Organizing social activities like pool parties, cookouts, and holiday parties is a big part of managing a community association. They bring members together and foster a sense of community. But association-sponsored social activities can be risky, too, if you serve alcohol.
If a member, employee, or guest drinks too much and gets into an accident, the victims—including the person who caused the accident—may sue the association and/or manager. And in many states, they’ll have a good chance of winning. The easiest way to avoid liability for alcohol-related accidents is to not serve alcohol at social events you sponsor. Many community associations are now doing this, making all social gatherings “dry”—that is, alcohol free.
But if you do decide to serve alcohol at association-sponsored social events, you can take steps to minimize your exposure to liability. Here are three things you can do:
- Have the right kind of insurance coverage. Your general liability policy may already have a clause giving you “limited liquor liability” or “host liquor liability” coverage. These clauses protect you against liability for accidents caused by people who have consumed liquor you served. If you don’t have this coverage, and you plan to serve alcohol at association-sponsored social events, you should get it.PRACTICAL. POINTER: If you have only one activity a year at which you serve alcohol—say, at a holiday party—consider saving money by getting limited liquor liability coverage just for the single event, rather than having it added on to your policy for year-round coverage.
- Don’t charge fee for admission or alcohol. Just having the right kind of insurance coverage isn’t good enough. If you charge money for the drinks you serve, the limited liquor liability clause won’t help you much. It won’t cover you for injuries for which the association might be held liable as a result of its:
- Causing or contributing to the intoxication of any person;
- Furnishing alcohol to an underage person;
- Furnishing alcohol to an already intoxicated person; or
- Violating any law in the provision of alcohol.
A limited liquor liability clause isn’t intended to cover those in the business of selling, serving, or providing alcohol. So if you want to serve alcohol at a social function, don’t charge for it. That way, you won’t be considered to be in the business of selling, serving, or providing alcohol, and your limited liquor liability clause should cover you in case there’s an accident.Don’t charge an entry fee, either. Some insurance companies might say that even though you’re not charging money for the alcohol itself, charging for entry into an event at which alcohol is served is the same as being in the business of selling, serving, or providing alcohol. If that’s what they conclude, they won’t cover you for any accidents that happen. So err on the side of caution and don’t charge an entry fee.
- Hire professionals to serve the alcohol. An alternative is to “subcontract” the provision of alcohol to a professional, licensed organization that uses trained bartenders. Having a professional bartender can help protect you because bartenders are trained to spot minors and to know when to stop serving guests who are intoxicated—tasks your employees won’t be able to do as well.The other big advantage of subcontracting out the provision of alcohol is that professional companies carry liquor liability insurance to shield them—and you—from liability. Insist that the company you hire name you on its insurance policy as an “additional insured” for the association-sponsored social event. Getting an outside firm to serve the liquor is the way to go, as long as it’s insured and the association is named on the policy as an additional insured.
Always feel free to call or write if you have any questions.
Jay Nussbaum, Esq.
*Jay Nussbaum is a founding Partner of Berlandi Nussbaum & Reitzas LLP. Jay focuses on a wide variety of general corporate transactions for both established and start-up enterprises. He is a graduate of Brandies University and Boston University School of Law.