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Teens Drinking at Parties = Insurance Issues

As the new school year starts, high schoolers are getting back into the routine of hanging out with friends. This often includes weekend parties after the Friday night football game, which can become occasions for teenagers to drink alcohol. Unfortunately, when teens drink at unsupervised parties they risk harming themselves and others.

Responsibility and Coverage

When high schoolers throw these parties, their parents may bear responsibility for what happens, whether or not they knew or gave permission. This can include any injuries or damages that occur after the guests leave. The homeowner’s insurance is likely to cover any financial damages, but the circumstances of the accident determine which policy will respond, making a difference in how much coverage the parents receive.

For example, if a teen drinks several beers at a party, then gets into an accident on the way home, injuring himself and a passenger, the parents of both injured teens could sue the parents who hosted the party. If the host’s parents then reach out to their homeowner’s insurance company, their policy’s personal liability coverage may or may not apply to an insured person’s legal liability for the situation.

Where Auto Insurance Kicks In

If the homeowner’s policy doesn’t cover the parents’ liability or defense costs, then it’s time to check whether their personal auto insurance will. For example, the policy’s liability insurance might cover 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. 

Then, even though the parents were not actually operating the vehicle involved in the accident, their policy would 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.

Different Coverage in Different Policies 

In a new situation, assume that the guest consumes the beer, but a sober guest gives him a ride home. Rather than go straight to bed, he goes for a swim in his parents’ pool and drowns. His parents sue the hosts, alleging that his judgment was impaired because the hosts allowed him to drink. Because this accident did not involve a motor vehicle, and no other policy provisions that would remove coverage apply, the homeowner’s policy should cover the claim.

While one policy or the other may apply to a liquor liability claim, the two policies could provide significantly different amounts of coverage. While most homeowner’s policies provide personal liability coverage of at least $100,000 for each occurrence, some have limits of $300,000 or $500,000.

Auto policies, on the other hand, may provide much less coverage. Most states have laws setting the minimum amounts of liability coverage an auto policy is allowed to provide, but those limits are relatively small. Every state has different requirements for minimum limits for injuries or deaths to third parties.

If a young person is seriously injured or killed, the damages claimed could well exceed these amounts. Parents should consider buying as much liability insurance as they can afford in case of teen drinking liability scenarios. In addition, they should consider purchasing an umbrella policy, which pays for damages that surpass the amounts payable under homeowners and auto policies. And of course, the best course of action is to properly supervise parties, so that everyone has a good time and makes it home safely.