1. Forms
2. HO
3. HO-07-54

What the form is

The HO 07 54, titled "Liquor Liability Exclusion And Exception For Scheduled Activities," is an endorsement to a homeowners insurance policy. It is specifically designed to be used in conjunction with the HO 07 01 Home Business Insurance Coverage endorsement. The primary function of this form is to exclude liability coverage for bodily injury or property damage arising from the selling, serving, or furnishing of alcoholic beverages in connection with the insured's home-based business. However, the crucial feature of this endorsement is that it allows for an exception to this exclusion: if specific activities or functions are described in the schedule of the endorsement, liquor liability coverage can be provided for those scheduled events.

Classes of business it applies to

This endorsement applies to individuals who operate a business from their residence and have the HO 07 01 Home Business Insurance Coverage endorsement. It is relevant for home-based businesses that may have an incidental liquor liability exposure for specific, pre-planned events, rather than regular alcohol sales or service. Examples include:

• A home-based caterer who occasionally serves alcoholic beverages at events they cater (these events would need to be scheduled on the endorsement).
• A consultant working from home who hosts an annual client appreciation party at their residence where alcohol is served.
• An artist or crafter with a home studio who participates in an occasional art show or open studio event and wishes to offer complimentary wine or beer to attendees (the specific event would need to be scheduled).

Special considerations

• Exclusion First: It's important to understand that this form is primarily an exclusion. Coverage for liquor-related incidents is only provided if the specific activity is explicitly scheduled on the endorsement.
• Specificity is Key: The activities for which coverage is sought must be clearly described in the schedule. Ambiguity could lead to coverage disputes.
• Not for Regular Liquor Sales: This endorsement is not intended for businesses that regularly sell or serve alcohol as a primary part of their operations (e.g., a home-based bar or regular online alcohol sales). Such businesses would typically require a full commercial general liability policy with appropriate liquor liability coverage.
• Underlying Coverage Required: This endorsement modifies the HO 07 01, so the Home Business Insurance Coverage must be active on the policy.
• Regulatory Compliance: This insurance endorsement does not override or satisfy any local or state laws regarding alcohol licensing, permits, or responsible service. The insured is still responsible for complying with all applicable regulations.

Key information for agents and underwriters

• Agents: Must thoroughly discuss the nature of the home business with the insured to identify any potential liquor liability exposures. If such exposures exist for specific, planned events, the agent should explain the function of the HO 07 54 and ensure any covered activities are accurately scheduled. It's crucial to manage the insured's expectations regarding the limited scope of this coverage.
• Underwriters: When an activity is scheduled, underwriters need to carefully assess the risk associated with that specific event. Factors to consider include: the type of event, expected number of attendees, whether alcohol will be sold or served free of charge, who will be serving the alcohol (e.g., trained bartenders vs. self-serve), and what risk management measures will be in place (e.g., checking IDs, availability of non-alcoholic beverages, transportation arrangements).
• Pricing: The premium for adding this coverage for scheduled activities will depend on the underwriter's assessment of the risk involved in those specific events.
• Coverage Gaps: This endorsement addresses a very specific coverage need. Agents and underwriters should ensure that the insured understands that this does not provide broad or all-encompassing liquor liability coverage and that other exclusions within the policy or the HO 07 01 may still apply.