Reader’s Question: How Big A Party Is Too Big For Your Home Insurance?

by Hank Coleman

Here is the next installment in our the Reader’s Questions Series which highlight questions emailed to me by you, the readers of Money Q&A. Be sure to find out at the end of this article how you can receive a free copy of Dave Ramsey’s book, The Total Money Makeover if your money question is chosen to be featured in an upcoming week’s blog post. If you’re not familiar with Dave Ramsey’s book, you should run right out and get it. It is one of my top ten best personal finance books that everyone should read. Now….on to our reader’s question.

How big does a party have to be to get excluded from you home insurance coverage? Or, what other factors determine your home insurance coverage?

There are limits to what is covered by your homeowner’s insurance policy, and house parties can quickly overwhelm your liability coverage if you are not careful. House party insurance is something that many party givers often forget. But, forgetting to ensure that a party is adequately covered can be disastrous for your finances.

When You May Need House Party Insurance

You may need house party insurance when you're the host.If a child gets hurt in a rented inflatable bounce house or a guest slips next to your pool during a party that you are hosting at your home, you may not be as covered by your homeowner’s insurance as you think you are. There are limits like all insurance as to what your policy covers, and typically events like a house party are not one of the covered items in your home insurance. You may need a special event or umbrella insurance policy to be adequately protected.

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You Have To Be Especially Careful Serving Alcohol

Supplementing your standard home insurance coverage may be especially important if you are planning on serving alcohol. As the host, you could be liable for third-party claims should a drunken guest drive off and cause an injury. Even if your friend does not sue you for damages that he or she suffers while being drunk, you can bet anyone else that they injure while inebriated sure will.

How Big Of A Party Is Too Big?

How big a party is too big for your homeowner’s insurance to provide coverage? Well it depends of course. All insurance companies are different, and their policies are different too. In order to be sure that you are covered, you should check with your individual homeowner’s insurance company. If you are serving alcohol to your guests, then one guest may be too many and you will need additional third party liability coverage. If you are just having a large party or event at your house without alcohol, then your homeowner’s insurance will probably provide you coverage for 10 to 20 of your closest friends. But, again, you will want to check with your insurance company just to make sure BEFORE your party.

Special Attractions Call For Special Event Insurance

Even event insurance will not cover all aspects of your party. If you are going to have special attractions like a mechanical bull, rock climbing wall, stunts, water slides, pyrotechnics, hazardous activities, and other events, you need to ensure that you tell your insurance company. Most event insurers offer additional riders that you can add to your event insurance policies in order to make sure that you are covered when you have your party.

Wrapping It All Up

Almost one third of all homeowners do not think that they could be held responsible for an alcohol-related accident after serving some one alcohol at a house party they host. Or worse, maybe they do not even know or realize that they can be held liable for someone’s drunken behavior, accidents, or injuries if you did not take the proper protections. Do not take these risks. Ensure that you are properly insured when you have a party and your assets are protected.

Past Readers’ Questions:

Do you have a money question that you would like to ask? Email me your money, investing, retirement, savings, or other question to Questions[at]MoneyQandA.com. If I pick your question for the next article in the series, I’ll send you a free copy of Dave Ramsey’s book, The Total Money Makeover, or you can pick from any of these other free books instead.

Thank you all so much for all of the questions! I would really like to turn this into a weekly series of blog posts answering your questions every Monday. So, please keep them coming!

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 575 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 3 comments… read them below or add one }

Jai Catalano

This is funny because my brother throws parties in the house all the time. I never get invited. I now know why. I better look into party insurance.

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Oil and Gas ETF

So essentially the safest route to take is to check with your insurance while still in the planning stages of a party. Better safe than sorry seems adequate as there’s alot of factors in play: alcohol, etc..

Reply

Hank Coleman

Exactly! I think that you hit the nail on the head. Insurance is not something that you want to ask for forgiveness after the fact. It is always better to check with them on what is acceptable and what your policy covers. You may also want to have the insurance company point to their policy in writing and let you know where you can find the fine print.

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