Does your charity event insurance do what you think it does?
Howard Lake | 3 February 2009 | Blogs
In this era of online quotes and price comparison web sites, it is easy to assume that one insurance is much the same as another, so the only difference is the price. Price comparison sites have not yet invaded the event insurance market, although if they did they would find it impossible to properly analyse the diverse range on offer.
Event insurance is a complex product, and every event is different, so it is vital to ensure that you not only getting a good price, but also that you are getting the right cover. There are few simple rules for making comparisons.
The first is “are you dealing with an experienced specialist insurer or broker?” In recent years there has been something of an explosion of offers from new entrants, not all of whom are wholly committed to the events market, so check their experience, and the underwriters they use – require them to have a thorough understanding of events and insurance. Check their qualifications too – just because someone says they are an expert, doesn’t mean they are!
Secondly, if you get alternative quotations, read them carefully. Don’t assume that anything is covered unless the policy actually says so. There are insurance products on the market which fall well short of comprehensive cover. For example, one well known insurer actually excludes riot from their cancellation insurance – so if you were to take their event insurance for an event in London on the day of a political demonstration which turned into a riot, you would not be covered.
Terrorism is frequently excluded unless you ask for it to be covered and some insurers won’t cover this risk at all. Amazingly, another excludes any orders or restrictions imposed by local authorities, police, fire or ambulance services, so would not cover a situation where the police or fire authority close off the venue because of an incident (such as a serious accident or chemical spillage) in the locality. These risks may seem obscure, but the whole point of event insurance is to cover the unexpected, and it is often the least expected which can cause a problem.
Also, beware of insurance which limits cover to cancellation of the whole event, because this means there is no cover for an event which is curtailed (for example reduced in size by damage to part of the venue) or abandoned half way through. Under an insurance with this limitation there is effectively no cover once the event has opened.
Next, decide what financial loss you want to cover – are you concerned just to cover your costs, or is there more at risk? A good event insurance will also cover other additional costs which can arise – these range from the cost of advising delegates and attendees that the event is off or moved, to penalties for failing to vacate the venue on time, to costs incurred in overcoming a problem so that the event can go ahead, possibly at another time or place. Look for cover for costs incurred in protecting the reputation of the event for next time, and for the costs incurred in making a claim. Beware of insurance which limits additional costs to a sub limit or restricts this to venue costs only – this will rarely be adequate.
If your event is revenue generating, you may also want to consider insuring the profit element, which means basing the insurance on the total revenue expected, not just expenditure. Whilst this means a higher sum insured (and hence a higher premium), it does mean the insurance will cover refunds to delegates/ticket holders, sponsorship and so on. This can be important in maintaining customer or exhibitor loyalty, or even just your organisation’s reputation for fair play. It also means that you will receive your expected return of investment even if the event is seriously disrupted.
So how does this work? No insurer will cover speculative risk, so don’t expect them to cover risks like not selling enough tickets. However, if your event has pre-booked revenue and/or has a well established profit history, you should be able to purchase cover which also protects your anticipated profit. This can get a little tricky if part of the revenue is made “on the night” – for example charity events frequently include raffles or auctions. Provided there is a track record, it is usually possible to even include a percentage of the revenue expected from these activities too.
To achieve this, the insurer will need confidence in your record keeping, so make sure you retain the accounts and other records from the previous holding of the event because you may need these when making a claim. Making successful claims is, after all, what insurance is all about.
Brian Kirsch BA FCII
Managing Director, Event Assured
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.