If you’re playing host to a holiday party this year and think your homeowners insurance provides enough coverage, think again.
Let’s say you serve alcohol at your party. Your guests have a grand time, but one partygoer gets a little too happy and leaves the celebration drunk. That guest crashes into another car or someone’s home.
The next thing you know you’re involved in a lawsuit – all because of your intoxicated guest.
It’s possible. According to the U.S. Department of Transportation, 16,885 people died in alcohol-related crashes last year.
It’s even more likely that you don’t have enough insurance to cover the legal fees and damages you could be forced to pay. According to a new study released by Trusted Choice, a group of more than 7,000 insurance agencies and financial firms, most party hosts are underinsured.
While homeowner insurance policies typically provide a minimum of $100,000 worth of liability insurance, to insure yourself against larger liabilities, you need an umbrella policy – and that’s something many people don’t have.
“I think a lot of people think that their friends will not sue them, but the reality is that it won’t be their friends. It’s going to be the person that they injured,” said Madelyn Flannagan, Trusted Choice’s vice president of education and research.
From its survey, Trusted Choice estimates that of the 28.5 million people planning to hold parties from now until the Super Bowl, 21.3 million do not have a personal umbrella insurance policy to protect them from huge financial losses. Umbrella policies are usually sold in increments of $1 million, and normally cost about $150 to $250 a year per $1 million of coverage, Flannagan said.
The fact is, if you hold a party and a guest drinks and then drives and causes an accident, you can be held responsible. Nationally, 35 states and the District of Columbia have enacted laws, or have case law, that allows a host to be liable for any damage and injuries caused by a drunken driver, according to the Insurance Information Institute.
“People don’t buy umbrella policies because they think they have enough coverage from their homeowner and auto policies – but they don’t,” Flannagan said. “The high dollar value of jury awards coupled with skyrocketing health care costs means one lawsuit can easily exceed the liability limits on the average policy.”
You only need one umbrella policy, which can be added to a basic homeowners or auto insurance policy. This insurance usually kicks in after you’ve exhausted coverage on your homeowner or auto insurance policy.
Typically, a personal umbrella policy covers you for any number of accidents or claims that occur during the policy term. For example, if you have a $1 million limit, you may be covered for several claims at $1 million each. There is no standard personal umbrella liability policy. The type of claims covered varies by insurer, so you should shop around.
While it’s good to have insurance, there are some things you can do to ensure you don’t have to use it. Here are some tips from Trusted Choice:
* Shift the liability by holding your party at a restaurant or bar that has a liquor license.
* If you are going to serve wine, beer or liquor, arrange transportation or overnight accommodations for guests who appear intoxicated.
* Serve all the drinks yourself (or hire a bartender) so you can monitor how much guests are drinking. Also stop serving alcohol at least one hour before the party is scheduled to end.
* Don’t serve alcohol. This year AAA has printed a special edition of its “Great Pretenders Party Guide,” featuring some of the best nonalcoholic drink recipes from its top-rated restaurants. To get a free copy of the booklet, visit any AAA office, call toll-free at 800-222-1333, or download a copy at www.aaa.com.
Finally, ask yourself this: Would you stop serving your guests alcohol if you thought they’d had too much to drink?
Although most people would, an amazing 8 percent of respondents in the Trusted Choice survey answered either “no” or they “didn’t know.” No matter how much umbrella insurance those people get, they should never play host to a party where alcohol is served.
Washington Post Writers Group
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