When planning a special event like a retirement party, fundraising event, or wedding, there are many upfront expenses that can be lost if the event must be rescheduled or cancelled. Event planners interested in protecting the financial investment that goes into making preparations for a special day can purchase specialized commercial insurance coverage for special events and event planners
Imagine yourself in the following scenario:
“You are producing a fabulous gala or even just an ordinary party. You have copies of all of the vendors’ insurance coverages (the “binders” that name you as an “additional insured”). The party is moving along superbly, the food is wonderful; there are a few back-of-the-house problems, but the client does not know. They’re just having a great time.
Suddenly the event takes a turn for the worse. Your staff is breaking down the party, and one of your food servers knocks over the Sterno, which burns down the table runners and the organza. It also leaves a nasty burn on the table.
When the owner of the venue comes to you and asks you for your insurance, you show him your policy. But you only have Errors & Omissions — this is not what is needed to cover the accident.
As a result, all event profits go to fix the client’s property, or the expense comes out of your pocket.”
Or the following:
Javier Velarde of Triton Productions in Miami Beach, Florida knows the importance of protecting yourself. Especially in the litigious society that we live in.
“We did an event, and at the end of the night, a guest was drunk and had your basic slip and fall,” Velarde says. “He sued everyone-the venue, the production company, the company throwing the event, everyone. Luckily, we were covered, and the insurance company settled.”
He argues that having coverage for the worst-case scenarios is the best way to protect yourself. Sometimes the smallest incidents can cause the biggest problems.
There are plenty of event planners out there who have suffered through similar scenarios. Or one of the following:
- Event Cancellation or Postponement
- Inclement weather or Natural Disaster
- Vendor Cancellation
There is no handbook that teaches you the type of insurance, certificates, and licenses to purchase. Unfortunately, it’s usually not until something goes wrong that you discover the insurance that you should have purchased. Hopefully, this article will provide you with a better understanding of your insurance choices.
According to John Jennings, underwriting manager for Missouri-based M.J. Kelly Company, “An event planner is like a general contractor: They’re at the top of the chain of responsibility and need to protect themselves in case someone has an accident and sues the venue or host and tries to bring them in as well.”
In the past, the most common Special Event Insurance purchased was a Business Owners Policy. This covered you for only the event and nothing else. Usually, it ranges in price between $350 and $1,000. This insurance covers you and your guests against slips, trips, falls, and fire-related accidents. However, this may not be enough protection. Review the exclusions and endorsements pages to see if you agent needs to add anything else to the coverage.
Other than a Business Owners Policy, the main type of insurance an event planner should purchase is Commercial General Liability (CGL). This is a comprehensive policy that addresses third-party bodily injury, property damage, and personal injury. Special events insurance is like a “special breed” of CGL insurance. This is because each event is unique, and the insurance depends greatly on the event. The number of people expected to attend, whether or not alcohol will be served, and the activities taking place at the event all may affect the type of coverage that should be included in a Special Event Insurance policy.
Special Event Insurance can provide coverage against lost down payments to vendors, should a vendor suddenly go out of business or the event need to be rescheduled. Policies may include event liability coverage, which is often required by venues that host large events. Not all types of endorsements are included in the insurer’s policy.
The following are additional event endorsements to consider:
Collapse of a Temporary Structure: This type of exclusion is very common; therefore, the event coordinator needs to hire a separate staging, tenting, or rental company to setup the temporary structures in order to be protected. Structures can very in type and could include fences, tents, bleachers, barricades, and stages. The CGL would not protect in cases where the event coordinator or other event workers or volunteers erect the structure and it then causes bodily injury or property damage to a third party.
Seating Fixtures and Glass: The CGL will provide you with coverage against third-party property damage if the lease period for the premises is seven days or less. As stated by the Insurance Journal, “This exclusion, however, if endorsed, removes coverage for those items shown. The seating, fixture and glass exclusion is often used for concerts and stems from facility property losses. This exposure is impossible to transfer to a subcontractor. If there’s a concern, it could be managed in the lease or through possible loss-control methods.”
Liquor Liability Amendment: The CGL provides “host” liquor liability, which means that the insured is not profiting from the distribution and sale of alcohol. When the amendment is attached to the policy, it creates an absolute liquor exclusion, meaning that the insured is not protected against a third-party personal injury lawsuit. It is recommended that the event holder hire a third-party to serve the alcohol.
Events with Live Performances of Rap/Hip-Hop: This genre of music has been given a bad name by battery and weapons assault charges at past events. If you want additional forms of protection, you can purchase it, but at a high premium cost.
Athletic or Sports Participants with Respect to the Insured Operations: Purchase a specific event athletic policy if you fear the risk of litigation from a sports-related injuries. Otherwise, your coverage will not protect you in an injury lawsuit against any athlete who is practicing or participating in an event.
Assault and Battery: Event coordinators should consider hiring a third-party company to oversee crowd control during the event. The assault and battery endorsement releases the insurer from having to defend the insured in a third-party bodily injury lawsuit.
Bodily Injury to Independent Contractors: Be sure to hire workers who already have workers’ compensation insurance through their employer. This will protect you in the event of a bodily injury to your subcontractors. You could also buy workers’ compensation for all event employees. Otherwise, insurance companies will include an endorsement which excludes bodily-injury claims.
Medical Payments: Insurers may include an exclusion which prevents them from paying injury claims. Be sure to have coverage which protects against slips, trips, and falls.
Catering Endorsements: This allows for off-premises catering operations.
Other event circumstances which may require coverage:
If you or your company may potentially be held liable in the event that your client states that the services provided did not have the expected or promised results, you should purchase Errors and Omissions insurance.
If you are incorporated, then Directors and Officers insurance is recommended.
If you make a product, other than catered food, then you should purchase Products & Completed Operations insurance.
If you are hosting the event in your own home, it is suggested that you purchase liability insurance. This coverage goes above and beyond your homeowners insurance.
Example Liability Program
For an example of special event insurance, let’s explore the Capitol Indemnity General Liability Program. The company has divided special events into three categories, depending upon the risks involved.
Group 1 includes numerous events, such as craft shows, weddings, golf tournaments, ice cream socials, and beauty pageants. Group 2 are those events that are often much larger and hold a greater threat to loss occurrences like circuses, rodeos, gun shows, and tractor pulls. Group 3 is solely for firework displays.
When submitting for an insurance policy, all underwriting information should be included so that the risks are clear. Then, the company will establish with you the effective and expiration dates of a special event policy to include time for the set up and take down of a special event. This may be done when the set up or take down either occurs on the same days as the insured event, or occurs on consecutive days immediately prior or subsequent to the insured event.
All events with a with a host liquor (serving alcohol without a charge) exposure must meet the following requirements:
- All servers trained to recognize intoxicated persons and to not over serve.
- Check identifications to verify the age of all patrons consuming alcohol.
Each insurance company is different. Discussing the options with your insurance agent will help you to decide the coverage you need for your event.
The cost for special event insurance depends upon a variety of factors, including location, total days of coverage, number of people attending the event, type of event, coverage limits, and additional endorsements and riders.
To gauge the range of costs, below are several event examples based on the calculator at one online site.
· A one-day wedding in Minnesota for 150 people would cost $125.
· A four-day golf tournament in California for 400 people would cost $250.
· A two-day lecture in South Carolina for 5,000 people would cost $360.
Click here for an example of a certificate of liability insurance. This is a general liability policy that has both host a retail liquor liability. It has a $1,000 deductible and covers $1 million in bodily injury and property damage.
On the whole, the cost of special event insurance is low. Therefore, the expense should not prevent you for getting the protection that you need.
Be sure to use the following checklist in order to confirm that you and your events are properly protected.
Speak with an independent insurance agent about your specific needs. If you have decided to purchase a policy from the Internet, you’re not alone. However, make sure to ask for a copy of your policy so that you can verify which items are covered and which ones are not.
Choose the policy that’s right for you, not the one that will save you money. Special Events Magazine calls this “Mistake No.1”. Develop a budget plan in order to allot yourself the correct amount of money to cover insurance, licenses, and certificates. It’s better to be protected before the event than after an incident occurs.
Use contracts with each of your vendors. This will help to control who is responsible for the various risks involved with the event.
Set up a meeting with your insurance agent and ask them as many questions related to the event as you can think of. This will help your agent know the exact nature of your business and the potential risks involved. Some of the questions to ask may include:
- Is the insurance company licensed to do business in the state where the event is being held?
- How much does the policy cost?
- How much will I be reimbursed if a loss occurs?
- What is (and is not) covered by the policy?
- Will the event be covered if it runs past midnight?
As argued by event planner expert Delia Arevalo, “even the most basic coverage policy could prove to be a big help in the long run. Having the proper insurance can make the difference between a minor bump in the road and a complete detour.” Each event requires a tailored Special Event Insurance policy and it can be daunting to understand the available options. Thankfully, an independent insurance agent is available to advise event planners about what types and amount of coverage will best protect their event plans. Planners can contact a local agent today for professional assistance in making this important decision.
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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
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