Summer Party Time: Are You Protected?

By Brian K. Schiess, CFP®, EA

Senior Financial Advisor, Principal

June 20, 2024

Welcome to summer, when warmer weather ushers in all kinds of fun events — pool parties, barbeques, boating, and of course the more formal gatherings like birthday parties and weddings. Since we are all eager to enjoy the company of friends and family, now is a good time to evaluate your personal liability exposure and consider taking some extra precautions when hosting.

Understanding and Minimizing Liability Risks When Hosting Parties

What Are the Risks?

The point of parties is to be free of stress and focus on the fun, such as games, refreshments, and great company. Unfortunately, parties can also be prime situations for accidents that can lead to injuries, insurance claims, and even lawsuits.

Even with a friendly social gathering on your own property, some unexpected things could go wrong. Here are a few examples:

Some of these scenarios may seem unlikely at first blush. But while low probability, they also can be high severity risks, which could wreak havoc on even the most well-designed and executed financial plans.

Even if your guests are as forgiving as you would have hoped, when accidents occur, their insurance company’s primary concern is about who is at fault and the financial considerations. Insurance claims related to an event that you host can easily jump well into six figures, especially when medical or property liability of a third party comes into play.

How Do I Protect Myself?

Risk management via insurance is a core component of every strong financial plan.  Our philosophy is to put measures in place to protect against unlikely, yet severely damaging occurrences.  There are several steps you can take to reduce potential financial liability risk when hosting an event.  Luckily, these protective measures are generally easy and simple to implement:

  • Alert your insurance company about the existence or addition of potential hazards on your property, such as swimming pools, trampolines, or swings.
  • Clear unnecessary clutter from all outdoor walkways, steps, and patios, as well as interior congregation areas of your home.
  • Ensure all walkways leading to and from your home are evenly paved and well lit to help prevent guests from stumbling or falling.
  • Provide guests with plenty of food and non-alcoholic beverage options when hosting a party. If you serve alcohol, be as mindful as you can about consumption. If necessary, offer to drive people to their next destination, pay for an Uber, or allow them to stay overnight.
  • Review your homeowner’s insurance policy in advance of a large gathering at your home. Depending on your policy’s current coverage limits, you may wish to increase your personal liability and medical payments coverage limits to further protect against potential large claims. Increasing your coverage limits will most likely result in higher premiums, but you can consider increasing your deductible amount to mitigate this increase. Ask your agent for an updated quote before making any changes to your policy.
  • Obtain an “umbrella” liability insurance policy. An umbrella policy is separate from your homeowner’s and auto insurance policies and can significantly increase the amount of protection against major claims and lawsuits. This is a relatively low-cost type of liability insurance that most high-net-worth individuals should consider to help shield their assets from low-probability/high-severity risks related to their home or cars. Auto and homeowner’s insurance policies alone may provide limited coverage that is well below the value of your net worth.
  • Consider event liability insurance when hosting a crowd. Large offsite events like weddings with tents and caterers as well as a significant number of guests make it difficult to monitor activity and can increase the risk of something going wrong. Even if the event is not held on your personal property, you can still be found personally liable for accidents that occur during or after your event. For this reason, you may have more peace of mind having an additional layer of specific coverage for the venue and the event.
  • Understand your state and local laws. Not every state will legally treat the circumstances of an accident in the same way, which can affect resulting insurance claim activity.

Party Smart

Many of us want to celebrate this summer with friends, family, and fresh enthusiasm. The simple steps above can help you enjoy yourself while providing an extra level of protection against unlikely, but potentially large financial risks that you cannot underestimate when it comes to your hard-earned wealth.

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