Do Homeowners Insurance Policies Cover Host Liquor Liability?
Question: “As this is party/graduation season, do Homeowners insurance policies cover Host Liquor Liability? My example: If a guest or other third party was injured or killed in an auto accident after attending a party, would the Homeowners provide Host Liquor Liability coverage?”
Answer: Well, possibly, but not for the scenario you described.
With any coverage question, the only way to know for certain is to review the coverage forms and endorsements in the specific policy the insured has purchased. It’s also not enough to look through a policy for references to “alcohol” or “liquor”. I just reviewed several carriers’ homeowners coverage forms (I collect policies for questions like this), and none of them mentioned those words. That would, on the face of it, mean that the exposure is not excluded. However, check out this exclusion in one of the forms:
“Coverages E and F do not apply to the following: …
2. Criminal Acts
“Bodily injury” or “property damage” caused by or resulting from an act or omission that is criminal in nature and committed by an “insured”. This exclusion applies regardless of whether the “insured” is actually charged with or convicted of a crime; …”
That exclusion is not in the ISO HO-3 form, but it’s in this carrier’s form. Several sections of New York Penal Law prohibit furnishing alcohol to individuals under age 21. Violators may be charged with misdemeanors, punishable by fines and/or jail time. It’s easy to foresee an insurance carrier invoking the Criminal Acts exclusion in a situation where an 18-year-old got hammered at a graduation party and caused injuries to himself or others. By the way, that same carrier’s form has a built-in exclusion for five breeds of dogs, plus other kinds of dogs. That exclusion is also not in the ISO form. Another illustration of why it’s so important to review the specific policy.
I don’t think most Homeowners policies will cover the scenario you described (“guest or other third party was injured or killed in an auto accident after attending a party”), not because there’s alcohol involved, but because there’s a motor vehicle involved. I don’t think I’ve seen a Homeowners policy that doesn’t contain some variation of this wording from the ISO HO-3:
“Coverages E and F do not apply to any ‘motor vehicle liability’ if, at the time and place of an ‘occurrence’, the involved ‘motor vehicle’:
a. Is registered for use on public roads or property;
b. Is not registered for use on public roads or property, but such registration is required by a law, or regulation issued by a government agency, for it to be used at the place of the ‘occurrence’; …”
The form defines “motor vehicle liability” in part as liability for BI or PD arising out of the occupancy/operation/use of a self-propelled land or amphibious vehicle by any person.
Note that the exclusion does not require that the insured be occupying/operating/using the motor vehicle for coverage to be excluded. If an insured is sued because of BI, and that BI arose out of the use of a motor vehicle by anyone (i.e., an inebriated guest leaving a party), the ISO form excludes coverage for the loss. The insurer will provide neither defense nor indemnity; the insured will be left to finance those costs on their own.
If there were a loss like that, the host should:
- Make a claim for primary coverage under the vehicle owner’s auto liability insurance (if they can find out the carrier and policy number)
- Make a claim for excess coverage under their own auto liability insurance
- Make a claim for excess coverage under their own personal umbrella policy, if they have one.
Every personal auto policy I’ve seen includes as an “insured” for liability coverage something like:
“For ‘your covered auto’, any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.”
To the extent the party hosts have legal responsibility for the acts or omissions of the driver, the driver’s PAP will provide them with defense and primary coverage. The definition of “insured” usually also includes the named insured and any relative for the use of any auto (without specifying use by any particular person, and subject to exclusions). Theoretically, it should cover the party hosts for liability arising out of the acts of someone else using that person’s auto. Ditto for the umbrella.
So, depending on the language in the insured’s policy and the circumstances of the loss, there may be coverage under either a Homeowners or Auto policy, but not both, plus an Umbrella.
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