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The office picnic, Christmas
party, and client party are all examples of company
events that may involve alcohol. Can a business be held
responsible for injuries that result from serving alcohol?
Is the current insurance program sufficient to address
this concern or is it necessary to purchase special
insurance?
Individual states govern the answer. Typically, state
Dram Shop (liquor) Laws set the standard for liability
for injury or damage arising from serving alcohol. The
laws vary among states, but often indicate liability
exists when serving someone that is underage or visibly
intoxicated. In states that do not have Dram Shop Laws,
the civil court system sets the standards based on each
case. Even in these states, courts often follow the
same line of reasoning used in Dram Shop Laws.
The Commercial General Liability policy excludes coverage
for Liquor Liability but only if the insured is 'in
the business of' selling, serving, or manufacturing
alcoholic beverages. If the event offers alcohol without
a charge, it could be stated that the insured is not
'in the business of' selling or serving. If persons
have to pay, even if the charge is only to offset the
alcohol's expense, could create a different legal situation.
When hosting an event that includes liquor, some businesses
have decided that hiring a bartender will reduce their
risk of being held liable. This step at least offers
the benefit of another party being held primarily responsible
and reducing the amount the business might be required
to pay. The main issue is obtaining a Certificate of
Insurance from the bartender to confirm that he or she
carries an adequate level of Liquor Liability insurance.
The certificate should be obtained PRIOR to the event.
Otherwise, it may be too late when you find out that
there isn't a policy or that the limits are insufficient.
Society is less tolerant of drinking and driving. An
impaired driver who causes an auto accident is much
more likely to be sued. Besides the driver, the lawsuit
will probably be extended to include a business that
provided alcohol. Why, because such a business is considered
as contributing to the loss and is called on to share
(or fully bear) the cost of injury or damage. The Commercial
General Liability policy could provide the necessary
defense for the business, if it is not 'in the business
of' providing or selling the alcohol.
The solution is to discuss the types of events your
business sponsors or hosts with your agent to determine
if you need to purchase special coverage. This discussion
may also help you take steps to reduce potential lawsuits.
Some businesses may find it easiest and safest to ban
drinking during business hours, including business lunches,
dinners or other events. Your insurance agent and legal
counsel can assist you in determining ways to protect
your assets.
COPYRIGHT: Insurance Publishing Plus, Inc. 2003
All rights reserved. Production or distribution, whether
in whole or in part, in any form of media or language;
and no matter what country, state or territory, is expressly
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Plus, Inc
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