During the spring, two events most teens participate in are graduation parties and prom after-parties. Both types of events usually also include alcohol. When they are at unsupervised parties, teens are at a greater risk of hurting themselves or others by drinking. Whether parents are present or not, they are the ones who take the responsibility for what happens. Liability insurance may cover financial damages, but the details of the situation dictate which type of policy will respond. This affects the amount of coverage the parents have.
If a house guest drinks several bottles of beer, drives away and is in an accident, the parents of the injured teen and any other passengers in the car may sue the parents whose house the party happened at. The first logical step would be to notify the homeowners insurance company, but liability coverage will not apply in the following situations:
– The actions of a minor while driving.
– The operation, use or occupancy of a motor vehicle by anyone.
– The insured’s failure to supervise people in the motor vehicle.
– Trusting the insured’s motor vehicle to anyone else.
Due to these circumstances, a home insurance policy will not cover the liability. However, a personal auto policy might cover them. Liability insurance for the policy covers the people who are named on the policy as well as residents in the home who are relatives against bodily injury in accidents. Despite the parents not being the ones operating the vehicle that was in the accident, their policy will provide coverage for the liability. The auto policy is also extended to the car involved in the accident. If the owners’ policy does not apply or pays its maximum insurance limit, the hosts’ policy will step in.
If the guest portrayed in the previous scenario had drank the beer but a sober guest drove the individual home only for him to try to swim and drown, the parents of the deceased party guest may be able to sue the homeowners hosting the party on the grounds that their child was allowed to drink and leave with impaired judgment. If the case went in their favor, the home insurance policy would have to pay the damages. Since there was no vehicle involved in the incident, the auto policy would not pay.
One policy or the other might be applicable if there were a liquor liability claim, but the differences in amounts could be drastic. Personal liability coverage with a home insurance policy is usually at least $100,000 for each incident. Some policies have limits of $300,000 per incident, but others may have limits of $500,000 per incident.
Auto policies usually offer significantly less coverage. The majority of states have passed laws designating minimum amounts for liability coverage that auto policies can provide. However, those limits are usually small. If a teen is injured seriously or is killed, the damages could total well beyond these amounts. For this reason, it is important for parents to buy as much liability coverage as they can afford. In addition to this, they should consider purchasing an umbrella policy, which will pay for any damages beyond the limits up to a specified amount. Umbrella policies come in increments of millions. However, the best way to deal with this issue and prevent it is to supervise parties to ensure everyone has an enjoyable time and arrives home without injuries.
If you have any questions or would like to review your coverage, call ACBI at 203-259-7580 or visit our website.