Limiting liquor liability

If a bartender is legally liable for serving alcohol to a patron who becomes intoxicated and then injures a third party, is the exposure the same for a business that hosts a social event where alcohol is served, such as a Christmas party?

According to the Insurance Information Institute, liquor liability exposure is not just limited to companies whose primary business is the sale of alcoholic beverages. Thirty–five states currently have social host statutes or common law that holds private–event hosts liable for the actions of their guests. You are considered a social host if you provide alcohol to individuals in a non–commercial manner. It is important to know the law in your jurisdiction and to take the appropriate steps to control your risk.

Social host liability in North Carolina

North Carolina first addressed this issue in 1992 when it became the 11th state to recognize liability of a social host who serves liquor to a guest who later drives drunk and causes injury to a third person. A social host may be liable for resulting property damage and personal injury if the following requirements are met.

The social host served alcohol to a person
The social host knew or should have known the person was intoxicated, and
The social host knew the person would be driving afterward.

Follow these steps to limit your social host liquor liability

Create a risk management program. An important first step in limiting your liquor liability is to implement a risk management program. The liquor liability program must have the support of management, be communicated to supervisors and employees, and include a policy advising employees to drink responsibly at company events.

Your program should outline procedures for handling intoxicated guests. This includes delegating who will assess and address the situation, such as hotel security or someone from your organization, and outlining appropriate actions for dealing with or removing a guest who has overindulged.

If an incident occurs, fill out a liquor liability incident report, which documents the measures taken to control an intoxicated person and helps your defense in the event of an alcohol–related accident.

Review your policy. You should review your company’s current general liability insurance policy to determine your coverage in social host situations. Remember, even with the proper coverage, a liquor liability policy does not eliminate your exposure if alcohol service is in violation of a statue, a minor is served, or an already intoxicated person is served.

Carefully select third-party vendors. It’s also important to have a program in place that includes the following recommendations when working with third–party vendors:

When working with a vendor, such as a caterer or bartender service, verify it’s licensed and insured.
Stipulate in your vendor’s contract that only employees who have received alcohol–awareness training should serve or sell alcohol at your event.
Require the vendor to provide Certificate of Liability Insurance to include Liquor Liability coverage naming your company as Additional Insured.

Before your company hosts its next event, contact us. We can review your coverage and help develop a risk management plan that keeps safety at the center of your holiday party.

Tips for promoting safety and sobriety at company–sponsored events

Serve drinks to guests rather than offer a self–serve bar.
Set up bar stations instead of having servers circulating the room; if being served, people are inclined to accept drinks they don’t really need.
Place signs at each bar reminding employees and guests to drink responsibly.
Don’t price alcohol too low, which encourages over consumption.
Offer a range of low–alcohol and alcohol–free drinks at no charge.
Require servers to measure spirits.
Always serve food with alcohol.
Close the bar an hour before the scheduled end of the party.
Do not offer a “last call” as this promotes rapid consumption.
Never raffle alcohol or hold contests that involve buying or drinking alcohol.
Entice guests to take advantage of safe transportation options by subsidizing taxis or promoting a designated driver program.
If your event includes a program or speaker, schedule it for after dinner and drinks are served. This allows additional time for alcohol to wear off.