Holiday-Party Booze Insurance

A longtime client emailed asking about serving booze at their bank’s Christmas party. Someone suggested the bank buy host-liquor liability insurance. Here is my reply:

Good to hear from you. This is exactly why I’m on the team!

Short answer: Your general liability coverage in the Travelers package insurance policy includes coverage for “host liquor.”

Longer answer: Your policy excludes coverage for events arising out of furnishing alcoholic beverages if you are in the business of selling, serving or manufacturing alcoholic beverages. As your bank is not in the biz of booze, you are covered.

You have $1,000,000 coverage there. Further, you have unlimited defense costs under this coverage. So, the $1,000,000 is all available for paying the award against you. For example, you are sued and the cost of attorney’s fees is $300,000. The award against you is $1,000,000. The policy pays the $300k plus the $1m.

Then we go to the umbrella. Your umbrella insurance provides coverage over the top of the general liability insurance (and auto liability, and employers liability). So, you have an additional $6 million of insurance coverage there plus defense costs.

Total host-liquor liability coverage: $7 million, plus defense costs.

That help?

Scott

The host-liquor liability insurance issue is an important one. Such incidents are exactly why a broad insurance program has to include a review of the “if, ands, and buts” in your policies.  I have seen some policies exclude “Host Liquor Liability.” How many organizations over 25 employees don’t have holiday parties? How about business dinners or lunches? What if a beer is consumed then there is a car accident? Details matter.

Side note…  I have used the host-liquor question as a test for insurance agents.  Way too many will show their ignorance of insurance intricacies by suggesting that an extra policy is needed to cover this exposure, sometimes called “special events insurance.”  Nope.  Host liquor liability insurance should be included in any well designed insurance program.