Whether it's an act of god (like a hurricane) or an act of goons (like a drunken brawl), unexpected snafus can quickly turn even the best-planned event into a major liability. That's why event insurance exists. A qualified broker is your best source of detailed information, but these are the basics:
What It Is
Special event insurance is an umbrella term for policies that cover public assembly, whether at a corporate party, a trade show, or a seminar, says Jack M. Buttine, president of New York-based insurance firm John Buttine Inc. To Debra Kozee, director of marketing for Event Insurance Brokers LLC in New York, the term "only means that the insurance is for a specified event or series of events. It can literally include any type of coverage."
The coverage most often purchased, Kozee says—usually because of contractual requirements from a venue—is general liability insurance, which offers broad protection against lawsuits stemming from personal injury, and can cover anything from trips and falls to food poisoning.
But short-term insurance coverage can also be arranged for property, workers' compensation, volunteer accident, participant accident, auto liability, event cancellation, and prize indemnity (which covers the sponsor of a prize to be awarded for unlikely tasks, like a hole in one at a golf tournament).
For events, one of the most important policies is liquor liability to protect you from personal injury or property damage caused by the consumption of alcohol. If you're selling alcohol, you'll need regular liquor liability insurance; if you're providing liquor free of charge, you'll need host liquor liability coverage. Two years ago Jonathan A. Theodore, president of Theodore Consulting Group Inc., a regional insurance broker in Suffern, New York, worked with a client running a small, three-day film festival in Utah. The client neglected to state on his insurance application that liquor was going to be served, so his policy didn't cover it. Some spectators drank too much, and fights broke out. "They had to lay out about $40,000 in medical bills for the people who got injured," he says. The liquor liability coverage would have cost the client about $1,000, Theodore says, "so the fact that they overlooked it was not the wisest decision."
When You Need It
Ask insurance experts what type of event needs insurance, and they won't mince words: from commercial product launches to corporate promotions to personal weddings, "all events need insurance," Theodore says. (Not that this is surprising, considering that brokers sell such policies.) The most obvious motive for buying event insurance is that it usually protects the entity holding the event against lawsuits rising out of the festivities. And these days, sponsors and venues often require policies as well. "Years ago, even if you went to a big hotel chain to have [an event], no one asked about insurance," Kozee says. "Now, oftentimes the venue asks for insurance, from commercial business and noncommercial personal events alike."
Of course, that doesn't mean every event host shells out for coverage. "You always need to protect yourself, but whether you choose to or not is a different story," Theodore says.
For event planner Shanette Barth, president of Barth Group LLC in New York, "Insurance hasn't been a big issue at most events—I just use my clients' existing insurance and get necessary entities listed as 'additional insured,' as required by some venues." (Insurance providers warn that this method doesn't always offer adequate protection. "If you cannot contractually shift all of your liability to another party and you do not have your own policy, you are up the proverbial creek without a paddle," Kozee says. "When something bad happens everyone gets sued.")
How to Get It
The first place to look when considering insurance needs is the host's current broker or carrier, to see if it can extend the host's master policy or provide something new. "You want to make sure your special coverage is in line with your current coverage, so you don't have a gap or a redundancy," says Damian Testa, president of New York-based brokerage firm Hub International Northeast.
Jim Henslee, director of event marketing for Tennis magazine, contacts his magazine's regular insurance agent to make sure the publication's events are covered adequately. "I send an email to my insurance agent, describe the event, and say we need insurance. Usually, I just get a fax that comes through with all the papers. It's that easy." The magazine's insurance agency can handle requests like event cancellation insurance, and "as far as liability insurance, a request for a rider generally takes 48 hours or less from my agency, and is part of our overall corporate insurance plan."
Large corporations often have a dedicated professional, like an insurance risk manager, who can help determine if specific events need additional coverage. Often, a company will choose not to cover an event under its master policy, because "they don't want something they sponsor to impact their overall insurance strategy," Kozee says. For example, if the company's policy carries a large deductible, the company may not want to assume the risk, or the event may be so unrelated to the company's operations that it doesn't belong in their regular portfolio.
What It Costs
Of course, premiums vary based on a number of factors, including the length and nature of the event, the number of guests, whether or not celebrities are involved, the type of entertainment, the type of facility, and the event's profile. The bottom line? You can spend anywhere from a few hundred dollars to a few hundred thousand.
When we asked for quotes for general liability coverage for a hypothetical event—a cocktail party for 300 guests, give or take an Olsen twin, at a New York museum—we heard estimates in the $300 to $425 range for a standard $1 million policy. With host liquor liability added on, the figure was generally around $700. And Kozee added, "If any wild celebs that have been involved in public altercations [are expected] this could be heavily surcharged." From an insurance standpoint, at least, some A-listers aren't worth it.
The Terrorism Effect
The attacks on September 11, 2001, and terrorism as a whole have added a new twist to event insurance—but experts disagree on exactly how important terrorism coverage is. "Terrorism has changed the event cancellation insurance world tremendously," says James Chippendale, president of CSI Entertainment Insurance in Dallas. Most event cancellation policies don't cover it, but such coverage can be added at an additional premium. In addition, a policy can be written to cover acts of terrorism in only a certain area or in the entire country. "The broader the coverage, the more expensive [it] will be," Chippendale says. (You'll also find a wide range based on location, he says, noting that terrorism coverage in cities like New York, Los Angeles, and Washington, D.C., will be more expensive than in Boise, Idaho.)
The federal government currently requires all insurance companies to offer terrorism coverage with every quote, says Theodore, "but there is no guideline as to how much it should cost, so you will find a wide range from company to company."
Unless it's included at no charge, you can waive the coverage—but you shouldn't, Theodore says, especially for large public events. "Take the optional terrorism [coverage] no matter what, because it's usually not that expensive," he says. "And you never know when the next attack will happen and how it can affect your event."
Chippendale disagrees. "Terrorism insurance for small events is cost-prohibitive. On most policies it is an additional cost, and the coverage area is limited [to] direct terrorism acts in the city in which the event is located."
—Erika Rasmusson Janes
Posted 09.12.05
What It Is
Special event insurance is an umbrella term for policies that cover public assembly, whether at a corporate party, a trade show, or a seminar, says Jack M. Buttine, president of New York-based insurance firm John Buttine Inc. To Debra Kozee, director of marketing for Event Insurance Brokers LLC in New York, the term "only means that the insurance is for a specified event or series of events. It can literally include any type of coverage."
The coverage most often purchased, Kozee says—usually because of contractual requirements from a venue—is general liability insurance, which offers broad protection against lawsuits stemming from personal injury, and can cover anything from trips and falls to food poisoning.
But short-term insurance coverage can also be arranged for property, workers' compensation, volunteer accident, participant accident, auto liability, event cancellation, and prize indemnity (which covers the sponsor of a prize to be awarded for unlikely tasks, like a hole in one at a golf tournament).
For events, one of the most important policies is liquor liability to protect you from personal injury or property damage caused by the consumption of alcohol. If you're selling alcohol, you'll need regular liquor liability insurance; if you're providing liquor free of charge, you'll need host liquor liability coverage. Two years ago Jonathan A. Theodore, president of Theodore Consulting Group Inc., a regional insurance broker in Suffern, New York, worked with a client running a small, three-day film festival in Utah. The client neglected to state on his insurance application that liquor was going to be served, so his policy didn't cover it. Some spectators drank too much, and fights broke out. "They had to lay out about $40,000 in medical bills for the people who got injured," he says. The liquor liability coverage would have cost the client about $1,000, Theodore says, "so the fact that they overlooked it was not the wisest decision."
When You Need It
Ask insurance experts what type of event needs insurance, and they won't mince words: from commercial product launches to corporate promotions to personal weddings, "all events need insurance," Theodore says. (Not that this is surprising, considering that brokers sell such policies.) The most obvious motive for buying event insurance is that it usually protects the entity holding the event against lawsuits rising out of the festivities. And these days, sponsors and venues often require policies as well. "Years ago, even if you went to a big hotel chain to have [an event], no one asked about insurance," Kozee says. "Now, oftentimes the venue asks for insurance, from commercial business and noncommercial personal events alike."
Of course, that doesn't mean every event host shells out for coverage. "You always need to protect yourself, but whether you choose to or not is a different story," Theodore says.
For event planner Shanette Barth, president of Barth Group LLC in New York, "Insurance hasn't been a big issue at most events—I just use my clients' existing insurance and get necessary entities listed as 'additional insured,' as required by some venues." (Insurance providers warn that this method doesn't always offer adequate protection. "If you cannot contractually shift all of your liability to another party and you do not have your own policy, you are up the proverbial creek without a paddle," Kozee says. "When something bad happens everyone gets sued.")
How to Get It
The first place to look when considering insurance needs is the host's current broker or carrier, to see if it can extend the host's master policy or provide something new. "You want to make sure your special coverage is in line with your current coverage, so you don't have a gap or a redundancy," says Damian Testa, president of New York-based brokerage firm Hub International Northeast.
Jim Henslee, director of event marketing for Tennis magazine, contacts his magazine's regular insurance agent to make sure the publication's events are covered adequately. "I send an email to my insurance agent, describe the event, and say we need insurance. Usually, I just get a fax that comes through with all the papers. It's that easy." The magazine's insurance agency can handle requests like event cancellation insurance, and "as far as liability insurance, a request for a rider generally takes 48 hours or less from my agency, and is part of our overall corporate insurance plan."
Large corporations often have a dedicated professional, like an insurance risk manager, who can help determine if specific events need additional coverage. Often, a company will choose not to cover an event under its master policy, because "they don't want something they sponsor to impact their overall insurance strategy," Kozee says. For example, if the company's policy carries a large deductible, the company may not want to assume the risk, or the event may be so unrelated to the company's operations that it doesn't belong in their regular portfolio.
What It Costs
Of course, premiums vary based on a number of factors, including the length and nature of the event, the number of guests, whether or not celebrities are involved, the type of entertainment, the type of facility, and the event's profile. The bottom line? You can spend anywhere from a few hundred dollars to a few hundred thousand.
When we asked for quotes for general liability coverage for a hypothetical event—a cocktail party for 300 guests, give or take an Olsen twin, at a New York museum—we heard estimates in the $300 to $425 range for a standard $1 million policy. With host liquor liability added on, the figure was generally around $700. And Kozee added, "If any wild celebs that have been involved in public altercations [are expected] this could be heavily surcharged." From an insurance standpoint, at least, some A-listers aren't worth it.
The Terrorism Effect
The attacks on September 11, 2001, and terrorism as a whole have added a new twist to event insurance—but experts disagree on exactly how important terrorism coverage is. "Terrorism has changed the event cancellation insurance world tremendously," says James Chippendale, president of CSI Entertainment Insurance in Dallas. Most event cancellation policies don't cover it, but such coverage can be added at an additional premium. In addition, a policy can be written to cover acts of terrorism in only a certain area or in the entire country. "The broader the coverage, the more expensive [it] will be," Chippendale says. (You'll also find a wide range based on location, he says, noting that terrorism coverage in cities like New York, Los Angeles, and Washington, D.C., will be more expensive than in Boise, Idaho.)
The federal government currently requires all insurance companies to offer terrorism coverage with every quote, says Theodore, "but there is no guideline as to how much it should cost, so you will find a wide range from company to company."
Unless it's included at no charge, you can waive the coverage—but you shouldn't, Theodore says, especially for large public events. "Take the optional terrorism [coverage] no matter what, because it's usually not that expensive," he says. "And you never know when the next attack will happen and how it can affect your event."
Chippendale disagrees. "Terrorism insurance for small events is cost-prohibitive. On most policies it is an additional cost, and the coverage area is limited [to] direct terrorism acts in the city in which the event is located."
—Erika Rasmusson Janes
Posted 09.12.05
