It’s holiday time again. That means many party hosts will be uncorking the bubbly, spicing up the eggnog, or mulling the wine.

Surely, ’tis the season to be jolly, but if you let your guests get too jolly, you could find yourself dealing with a lawsuit.

Under what are known as “social host laws,” individuals who serve alcohol may be found liable if a guest who was drinking is later involved in a car accident.

If you’ve never heard of social-host laws, you’re not alone.

In fact, a recent survey by the Independent Insurance Agents and Brokers of America found that more than two-thirds of people didn’t know they could be held financially liable if someone who drank at their home becomes involved in an auto accident. These laws apply whether you own your home or rent.

Protecting Your Party
Fortunately, you can take steps to limit the potential risks of hosting a party.

Before you send out the invitations, check your homeowners, renters or condo-owners insurance policy, or discuss it with your agent. Make sure it provides personal-liability coverage. Some homeowners policies cover only the structure or dwelling. Renters are at particularly high risk because roughly two-thirds of them don’t carry any renters insurance.

If you don’t already have one, you may want to consider obtaining an umbrella liability policy. These are policies that supplement your homeowners coverage. Say that your homeowners coverage limit is $300,000. An umbrella liability policy would kick in once that $300,000 is used up. Umbrella policies typically start at $1 million in coverage for a rather modest premium, and go up from there.

The amount is calculated in addition to the coverage you have under your homeowners policy. If your homeowners liability coverage is $300,000, and you have a $1 million umbrella policy, your total coverage is $1.3 million. While this may sound like quite a bit of money, given the legal costs and possible jury awards in drunk driving lawsuits, it could go quite quickly.

Fortunately, obtaining an umbrella policy doesn’t have to cost an arm and a leg. Annual premiums usually range from $200 to $600.

Things Not To Do

If you have an umbrella liability policy, but you serve liquor to a minor, it puts everything in jeopardy.  Another point to keep in mind: Some policies may not provide coverage if you knowingly serve an individual who already is acting intoxicated.

Be a responsible host. For some get-togethers, it may be easiest to simply not serve alcohol. If you’re hosting a brunch or lunchtime party, this may be a natural solution.

If you are going to serve alcohol, take a few common-sense precautions:

• Limit your guest list to those you know well.
• Before the festivities get under way, let guests know you’ll provide transportation home if their behavior seems questionable.
• Only serve party-goers who you know are over the legal drinking age of 21.
• Stay sober and serve the drinks yourself, so you know which guests are reaching their limit.
• Have plenty of food available, so guests aren’t drinking on an empty stomach.
• Close the bar at least an hour before people will be leaving.
• If a significant number of young people will be attending a party at which liquor is being consumed, have them turn in their car keys as they enter and only return them when you are confident they have not been drinking.

Finally, if an incident does occur, notify your insurer right away. Some policies will exclude claims if you didn’t provide “timely notice.”