The District II Wisconsin Court of Appeals ruled on Feb. 2, 2012, that an insurance company is obligated to cover a premises liability lawsuit on behalf of a client alleged to be negligent for serving alcohol to an underage guest.

According to court documents, a 21-year-old man hosted a party in a shed located on business property owned by his family. The man allegedly served alcohol to an underage guest. Later in the evening, the underage drinker allegedly assaulted and injured another guest at the party.

The person who was assaulted filed a premises liability lawsuit against the 21-year-old man and West Bend Mutual Insurance Company. The alleged victim argued that the man was negligent when he served alcohol to the underage party-goer.

At the time of the alleged assault, West Bend Mutual insured the home of the 21-year-old man and his family. The insurance company argued it was not liable in the case because the policy did not cover the shed on the business property and it did not cover that type of "occurrence."

A circuit court judge agreed and issued an order dismissing West Bend Mutual from the case. However, the Court of Appeals overturned the circuit court ruling Feb. 2.

The appeals court found that the man's policy covered liability for bodily injury damages caused by an accident. The appeals court ruled for insurance coverage purposes, assaults are accidents, as long as the injured person "did not intend, expect, or anticipate the assault or resulting injuries."

The appeals court also denied West Bend Mutual's claim that the company was not responsible for covering the injuries because the shed was not covered in the family's homeowner's insurance policy. The court found that the family used the shed to store personal property, which made it a premises used in connection with the residence.

Source: State Bar of Wisconsin, "Insurance policy covers drinking party assault on insured's business property," Joe Forward, Feb. 7, 2012