Host Liquor Liability Insurance Explained

A host liquor liability insurance policy protects businesses that serve alcohol to guests, occasionally. If a guest leaves your special event after a few-too-many eggnogs and causes a car accident, your company won’t be held liable for the damage.

Sometimes this coverage is built into your general liability policy already, but the limits of liability might not be high enough to keep you comfortable.

Host liquor liability insurance is not for breweries that manufacture alcohol, nor restaurants that serve it daily. Think of it as a type of special event insurance for company picnics, holiday parties and the like.

Any time your company hosts an event that serves liquor, or allows guests to bring it, you should consider adding a host liquor liability insurance policy to your event plan.

Today, we’ll answer questions about host liquor liability insurance policies such as:

When does my business need host liquor liability insurance?
Why should I buy host liquor liability coverage?
How much does this policy cost?
Does my commercial insurance policy already include this coverage?
How to buy host liquor liability insurance?

We’ll also take a good look at some alcohol-related traffic statistics and human behavior. This way, you’ll understand the real value of this special event insurance for your company. Then, we’ll help you understand how to get host liquor liability coverage. Don’t worry, it’s easy!

When Does my Business Need Host Liquor Liability Insurance Coverage?

Every time your company offers (or allows) drinking at a company event, it’s a good idea to buy extra host liquor liability insurance coverage.

Some common instances include:

Holiday and New Year’s Eve Parties
Independence Day celebrations
Retirement parties
Ribbon cuttings or “open house” events
“Wine walks” where businesses in a neighborhood offer a glass of wine to passers by
Company-hosted sports events, like softball games or bowling parties
Team-building exercises
Conventions or trade shows hosted by your organization

But those are just a few examples. Any time alcohol is involved with a corporate function or special event, host liquor liability insurance should be at the front of your mind.

Why Buy Host Liquor Liability Insurance

The goal is to make sure your business is protected from incidents that arise when guests imbibe. And those incidents do happen! Let’s start with a look at some traffic issues related to alcohol. And then we’ll think about human violence.

Traffic Statistics to Keep in Mind

Per the National Highway Traffic and Safety Administration (NHTSA), about 28 people die in the US every day thanks to drunk driving accidents.

33% of all traffic fatalities in the US involve a drunk driver.
In 2019, more than 10,000 people died in these preventable crashes.
If you do that math, that is 28 deaths per day, more than one every hour.
And that’s about average, per NHTSA.

Looking closer, we learn that July 4 and the winter holidays — Thanksgiving through January 1 — are the deadliest drunk-driving days of the year. (Superbowl Sunday is also usually a contender, especially when the local team loses.) Remember that it only takes a 0.08% blood alcohol content (BAC) to be considered an impaired driver.

Blood Alcohol Content (BAC)

Now, we won’t get too deep into the science of BAC here, just know that it depends on your weight, number of drinks and unique body. But for some individuals, a BAC of 0.08% is less than two drinks.

In most states, legal BAC is even lower for individuals who aren’t old enough to drink.
For instance, in California, any presence of alcohol in an underage driver is considered too much, even 0.01%.
In other words, if your employee’s teenage son snags one sip of a wine cooler, and gets in an accident after your company event, he will be treated legally as an impaired driver.

And you can be sure your employee’s car insurance company will be looking for the provider of this alcohol. Hopefully, the accident is a minor one. Because the costs of emergency healthcare, vehicle repair and even property repairs have skyrocketed.

Drunk driving causes $44 billion of damage to humans and property in the US during an ordinary year. But in a post-pandemic year like 2021, to cost to repair damaged property can be much higher.

But drunk driving isn’t the only risk associated with drinking at company events. Now that we have thought about alcohol and traffic accidents, let’s think about alcohol and violence.

Alcohol Affects Human Behavior

It is no secret that alcohol affects our decision-making process and sways our moral compass. If you have ever been to a bar on Karaoke night, you’ve experienced this phenomenon firsthand!

Your first drink might make you feel a little warm and happy, but after a few more your inhibitions leave the building. Suddenly, you find yourself singing Meatloaf’s Paradise by the Dashboard Light with a total stranger. We understand.

In 2003, psychologists learned that a few drinks of alcohol will cause our frontal lobes – the part of the brain that makes moral choices – to go dark. When that happens, we make impulsive decisions based on basic desires – the part of us Freud would call the “Id.”

Social norms, religious and customary values go right out the door. Some people become prone to violence. And worst of all, after too many drinks, a person might not even remember their questionable behavior.

Alcohol, Violence and Your Business

Alcohol consumption leads to aggression and violence. This is a documented fact supported by hundreds of scientific studies. And if you’ve been at the bar on Karaoke night, you’ve witnessed some of this, too.

All it takes is one or two guests at your company function to enjoy a few drinks too many, and violence might ensue. One guest stumbles into another, or someone takes offense at an off-color joke, and suddenly fists are flying.

Your guests might get injured, and those expensive medical bills might become the responsibility of your business. And that’s one more reason to buy extra host liquor liability coverage for company events.

The good news is that host liquor liability insurance policies are very affordable! Depending on the size of the event and your claims history, you can get host liquor liability insurance as little as $100.

Host Liquor Liability Insurance Costs

Host liquor liability can often times be added to your current small business policy as a rider or through endorsement. The additional premium charged by a carrier typically ranges from $100 – $300, depending on the size of the event and claims history.

Many commercial insurance providers will offer additional host liquor liability coverage for a special event. But you can also purchase these special event insurance policies as a stand-alone item.

Do I Already Have Host Liquor Liability Coverage?

Business Owner’s Policies (BOPs) and General Liability policies may already have some host liquor liability built into them. But every insurance policy is a unique contract. And every insurer must operate by different rules, which might vary by state.

Before you buy a stand-alone host liquor liability insurance policy for your event, read your insurance documents carefully and talk to your agent. They’ll be able to explain any existing coverages.

Then, think carefully about the limit of liability. Remember, any insurance policy will only pay up to the policy limits.

How Much Host Liquor Liability Coverage Should I have?

No one likes to think about a tragedy. But statistics prove that alcohol impaired driving causes many fatal accidents and a lot of property damage.

If a guest were to leave your company event, miss a stop sign total a vehicle, injure another driver, or kill a whole family, it’s going to be expensive! So, $1 million in host liquor liability coverage is a good starting point for a smaller event, less than 100 people.

If your company is hosting a huge event, think Lollapalooza with 25,000 attendees, you are going to need much more coverage. Remember, every guest at your special event poses a risk to your business if alcohol is involved.

Liquor Liability vs. Host Liquor Liability Insurance

Some companies deal with alcohol on a regular basis. If that’s your business model, you’ll need a liquor liability policy. If you regularly serve or sell alcohol, your company might be held responsible for the actions of an inebriated customer after they leave your property.

Liquor Liability Policies are for:

Restaurants that serve drinks
Bars, nightclubs, and pubs
Convenience stores
Liquor stores
Casinos
Hotels and banquet halls
Caterers that include alcohol in their packages
And even day spas or salons that offer alcoholic beverages as part of the spa experience

Host liquor liability insurance policies protect organizations that don’t usually deal in alcohol directly but might offer it at a company party or special event.

Host Liquor Liability Policies are for:

Any business hosting event where alcohol is served, or that might attract a guest who brings alcohol to the party
Non-profit organizations hosting fundraisers that might involve drinking, like “casino nights” or BINGO.

This brings us to a good point about fundraising.

Host Liquor Liability Insurance is Vital for Non-Profit Organizations

From time to time, non-profit organizations host events that supply alcohol or attract a guest that might bring drinks. Churches, temples, museums, and non-profit social clubs like the Elks Lodge, for instance, should all buy host liquor liability coverage for these events.

Remember, even though your pure intentions are to raise funds for a group at need, your organization could still be held liable for the actions of an inebriated guest.

So, you should absolutely consider adding host liquor liability insurance when hosting:

Rummage sales
Pageants
BINGO or “casino night” fundraisers

Whether you’re running a non-profit organization or a for-profit business, your search for host liquor liability insurance coverage will go the same way. Start by gathering any insurance documents you have on hand. Then contact your agent and do a few searches for host liquor liability insurance online.

How to Buy Host Liquor Liability Insurance

Once you’ve reviewed your commercial insurance policy, contact your insurance agent.

Expect them to ask standard questions like:

What sort of event are you hosting? A rowdy rodeo might cost more to insure than a classy art exhibition.
What is the date of the event? Remember some holidays are known for alcohol-related traffic troubles.
What is the location address of the event? A theme park or rodeo grounds might have a significant claims history that insurers watch closely.
If your event is at a special location, do they carry insurance? Who is the provider?
How many guests will be attending?
How much host liquor liability insurance coverage do you want to buy?

The amount of host liquor liability coverage you need depends on the size of the event and the amount of liability you already have with your regular insurer.

Most licensed insurance agents will tell you that more is better. And that’s not just an upsell. Remember, the purpose of host liquor liability insurance is to protect your business from the actions of inebriated guests who can cause costly traffic accidents or behave violently. Use our free online quote tool to compare host liquor liability insurance quotes.

Do You Have a Claims History?

Remember, a history of claims can affect your price for host liquor liability insurance. If an insurer has paid several liability claims associated with rowdy holiday parties in the past, your price for host liquor liability insurance might be high.

But you can always shop around for a better deal. A quick search on the internet for “host liquor liability insurance” will bring up dozens of options.

In closing, host liquor liability coverage should be high on your event planning “to do” list. It’s usually very affordable, and you’ll sleep better knowing your company is protected from the bad choices of Karaoke singers.