Whenever alcohol is sold, served, or consumed, there exist a number of liability exposures of which insureds should be aware. Most policies have an exclusion for Liquor Liability, which generally applies if you are in the business of manufacturing, distributing or selling alcohol. Most policies do provide coverage for Host Liquor Liability, which covers an insured for bodily injury or property damage arising out of the serving or furnishing of alcohol by a party not engaged in this activity as a business enterprise. The main difference is the insured is not collecting a fee to serve the alcohol.
Many community associations will have an annual holiday party or summer BBQ each year and will have alcohol present. Most of the time it’s BYOB or the association provides the alcohol at no charge. As long as the community association isn’t providing a cash bar or collecting a cover charge to attend and consume alcohol, then more than likely coverage is provided under Host Liquor Liability. Once a fee is charged, the association has now entered the business of manufacturing, distributing and selling and more than likely the Liquor Liability exclusion will apply.
If your association plans on having a party and charging for alcohol, they should either request that the Liquor Liability endorsement be added to the policy. If that cannot be accomplished, then a one day Special Events policy should be taken out. This will be a separate policy provided just for the day and will include Liquor Liability coverage.
If your employees will be serving the alcohol, you may want to have them take part in a server training course to be educated on ways to avoid lawsuits by spotting problematic situations, an how to effectively handle such situations. Such programs often can provide a degree of legal protection, by offering a “reasonable efforts defense” in the event of a third party suit. The goal of this type of training is to limit your exposure, as well as to ensure the enjoyment and safety of your clients, guests, and the community in general. Mackoul and Associates does offer such training, so for more information, please contact us.
