your party or your business, ask an insurance professional to make sure you know where you stand.
For other questions about your business insurance, contact Paul Pukis at Mosaic Insurance Alliance at 425-320-4280 or SuperAgent@MosaicIA.com.