Survey: Party Hosts Lack Liability Knowledge

By Mark E. Ruquet

NU Online News Service, Dec. 10, 11:41 a.m. EST?An insurance agents group is warning that homeowners who host parties and provide alcoholic drinks during the holidays should be aware that such seasonal merriment includes a "bah humbug" element?lawsuits.[@@]

The Independent Insurance Agents & Brokers of American Inc., based in Alexandria, Va., cautioned consumers they need to know the limits of their homeowners' coverage and recognize that there might not be enough to cover them in case of a third-party accident suit that resulted from a guest drinking too much at a party in the customer's home.

Their alert was issued after polling by the group found a high level of ignorance concerning party host liability issues.

IIABA said that there are now 31 states that either have laws or court precedents holding a person who gives a party where liquor is served as liable as a third party to drunken driving crimes.

A survey for IIABA by International Communications Research, based in Media, Pa, asked 1,000 people about the host's liability. Twenty-nine percent of those contacted said they should be held liable if a person leaves their home drunk. Seventy percent of those with household income of more than $75,000 a year said they should not be held liable.

Eighty-seven percent of the respondents said they did not know if they reviewed their insurance coverage with their agent to make sure they have adequate liability coverage in the case of a guest who drank too much alcohol at their party. Again, those in a higher income bracket, 91 percent, with household income above $75,000, said they had not reviewed their policy.

The survey said that 40 percent in this greater income bracket would be hosting some party during the holiday season.

Dave Hulcher, director of errors and omissions operations, and Rob Eilers, manager of errors and omissions loss prevention services for the IIABA, said agents should constantly review policies with their clients to make sure they have the most coverage they need.

But, more importantly, for the agent to avoid an E&O claim, agents need to make sure they review all the aspects of the customer's needs. This is especially important around renewal time as an effective risk management tool, according to IIABA.

Agents should also remember to check with young clients on rental insurance. Mr. Hulcher noted that a young person with an auto insurance policy might live in an apartment and not have renters insurance, which a recent IIABA survey showed many tenants lack. They are just as liable as a homeowner as a party host, to a third party claim.

"The key is to identify the exposure with the client," said Mr. Hulcher, emphasizing the need for agents to keep a check list as they go over coverage.

IIABA noted that a smart move for a frequent party host may be to purchase a personal umbrella liability policy that provides $1 million or more in additional coverage over the limit of a standard homeowners or renters insurance policy. This added coverage can cost as little as $150 per year.

"Be consistent with all the clients you have, so there is no appearance an agent is favoring one class over another," noted Mr. Eilers.

It is equally important that agents document the entire transaction. Offer coverage, they said, but let the customer decide if they want the coverage or not, and document the decision.

"For any agent, if he or she goes to court, what you got in your file is what protects you," observed Mr. Eilers.

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Survey: Party Hosts Lack Liability Knowledge

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