When it comes time to throw a party, don’t let the excitement of celebrating a happy occasion cloud your judgment, especially if you are hiring vendors. A party itself already presents a significant personal liability risk, so you need to make sure your home insurance policy is in order. Once you introduce an outside vendor, the potential risk increases. However, there are some simple steps you can take before hiring anyone to potentially minimize your liability in any state: Alabama, Alaska, Arizona, Arkansas, Connecticut. As with all aspects of your party, some planning will go a long way to ensuring you have a good time.
When you hire anyone to provide services for your party, you need to document the relationship. It can be as formal as a full contract or something as simple as an invoice. Generally, a written agreement between two parties that states the obligations of each party will help eliminate disagreements. While it’s common for the service provider and client to spend time negotiating the terms of the services and goods provided, it’s less common for the parties to discuss insurance issues. Don’t make that mistake – make sure that insurance and hold-harmless obligations are properly addressed in your contract. A hold-harmless provision in a contract requires one party to protect the other party from losses and claims. Any vendor providing services at your party should agree to provide you with evidence of their insurance. Usually, you want to ensure that they have three main types of insurance: general liability, automobile liability, and workers compensation.
The most important coverage to verify is general liability insurance. Your contract should require the vendor to provide evidence of liability insurance and to make you an additional insured. By naming you as an additional insured on the vendor’s policy, any issues at your party that arise out of the vendor’s services can be sent to the vendor’s policy instead of your home insurance policy. For example, if you hire a clown for your child’s party and the clown puts on a juggling show, and then during the show the clown drops a ball and it injures a guest, that’s a potential personal liability claim against you. However, since it really arose out of the clown’s services, you can ask the clown’s liability insurance to handle the claim. As you have been made an additional insured on the clown’s policy, you can treat that policy as if it were yours. This then provides you with extra liability insurance before you have to use your home insurance policy.
Workers’ compensation insurance should be required of your vendor because state laws generally require any company with employees to maintain the coverage. If you do not verify that your vendor has the required coverage and one of the employees is injured, you may be held responsible. This is compounded by the fact that your home insurance policy may not cover you in this situation. Therefore, it’s very important to require your vendor follow the law in your state.
Automobile liability insurance is necessary if your vendor will be driving to your home to conduct its business. If one of the vendor’s autos causes injury or damage, you need to know that they will be handling it through their insurance. Because all automobile-related matters are not covered by the standard home insurance policy, you do not have any protection from liability claims if your vendor does not provide its own coverage.
With a little planning and documentation, you can have a safe and liability-free party. Just make sure you collect evidence of insurance before the event.