WHAT IS DRAM SHOP LIABILITY?
Did you know that giving a beer to a friend could bankrupt your family? No, this was not a new super-expensive micro-brew you just gave to your friend; this is your potential liability under the Indiana Dram Shop Act. Losing everything your family has is an extreme example for sure, but it highlights the potential risk one has when they give or sell alcohol to another person.
In its simplest terms, the Dram Shop Act imposes liability on a provider of alcohol for over-serving a drunk person. More specifically, the provider may be civilly liable for injuries or damages caused by knowingly serving alcohol to a "visibly intoxicated" person. The most common example of this is a bar or restaurant that serves multiple drinks to a patron and that patron injures someone while they are driving home. The bar or restaurant will likely be sued and could be liable to the injured person.
However, the Dram Shop Act can also impose liability on individuals. If an individual gives alcohol to a visibly intoxicated friend at a party or social gathering, they may be liable for any damages or injuries caused by the intoxicated person. This is called social host liability. If the intoxicated person gets into a car accident on the way home, or falls down the stairs hitting someone in front of him, the social host could have to pay.
The Dram Shop Act was originally passed in 1986 to protect providers of alcohol. It required that the provider must have "actual knowledge" of the person's "visible intoxication" before liability can be imposed. However, these protections have been whittled down through the years by the Indiana courts and there are now several ways to establish intoxication. First, are the obvious signs such as stumbling, slurring of speech, passing out, or overly aggressive behavior (to name a few). A bartender, server, or social host that observes these signs should not serve.
Second, visible intoxication can also be supported by the provider's knowledge that the person has already consumed an excessive number of drinks. This is why bars and restaurants will cut-off someone that starts acting intoxicated and/or has had several drinks. Finally, visible intoxication can even be supported by the person's behavior before, during, or after being served, even if outside the view of the provider. Expert testimony from a toxicologist can also be used to support visible intoxication.
HOW TO REDUCE THE RISK
There is no bright line test and all of these factors can be used by a plaintiff to potentially prove dram shop liability in court. But there are things individuals can do to protect themselves:
1) Don't host parties at your home. Go to a bar, restaurant, or another location where the alcohol is provided or purchased by someone else. This not only protects you from dram shop liability, but it also saves you from having to clean up the mess your party guests left.
2) BYOB. If you do host a party or gathering, have your guests bring their own alcohol and don't provide it to them. The Dram Shop Act prohibits the providing of alcohol to an intoxicated person. However, there is no dram shop liability for merely watching someone get drunk on their own booze, even if they do so at your home.
3) Have enough insurance. Most people have $100,000 or $300,000 in liability insurance through their auto or home policies. However, a $1,000,000 umbrella policy should be considered as they are relatively affordable. Medical bills and damages from a serious accident (whether caused by alcohol or not) can often exceed the $100,000 or $300,000 policy limits. That could leave you personally exposed for the excess.
DRAM SHOP LIABILITY FOR COLLEGE KIDS
Even if you don't host parties, your college-aged children likely do. Think back to all of the house and apartment parties you attended in college. Keggers, handles of vodka, shots, drinking games, etc. Now think about what you just read about dram shop liability. Pretty scary, right?
The good news is that a parent is not directly liable for the actions of the 18+ year old child (unless the parent is providing the alcohol to minors - in which case, the parent should know better). The adult child is typically responsible, but the parents may still end up paying in the end through increased insurance premiums. Most often, full-time college students are covered under their parents homeowners insurance for liability and property loss.
If the child hosts a kegger at college, and just one party guest has too much and injures someone while driving home, the child will likely be sued. The parent's homeowners carrier will then typically step in to defend the the child and may ultimately pay any settlement or judgment. This may be reassuring to the parent, but the claim will likely increase the parent's insurance rates dramatically.
College kids should know the potential risks of hosting a party. Parents should talk to their children about these risks so they at least know what could happen Hopefully, the parent's advice is not lost on their teenager (as is often the case).
Knowledge is power. Knowing your risk is half the battle.
Christopher A. Pearcy
Senior Associate
Attorney
Hume Smith Geddes Green
& Simmons LLP
54 Monument Circle, 4th Fl.
Indianapolis, IN 46204
Phone: (317) 632-4402
Fax: (317) 632-5595
54 Monument Circle, 4th Fl.
Indianapolis, IN 46204
Phone: (317) 632-4402
Fax: (317) 632-5595
