Article by Stephen Lindsley
There are times when the most popular keynote speaker or lavish sit-down dinner may not be enough to grab the attention of potential event attendees. It is at these moments in the life of a meeting planner when thoughts may turn to more spectacular enticements such as a giant inflatable water slide or a grand finale fireworks display. These are among the more obvious examples, but there is a wide range of potential event elements for which the prudent planner should seek event insurance.
Activities such as the ones mentioned above constitute good reason for event liability insurance, which offers protection in case something goes wrong during a gathering or show. Liability insurance can protect event producers, vendors, and exhibitors from exorbitant legal expenses and adverse judgments. If any individual, whether exhibitor, attendee, contractor or bystander, is harmed while attending your event, the potential liabilities may include medical expenses, loss of income, and other financial or legal damages due to unintended consequences. Assuming that these costs are not comfortably included in your budget, acquiring a good event insurance policy is definitely recommended.
John Jennings, underwriting manager for M.J. Kelly Co. of Springfield, says, “An event planner is like a general contractor: He or she is at the top of the chain of responsibility, and needs to protect himself or herself in case someone has an accident, sues the venue or host, and tries to bring (the planner) in as well.”
Various kinds of coverage are available under the heading of event liability insurance. These include:
- General liability (bodily injury, property damage)
- Care, custody or control liability (third party property damage)
- Collapse of temporary structure liability
- Contractual liability
- Damage to premises (fire legal liability)
- Hired and non-owned auto liability
- Liquor liability, for the sale of alcohol
- Medical payments
- Third party property damage (care, custody or control liability)
- Waiver of subrogation
This last category is often not well understood, but it may be a crucial element in determining whether coverage is acceptable to the vendor or venue. In short, it prevents the insurer from seeking damages from a third party for an accident that results in the insurer’s being required to pay on a claim. Depending on the venue used, a meeting planner may be required to demonstrate that this waiver is a part of the policy for an event. Some states also require worker’s compensation to be a part of event coverage.
As you can see, under the liability category alone, the considerations are significant. Other options include weather insurance, event cancellation insurance, “failure to appear” coverage, event equipment coverage, and accidental medical/accidental death and dismemberment insurance. Professional liability insurance, or errors and omissions insurance, also may be a consideration for meeting professionals wishing to further protect themselves from responsibility for a potentially costly mistake in planning or execution of their duties.
The actual circumstances of each event are used by planners and their insurance providers to determine what coverage is necessary. Below is a list of standard per-event liability limits:
- $1,000,000 – Each occurrence
- $1,000,000 – Products / completed operations
- $1,000,000 – Personal injury and advertising injury
- $2,000,000 – Aggregate limit
- $1,000,000 – Host liquor legal liability
- $100,000 – Premises rented to you
A qualified insurance agent can help planners wade through these options based on the intentions for the event, making it possible to choose only the type of coverage needed for each particular circumstance. The cost of general liability coverage for an event usually is determined by type of event, duration, and the number of people attending. When negotiating a contract with a venue, your attorney also may recommend that you, the planner, be added to the property’s existing policy to further indemnify yourself.
While event insurance may seem a costly item to add to your budget, the potential cost of an accident makes this kind of insurance a necessity for nearly any kind of event – not just one that includes potentially dangerous elements.
When the unexpected happens
No matter how much thought and consideration a planner puts into an event, Mother Nature can change those plans in an instant. Cheri Hutchings, founder and president of Claire De Lune Productions in Fairview Heights, Ill., experienced this reality first-hand. Her client, a nonprofit group that helps disabled people find work, was planning a cook-off that included 15 to 20 vendors and bands playing on two stages. The event already had been postponed once because its intended location, a riverside park, had flooded.
After two days of setup and preparation, the day of the event finally arrived. But just an hour before it opened, a tornado swept through the event area, blowing more than 20 tents into the river and wreaking destruction throughout the location. After the chaos of the storm, a foot of water swept into the park.
The event was cancelled, and there was damage to much of the vendors’ property – not to mention an enormous loss of revenue for the organization that staged the event.
Hutchings says she had advised the organization to consider event insurance because of this sort of emergency, but its leaders decided against it because they had never had a problem before.
Unfortunately, because they did not choose to obtain the proper event insurance, they faced an enormous loss of revenue plus additional costs associated with the tornado’s destruction. This kind of story is very familiar to meeting planners and insurance agents, and serves as an important warning against holding an event without proper insurance in place.
Corey Schuster, managing agent at the Daniel and Henry Co. insurance firm, says planners often think that just because insurance is not legally required, they do not need to have it. He notes that especially for events in which alcohol is served, a planner is strongly advised to speak with an insurance agent and find out how events can be exposed to potential liabilities. He also says it is crucial for a planner to have a policy in place at least two weeks before an event, especially when adverse weather is a consideration.
Schuster cites the example of a nonprofit veterans’ service organization in St. Charles that holds an annual truck and tractor pull fund-raising event. In 2014, the event location was too wet from recent rains for it to proceed, and it had to be cancelled.
Fortunately the organization did have an event insurance policy in place, and it mitigated the losses incurred.
Schuster says the organization’s policy, which cost $2,200, paid out nearly $55,000 to cover the loss of admissions and concession revenue. Without this policy, the nonprofit would have lost all that potential income, leaving it in a very difficult financial situation.
Schuster says that organizations planning events should not assume that their regular insurance policies cover these kinds of losses. Most policies are written in such a way that only an area up to 100 feet from the insured location is covered. So if an event is planned at an off-site location, for example, the organization’s policy will not cover any accidents that occur there.
Verify your coverage
When using a vendor for items such as fireworks, amusement rides, or inflatables, it is important to verify that the company can provide evidence of insurance. In fact, it is recommended that you obtain proof of insurance from all your suppliers well in advance of an event – and that you refuse to work with uninsured suppliers. It also is important not to assume that a vendor or supplier’s insurance coverage is enough. If an accident does occur, the victim may seek damages from anyone remotely involved with the incident. If planners do not have the appropriate coverage in place, independent of any vendors or subcontractors, that may leave them vulnerable to a victim seeking damages.
When an element of an event is inherently risky, such as those mentioned at the beginning of this article, it may be prudent to add contingent or excess coverage for these specific portions of the event. This provides extra coverage on top of regular liability coverage. Planning for these risks in advance and reviewing them with your insurance agent is the best way to make sure appropriate coverage is identified and obtained in advance.
Another important consideration is to make sure that a binder, or evidence of insurance, is secured well in advance of the actual event. Verification of this binder often will be a requirement of your contract with the venue or important vendors. The binder is obtained once the policy is paid for, and it must be on file with the broker in order to guarantee coverage. This is an important element in the process of securing coverage, and should be a top priority as plans for the event are being finalized.
Cover your bases
Cathy Ewing, CMP, president of Cathy Ewing Event Consulting LLC in Kansas City, is a meeting and event planner who often organizes large offshore events in places such as Mexico, Costa Rica and the Dominican Republic. Ewing says anytime an offshore event is planned, the number of potential problems increases. In such cases, it is very important that the planner discusses event insurance with the client from the very beginning of the planning process, so the client can budget appropriately for this expense.
Ewing says insurance of this kind is often not something the client has even considered, so it is important that the organization be aware of this necessity. Weather events such as ice storms or hurricanes are always a consideration, but other natural disasters such as earthquakes and volcanic eruptions can disrupt and sometimes completely destroy an event group’s plans. Ewing says she and her employees make sure the appropriate coverage is in place, but they also keep a constant eye on the news for anything that might disrupt their plans. This might be a threatening weather event, but it also could be political or social unrest near the intended destination. Last-minute cancellations due to illness or family distress also can be an issue.
Some organizations also may be subject to adverse publicity, and may encounter protesters or picketers who disrupt their event plans. Because the number of potential interruptions is virtually limitless, Ewing makes sure she and her employees travel with a list of resources and contact information in the event of an emergency. It is this kind of advance preparation that contributes to peace of mind for planners and their clients.
Often at gatherings of meeting planners, conversation turns to the nightmares they have encountered during events. Nearly every meeting planner, if he or she has been in the business long enough, can contribute tales of woe about events that spun out of control due to poor planning or acts of God. Every event has countless moving parts that must come together flawlessly for it to be a success. But new and different obstacles and potential disasters are constantly looming.
Some potential problems can be prepared for in advance; others, like the weather, are completely out of anyone’s control. This is why event insurance is so important, and why the successful event planner makes certain to advise clients about the necessity of appropriate coverage for every aspect of an event.
The risks are always there. The question is, how well will you prepare for them? With thoughtful planning and proper event insurance in place, you can rest easy in the knowledge that you are covered.
Stephen Lindsley is a freelance writer in St. Louis, Mo.