Liquor Liability Insurance
for Nonprofit Organizations
Has your nonprofit or social service ever planned an event where alcohol was served? Perhaps it was a holiday party for the employees of your nursing home. Or maybe your botanical garden is planning to host a fundraiser to raise money.
Whenever an organization serves alcohol to a group of people, liquor liability issues come in to play — and Liquor Liability Insurance (sometimes called “Dram Shop Insurance”) may be necessary to protect your organization from potential loss.
Most states have some kind of “dram shop law,” which outlines the various liabilities of establishments like bars and restaurants that sell alcohol. All states assign penalties when these establishments serve minors, and some also assign penalties for serving intoxicated persons.
Dram shop laws can vary greatly from state to state, and some even include rulings that legally address “social host liability.” A “social host” is an organization or individual who does not typically sell or serve alcohol for profit but who hosts a gathering where alcohol is served.
If your nonprofit or social service ever serves alcohol — whether formally or informally — your organization would be considered a social host and subject to the social hosts laws in your state.
Read on to learn more about social host liability and how Liquor Liability Insurance can protect your nonprofit or social service in the event of an alcohol-related accident.
Social Host Liability
Nonprofits and Social Services Organizations: What Is Social Host Liability?
If your nonprofit or social service organization operates in a state that has a social host law on the books, then you could be found responsible for the actions of the intoxicated patrons at your party. This is called social host liability.
The specifics of these laws vary wildly from state to state (and some states don’t place any liability on social hosts), so it’s important to be acquainted with your local regulations. Some common areas of liability include:
- Serving minors. Many states hold social hosts responsible for serving minors. If, for example, an intoxicated minor leaves your gathering and ends up injuring another person, you could be held liable for the cost of those injuries. You may also be held liable for any damage the intoxicated minor does to himself.
- Serving intoxicated adults. In most states that have social host liability laws, you can be held liable (to varying degrees) for the actions of an intoxicated adult who leaves your party. Most laws hold social hosts liable for “third-party” injuries and damages. In this case, if an intoxicated guest drives drunk and injures another person, you could be responsible for their injuries. In a few states, you could also be held responsible for any harm the intoxicated individual does to herself.
Between potential medical expenses, property damage, and legal costs, the price of an intoxicated guest’s actions can add up fast. Liquor Liability Insurance helps nonprofits and social service organizations pay for the cost of alcohol-related accidents.
Do You Need It?
Do Nonprofits & Social Service Organizations Really Need Liquor Liability Insurance?
If your nonprofit of social services organization will never, ever serve alcohol, then Liquor Liability Insurance won’t do you much good. But if you ever plan to host a function where alcohol may be served, you should definitely consider purchasing this coverage.
If you plan on renting out a venue to host your function, there is a good chance the venue will require you to carry Liquor Liability Insurance. You have two options for securing coverage:
- Your General Liability Insurance. General Liability Insurance often comes with Liquor Liability Insurance included. You’ll just have to make sure your limits match the minimum required coverage for the venue.
- Special Events Insurance. If your General Liability Insurance does not come with Liquor Liability protection, you may be able to add temporary coverage with Special Event Insurance. Special Event Insurance is helpful whether or not you serve alcohol. Learn more about it by reading the post “How (and When) to Purchase Special Event Insurance ” on our blog.
Even if your state does not have established social host liability laws, it’s still a good idea to carry coverage. People can file lawsuits against your business even if they don’t have the legal ground to do so — legal cases, after all, can set new precedents.
When you have effective Liquor Liability Insurance, your coverage helps you pay for:
- Legal defense, which you’ll need even if the claim never goes to trial (including lawyers’ fees).
- Legal investigation.
- Judgments, settlements, and other court-related fees (including damages related to injuries or pain and suffering).
Your Liquor Liability Insurance can protect you up to the stated limits on your policy. You can learn even more about Liquor Liability Insurance by checking out our free eBook “Liquor Liability Insurance? I'll Drink to That: A Complete Guide to Serving and Hosting Responsibly”
Get Liquor Liability Protection
Nonprofits and Social Services Organizations: Get Liquor Liability Protection for Your Next Event
What to learn more about Liquor Liability Insurance for your nonprofit or social services organization? Call your insureon agent, who specializes in securing small business insurance for organizations like yours. You can also receive insurance quotes by email, if you complete an online application.