Host Liquor Coverage and your General Liability Policy

The Risk Sentinel - VOL 1, ISS 4

As a business owner, you have a lot on your plate. You're busy trying to keep your finances in order and make sure that customers are happy with their service or product. One of the most important things to consider when hosting an event is how to protect yourself from liability. If you are planning a work party or other type of event where alcohol will be served, it's possible that someone who attends could become injured or pass away due to over-consumption of alcohol (or some other cause). You want to make sure that if something like this happens, you won't be held responsible for any damages incurred by those involved—especially since these situations can get out of hand quickly!

When hosting a work event, you may be advised to purchase Host Liquor Coverage.

If you are hosting a work event, you may be advised to purchase Host Liquor Coverage. This coverage is designed to provide liquor liability coverage for the policyholder when they are hosting an event where alcohol is served.

Host Liquor Coverage may be provided by an endorsement to your existing general liability policy, or by a separate special event policy altogether. It is important to understand what your general liability policy covers and does not cover before hosting your event.

The Total Liquor Exclusion

The most important thing to understand about the Total Liquor Exclusion is that it is not a standard exclusion, but rather an exception to the basic liquor liability coverage under a General Liability Policy. The Total Liquor Exclusion exists so that insurance carriers can protect themselves from claims arising from the selling or serving of alcohol, whether you are in that business or not. The reason insurance carriers do this is because liquor liability in those types of situations is often times not monitored or controlled to the same standard as you should have in a business that does so on a regular basis. As the name implies, there are limited to zero exceptions when your General Liability policy includes a "Total Liquor Exclusion". You have to be careful though, the ISO liquor exclusion (CG 21 50) is titled "Amendment of Liquor Liability Exclusion".

Host Liquor Coverage

Host liquor coverage is designed to fill the void left by your general liability insurance policy. Because of this exclusion, you will need to purchase host liquor coverage in order to be covered under your general liability insurance. One option for this made available by ISO is CG 21 51 - Amendment of Liquor Liability Exclusion for Scheduled Premises or Activities. This endorsement is the companion to CG 21 50, but it allows the carrier to underwrite and charge for certain types of eligible exposures.

The total liquor exclusion is one of the most common forms of liquor exclusions found in a general liability policy. The reason for this is simple: as an insurer, it’s much easier for an insurance company to exclude coverage than it would be to cover it. By excluding coverage for damages caused by alcohol consumption and sales, an insurer can greatly reduce their risk exposure and costs associated with claims related to these types of issues.

With a total liquor exclusion your policy does not cover damages caused by consumption, distribution, service or sales of alcohol even if it was served by a third party (such as at a bar or by a caterer). You may be thinking to yourself, "Okay I'll just make sure we always go to a bar or restaurant for our events," and while that certainly could reduce your liability, in some jurisdictions, especially those with dram shop liquor liability laws, that might not be enough.

Conclusion

Host liquor coverage is not required by law, but it is recommended for business owners who want to protect themselves from liability if someone gets hurt or property is damaged because of alcohol. Host liquor coverage can be purchased as an add-on to your general liability policy, so you don't need to worry about finding a separate insurance provider or paying more in premiums. Need help figuring out what kind of coverage you have or need? Feel free to reach out to us for your free initial consultation.