Event insurance: what is the worst that could happen?
Howard Lake | 11 April 2008 | News
Brian Kirsch, Managing Director of insurance and financial protection service Event Assured, looks at the risks charity event organisers face and how to handle them.
Organising charity events can be a nerve racking business. What if something goes wrong and wrecks your plans? Who pays if someone gets injured? What do you do if the AV equipment goes missing? Who defends you if you get sued? Whilst these challenges are faced by all event organisers in all industries they are particularly worrying for charity events, where one miss-step could ruin an entire year’s funding and your ability to meet the needs of those relying on you.
The risks mentioned above can be split into four risk categories, which all event organisers face: legal, physical, people and event. The risks are present whether the event is a small conference or a music festival, sponsored by a corporate company or based on the takings at the gate. The differences are largely a matter of scale and exposure and this is where risk management and insurance come in.
Legal risk
Considered by many organisers to be the most onerous and complex area of risk, your legal exposure arises under Common Law, contract, and statute where an ever increasing body of legislation defines legal responsibilities. This can range from health & safety, construction and manual handling regulations to the most recent, high profile law on corporate manslaughter. Whilst there are many areas to consider and expert advice should be sought to ensure you are fully covered, the following key points must be checked and thought through.
Be on alert for clauses which transfer or increase your legal responsibilities from other parties, for example venues making you responsible for anything and everything that happens on the site – a situation which is not always reasonable, particularly if the cause of an accident is down to the state of the premises or the ground, areas over which you have no control. You must also resist accepting responsibility for the actions of any other party, unless you are in control of what they do. As part of this, ensure back to back indemnities from your sub contractors to match your responsibilities to your principals. For those events where you have exhibitors or sponsors check their insurances, both limits of liability and wordings, making sure they contain an Indemnity to Principals Clause, which indemnifies you for their negligence.
The legalities of staffing events must be thought through in some depth, particularly as many charity events involve volunteers and part time workers. Start with the simple question: Who are my employees? To which the answer is: “any person in an employee/employer relationship”. This can include labour only sub contractors (e.g. freelancers), temporary employees and volunteers, so you need to check your insurance to make sure they are included and that your insurers are aware of who they are, what they are doing, and what you are paying them. The employees of bone fide sub contractors are generally their responsibility, but you should check that they have the required Employers Liability insurance in place – if in doubt, ask to see a copy of their certificate. Many charities run overseas fundraising events, which carry a whole host of additional requirements, particularly in respect to staff. Care is required when employing direct labour overseas. Check your UK event or liability insurance to confirm that it includes cover for these locally employed persons, and check to see what obligations you have to arrange local Workmen’s Compensation insurance.
The phrase risk assessment is becoming more used in all areas of the event’s industry and for many it creates a sense of dread. It is however particularly important in the charity sector where so many events are unusual and involve the public. You must either carry out your own or commission risk assessments. They are vital where hazardous activities are taking place, but remember that something as mundane as a trailing cable presents a risk, and most liability claims arise from people falling over, off or into something.
Physical Risk
Events pose a substantial risk to the equipment and property used on site. From AV equipment to the very fabric of the venue everything needs to be covered or considered whilst finalising the details of the insurance. If it is your own property you are taking onsite, be careful not to insure items twice, you may already have insurance for items normally based at your premises.
If it is externally hired equipment question who is responsible for it and when their responsibility expires and (possibly) transfers to you. The details should be listed in the contracts for hire. If the responsibility falls to you, establish the real value of the property at risk and insure the full replacement cost. Also check whether you are responsible for breakdown risks and the loss of hire charges under hire agreements. If you are using a carrier to move equipment around, be aware of limitations on their liabilities under conditions of carriage
Also, consider the venue, it will often be the single most “expensive” piece of property you are using for your event so check the contract to see what your responsibilities are for damage to their property – it may be more than just legal liability exposure.
There are of course several ways you can control your exposure to physical risk claims. In my opinion one of the best is to act as if you are uninsured, by doing so you will generally take greater care of the property. Site security is also important, if you don’t feel comfortable leaving valuable equipment unattended at a certain location, don’t expect an insurer to feel differently.
Finally, don’t forget money, avoid large accumulations of cash! Insurers view this separately, and will need to be satisfied that adequate procedures exist for transporting money to safes and banks. The security of personnel transporting the money must also be planned.
Is it Worth Putting People at Risk?
If the event includes hazardous activities, can you justify the extra risk to the participants ? For some events, the hazardous element is the reason it is taking place in the first place – sponsored bungee jumps, parachute dives or racing of some sort. In all these instances (and many more) the risk should be measured and undertaken consciously, and frankly in some cases, it may best to decide not to take the risk. There are plenty of ways to have fun and stimulate interest without putting people at risk.
If your own staff are taking part, ask what would be the financial consequences of an injury to a member of staff? What would it cost to replace them? How much fundraising income do they produce? What is their role in helping the beneficiaries of the charity? Are you prepared to take the risk? It is possible to insure personal accident risks for most activities (for a price) but if the insurers think it is a high risk – so should you.
Event Risk
This element of risk is often overlooked, because “nothing has ever gone wrong with one of our events”, yet it is potentially one of the most damaging. Event risk insurance is about cancellation, abandonment, curtailment or other disruption to a planned event. Look at the components of what you are planning and ask – what can go wrong? Whilst not wishing to appear a doomsayer, here are a few thoughts to get you started…
• Venue: damage rendering the venue unavailable; breach of contract by the venue; terrorism damaging the venue or preventing access; outbreaks of infectious diseases, leading to quarantine or restricted access.
• Transport: adverse weather disrupting air, sea and rail transport; strikes; outbreaks of civil disorder, revolution or war, which can have indirect effects such as flight diversions etc.
• People: speakers or entertainers who fail to turn up due to illness, delays or other problems
• Content: adverse weather curtails the outdoor elements; the failure of key services such as power supplies, water or drainage; reduced attendance – loss of revenue arising from a common cause preventing people from getting to the event
• Or how about… death of Head of State or a member of her family causing periods of national mourning, and closure of venues?
I could go on, but what do you stand to lose if it all goes wrong? In a worst case scenario, the whole event operating budget could be lost, and/or you could incur additional costs such as rebooking at another time or another venue, extra accommodation and subsistence costs, venue penalties for not vacating on time, plus the profit you might otherwise have generated from the event. Because all this is at risk, event risk insurance needs to be on the agenda early in the event planning process.
Fortunately, a well developed insurance market exists to protect against all the perils listed above (and more). Event insurance is a specialist field so don’t assume your existing insurance covers all this – it almost certainly doesn’t. Your current insurances may need amending or extending, although when asked to insure these special risks, the average insurer will quickly be out of its depth, so it is always best to consult a specialist.
Treat your insurer as a partner – they are there to help so give them all the information they need to underwrite the risk. Explain the event, and discuss what risks concern you. Ask for competitive premiums, but cheapest isn’t necessarily best, because it’s the cover that counts. Insurers’ business is not about collecting premiums – it’s about paying claims.
Brian Kirsch is Managing Director of Event Assured, the leading innovator for insurance and financial protection services for the events and business travel sectors. Event Assured has developed a range of specialist insurance products to meet the demanding needs of events, people at events, and people who organise events – including the charity sector. Their expertise is combined with leading edge technology, whilst still offering a unique personal service.
www.event-assured.com
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.