To Insure or Not to Insure? Special Events Beg the Question
Aschkenasy, Janet, Risk Management
It's something to consider, even if Julia Child isn't grilling the burgers. One of the most critical decisions surrounding event or promotion planning concerns the purchase of special events liability insurance. Some risk managers are comfortable with their typical contract limits. "Normally, there's nothing in a standard commercial general liability policy that would exclude a special event," says Gene Williams, assistant vice president of Chubb Son Inc. in Warren, New Jersey. However, if an event is open to the public, involves the sale of liquor or includes high-profile celebrities on the guest list, companies may choose not to risk their retentions on one major event. "More and more people are buying liability coverage to insulate their master policy from claims and to avoid exposing their high retentions to an unexpected loss," says A. LeConte Moore, senior vice president of Marsh McLennan, Inc.'s arts and entertainment division in New York.
Increasingly, Fortune 1,000 companies are sponsoring or organizing special events; however, many risk managers are unsure when it is their firms' responsibility to secure special events liability coverage. "Some people call me for coverage when they don't need it. I send away one out of three," says Mr. Moore.
Certainly risk managers need to consider the risks inherent in the event, their experience with those exposures and the appetite for such risks that their company and insurers may have. But first, the risk manager needs to consider who else is carrying liability limits for the event. The liability exposure is apt to be limited for sponsors buying only name or logo recognition. If another party is responsible for most of the contracts and promotions, it should carry its own liability limits. But because these distinctions can become confusing, liability coverage should be clarified in the early planning stages of an event.
Special Events; Unique Insurance
All special events are not organized in the same way, nor do they carry the same exposure, leading to confusion about who needs to insure what. Mr. Moore suggests that whenever risk managers are hiring extra people for an event and are signing contracts other than for standard sponsorship, they should consider purchasing special events liability coverage.
Tony Wittwer, vice president of fairs and events at K&K Insurance Group in Fort Wayne, Indiana, suggests obtaining extra coverage for events such as those with carnival rides and in which the prospective insured is serving alcohol and has never had a liquor liability exposure before. Companies that give away liquor might have some coverage under their existing policies, according to Mr. Wittwer. However, "if you're selling it, you've entered into a new realm of exposure," he says. Other factors to consider are weather preparedness, medical response plans, emergency evacuation and security programs.
A risk manager's experience with a specific type of event can also help decide whether a company needs extra coverage. If a policyholder is planning a concert or some other event that draws a crowd it normally wouldn't attract, extra precautions may be required, says Mr. Wittwer. K&K provides sports, leisure and entertainment insurance for many companies and, after making it through the bungee-jumping craze, continues to cater to some rather interesting risks. It insures white-water rafting establishments as well as management-motivation seminars. "The insurance is purchased by organizations that coordinate events professionally for other companies," says Mr. Wittwer. A common risk requiring insurance is a corporate leadership program involving high-wire" or "high-ropes" courses, in which participants climb poles with safety ropes held by colleagues.
It is obvious that the organizers of special events can incur liability, but what about the sites or towns in which they are held?
A hot spot for special events is the resort city of Virginia Beach, Virginia, which hosts shows and contests such as surfing championships and skydiving exhibitions. …