As the new school year starts and high schoolers get into the groove of hanging out with friends, they may go to parties after their school football games on weekends.
Unfortunately, these events often become occasions for teenagers to drink alcohol. Teens at unsupervised parties risk harming themselves and others when they drink.
Parents of the kids that throw these parties (with or without their parents' knowledge or consent) may bear responsibility for what happens there - and for injuries or damages occurring after the guests leave.
While their homeowner's liability coverage may 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 homeowner's insurance company. However, the policy's personal liability coverage does not apply to an insured 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.
Where auto insurance kicks in
Because of this, the homeowner's policy would not cover the parents' liability or defense costs. Their personal auto insurance policy may cover them, however. The policy's liability insurance covers the individuals named on the policy and household residents who are their relatives for their liability for bodily injury from an accident arising out of the use of any auto.
Therefore, even though the parents were not actually operating the vehicle involved in the accident, their policy will cover their liability. In addition, the auto policy that applies to the car involved in the accident (the guest's insurance, or, more likely, his parents') will also cover the hosts' liability for the passenger's injuries. The hosts' policy will step in if the owners' policy either does not apply or pays out its maximum limit of insurance.
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 judgement 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 the claim.
While one policy or the other may 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 may provide much less coverage. Most states have laws setting the minimum amounts of liability coverage that an auto policy may provide, but those limits are relatively small. Every state has different requirements for minimum limits for injuries or deaths to third parties.
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.
Let us know if you would like to discuss your coverage options.
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.