It is once again the holiday season, a time when many inns like to host holiday parties and charity events. While these gatherings can provide opportunities for your guests and visitors to mingle casually and revel in the spirit of the holidays, they can also prove to be a liability for you and your inn. That is why it is important that you take reasonable precautions to minimize risk and financially protect yourself through proper insurance coverage.
The United States Department of Labor states that hosting a holiday party with improper use of alcohol can make your inn more vulnerable to liability under Workers’ Compensation or other laws. When you host a holiday party and serve alcohol as part of the festivities, liquor liability can be covered by your Commercial General Liability policy. However, it is always best to check with your insurance agent or broker first, to make sure this coverage is specifically included.
If you are an inn without a liquor license that does not serve alcohol, you may not need a Liquor Liability policy. We strongly recommend you discuss the specific serving practices of your inn, whether by staff or by the guests themselves, with a trusted insurance advisor, to make sure you have the protection you want for this activity.
In addition to a Commercial General Liability policy, businesses should also consider purchasing an Employment Practices Liability policy. This policy will protect your inn from claims of discrimination, sexual harassment, emotional distress, and other workplace-related issues. When purchasing this policy, be certain it includes “third-party” coverage. Third-party coverage refers to claims made by non-employees, usually a guest or visitor, who alleges that an employee engaged in wrongful conduct such as sexual harassment or discrimination. This can be important coverage. For example, if someone on your staff, or a guest, makes an inappropriate overture towards another guest or visitor, this policy can provide protection. Without a specific policy endorsement for third-party claims, Employment Practices Liability policy forms do not cover these types of exposures. In addition to overtly inappropriate behavior, posting a video clip or picture on social media that could result in reputational harm to someone can also be covered under this type of policy.
Here are some recommended steps you should take to ensure that you and your guests are protected:
- Advise employees to be responsible and to be mindful of overly-intoxicated guests.
- Avoid providing an open bar whenever possible. Guests will likely drink less if they have to pay for the drinks themselves.
- If you must furnish an open bar, consider a drink voucher system to limit the number of drinks served. Or, serve alcohol for only a short period of time.
- If you do not already have one on staff, consider hiring a professional bartender, or insist that the bartender hired by the guests is a professional. Most bartenders are trained to recognize signs of intoxication and will limit consumption.
- Offer non-alcoholic beverages and always serve food. Consuming food while drinking can help lessen the effects of alcohol for some people.
- Do not serve alcohol to minors.
- Stop serving liquor toward the end of the evening and switch to coffee, tea and soft drinks.
Appropriate liability insurance coverage is necessary. In some cases, special event coverage may be available that will cover both liquor liability and other liability exposures specific to the event. The insurance professionals at the Merriam Insurance Agency recommend that you speak with a member of our staff about your liability insurance coverage and any exclusions, conditions, or limitations to your policies for this type of risk.