Holiday parties: Eat, drink and be wary!
By Karen M. Kroll • Bankrate.com

It's holiday time again. That means many party hosts will be uncorking the bubbly, spicing up the eggnog, or mulling the wine.

Surely, 'tis the season to be jolly, but if you let your guests get too jolly, you could find yourself dealing with a lawsuit.

Under what are known as "social host laws," individuals who serve alcohol may be found liable if a guest who was drinking is later involved in a car accident.

"People need to understand that if they're serving any type of alcoholic beverage, they're going to be named in a lawsuit in the event a person leaves and gets in an accident," says Andy Thompson, head of The Thompson Group, an insurance agency in Parker City, Ind.

Last year, 17,400 people -- an average of nearly 50 per day -- died in alcohol-related crashes, according to statistics from the National Highway Traffic Safety Administration. The percentage of alcohol-related traffic fatalities tends to increase during the holidays.

If you've never heard of social-host laws, you're not alone.

"These are much less known than other laws," says Phil Berardelli, author of several books on safe driving, including The Driving Challenge: Dare to be Safer and Happier on the Road.

In fact, a recent survey by the Independent Insurance Agents and Brokers of America found that more than two-thirds of people didn't know they could be held financially liable if someone who drank at their home becomes involved in an auto accident. These laws apply whether you own your home or rent. The specific laws vary from state to state. Currently, more than 30 states have either case or statutory laws that hold hosts responsible for providing alcohol to minors, or to people who are intoxicated and later are involved in car accidents. An attorney or your insurance agent should be able to explain the law in your state.

Different people hold different views on just how responsible a party host should be for the actions of a guest. While most would hold adults responsible if they provide or allow liquor to be consumed by those under the legal drinking age of 21, opinions are more divided when it comes to adult guests who drink and drive. However, given the litigious environment today, it's wise to be aware of the potential liability.

Of course, the most significant concern in an automobile accident is the potential for injury and loss of life. Few of us would want to know that we contributed, however unintentionally, to the death or injury of another person.

"The general public often doesn't understand how traumatizing it can be for families (of the victims of drunk drivers) to deal with this devastation in their lives," says Wendy J. Hamilton, national president of Mothers Against Drunk Driving.

Protecting your party
Fortunately, you can take steps to limit the potential risks of hosting a party.

Before you send out the invitations, check your homeowners, renters or condo-owners insurance policy, or discuss it with your agent. Make sure it provides personal-liability coverage. Some homeowners policies cover only the structure or dwelling, says Don Griffin, assistant vice president with the National Association of Independent Insurers, a professional group based in Des Plaines, Ill.

Renters are at particularly high risk because roughly two-thirds of them don't carry any renters insurance, says Kevin Callahan, spokesman with the Independent Insurance Agents and Brokers of America.

"If you have a party, you can get sued if a person gets drunk, trips and hits his head on the coffee table. You would have nothing to use to pay the legal bills," says Callahan.

Look for wording that indicates that you're covered for liabilities arising from the negligence of the homeowner, says Griffin. This should help protect you in a lawsuit, if you unknowingly serve alcohol to someone who is becoming intoxicated.