Ho ho ... oh no: When a holiday party goes wrong, insurance could save you millions

Now that the party season is at hand, and you may be planning to host a big shindig, think about protecting yourself or your company from a huge liability bill by getting event liability insurance.

Accidents can happen at parties, especially if booze is being served, and you could get stuck with the bill if one of your guests causes damage.

With weddings and bar/bat mitzvah parties costing $20,000 and more, you can also protect deposits and get them back as long as the reason for cancellation is one of the allowable excuses in the policy. Yes, some policies even allow "cold feet" as an excuse.

Considering that you can get as much as $2 million in insurance for as little as $450, it's worth the cost to protect against a much larger liability.Don't get the cheapest policy out there. Be sure you'll have coverage for any major catastrophes that could occur. You may be asking yourself ,what can possibly go wrong to make me liable for $2 million in damages?

Jeff Kleid, CEO of Elite Risk Solutions, gave Bankrate.com an example of one of the most expensive claims against a policy: A guest tipped over a votive candle in a holder and set a camera on fire. The blaze quickly engulfed the room, and at least one person was badly burned. Think about the medical bills and repairs bills for that guest's error.

Many venues may require event liability insurance, and if you plan to serve liquor, be sure you add liquor liability insurance or a liquor liability rider. You can be sued if one of your guests gets drunk at the party and ends up in a accident on the way home, saying you're responsible because you served the liquor. The insurance company would defend you and pay for any damages.

You'll also have protection if a fight breaks out at the party and there are damages to the hall. Even if that fight moves outside, you'll be protected for damages that could occur in the parking lot.

To research event liability insurance, you can check with the venue at which you will host the affair. They likely work with one or two companies that offer insurance. One company even specializes in liability insurance for weddings called Wedsafe.

Another major event insurer is HCC Specialty Underwriters. They provide coverage for 24 different types of events, including animal shows, arts and crafts festivals, auctions, concerts, conventions, dances, fairs, graduations, meetings, parties, receptions and weddings.

Before pricing event liability insurance, check with your home insurance provider to see what types of coverage you have through your home insurance policy that could protect you when you host a party. Also, ask about an umbrella policy that could give up to $1 million or $2 million in liability coverage for any incident year round, not just for the party. But if you're planning a major event where you'll be putting thousands down in deposits, event liability insurance will still be your best option if you cancel the event and want your deposits back.

Lita Epstein has written more than 25 books including "The Complete Idiot's Guide to Social Security and Medicare" and "The Complete Idiot's Guide to Improving Your Credit Score."
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