Every spring brings with it the prom and graduation party seasons. Unfortunately, these events often become occasions for teens to drink alcohol. Teens at unsupervised parties risk harming themselves and others when they drink. Parents who host these parties might bear responsibility for what happens there and for injuries or damages occurring after the guests leave. Although their liability insurance might cover any financial damages, the circumstances of the accident determine which policy will respond and this will affect how much coverage the parents have.
Assume that a guest consumes several beers at the party, drives off in his car, and gets into an accident, injuring himself and a passenger. The parents of both injured teens sue the parents who hosted the party, who in turn notify their homeowners insurance company. However, the policy's personal liability coverage does not apply to an injured person's legal liability for:
• The occupancy, operation, or use of a motor vehicle by any person
• The entrustment of a motor vehicle by the insured person to anyone else
• The insured person's failure to supervise or negligent supervision of any person using a motor vehicle
• The actions of a minor involving a motor vehicle
Because of this, the homeowners policy will not cover the parents' liability or defense costs. The guest's auto insurance policy, or his parents policy will respond.
Now assume that the guest consumes the beer, but a sober guest gives him a ride home. Rather than go straight to bed, the young man goes for a swim in his parents' pool and drowns. His parents sue the hosts, alleging that his judgment was impaired because the hosts allowed him to drink. In this situation, the homeowner's policy should pay for the hosts' liability and legal defense. Because this accident did not involve a motor vehicle, and no other policy provisions that would remove coverage apply, the policy will cover this claim.
Although one policy or the other might apply to a liquor liability claim, there could be significant differences between the amounts of coverage the two policies provide. Most homeowner's policies provide personal liability coverage of at least $100,000 for each occurrence; many provide limits of $300,000 or $500,000. Auto policies might provide much less coverage. Most states have laws setting the minimum amounts of liability for injuries to one person and $50,000 for injuries to two or more people (higher amounts apply for death claims). Should a young person become seriously injured or killed, the damages claimed could well exceed these amounts. Parents should consider buying as much liability insurance as they can afford; they should also think about buying an umbrella policy, which pays for damages that surpass the amounts payable under homeowner's and auto policies.
Of course, the best course of action is to properly supervise parties, so that everyone has a good time and lives to have another one someday.
Source: Stromsoe Insurance
If you are having a graduation party this summer, please give us a call at 585.352.1234 so we can help you with any questions you may have regarding your insurance coverages.