Event insurance: Do you need it? Is it worth it?

Are you wondering whether or not you need event insurance? Maybe you have policies in place but you’re not sure how much would really be covered if the worst actually happened? Are you legally obliged to have insurance? Maybe you’re wondering if it’s worth the financial outlay? Either way, you’re not alone!

Event insurance can be fiendishly complicated and rather expensive. As with most insurance, there are caveats, conditions and exceptions galore. Just because you’re insured, it doesn’t necessarily mean you’re covered!

So in this post, we’re going to take a quick look at the different types of event insurance on the market today; how they work; whether you need them or not; and how to make sure you get the best deal.

Do you actually need event insurance?

The answer to that (in most cases) is going to be ‘yes’. But whether you need all of the options we’ll look at, or just some, is likely to be a commercial decision specific to your event, market and risk tolerance.

From a legal standpoint, assuming you’re operating your event in the US, UK or most other developed economies, you’ll need to have basic public liability and employers’ liability policies in place as a bare minimum. If you don’t and your attendees or staff come to harm, there’s a real risk that directors or officers of your organisation will be subject to legal proceedings.

Of course, any number of other non-lethal but expensive things can go wrong at your event. How you choose to protect yourself against threats like damage to property, cancellations, terrorism etc, has more to do with the scale and nature of your event, its location, your organisation’s budget, attitude to risk, and so-on.

What are the different types of event insurance?

While it’s possible to arrange cover for almost anything, most event insurance needs fall within these four types:

• Public liability insurance
• Employer’s liability insurance
• Equipment / property insurance
• Cancellation insurance

We’ll look at each of these types and why an event planner might want to consider them.

Public liability insurance

Public liability insurance protects you in case a member of the public (either one of your event attendees or a passer-by) gets injured as a result of your event.

If you’re hosting your event at a venue, chances are they already have public liability insurance. However, that only covers them, not you as an event organiser.

Strictly speaking, public liability insurance isn’t a legal requirement if you’re planning an event in the UK, or in many states in the US. However, you’ll often need coverage in place before a venue will confirm your booking, and certain other suppliers and partners may also want to see proof of your cover before they allow their personnel or guests on site.

It’s not unusual for a venue to require a copy of your public liability insurance certificate because they’ll want to shield their own cover from any claims that might result from your negligence as the event organiser.

Remember that while there’s no statutory requirement to hold public liability insurance for your event, having a policy will place you in a stronger position if a claim is brought against you. It may even save your business.

Public liability insurance protects you against claims for losses, damages or compensation from attendees or other members of the public, who may have suffered injury, or damage to their property, because of your event. Normally, public liability also covers your legal fees – which can easily run to more than $1m in cases of death or critical injury.

The nature of the incident will usually dictate whose personal liability insurance is subject to a primary claim (yours, or the venue’s). If the ceiling collapses because the building is poorly maintained, or a member of venue staff scalds a guest with boiling water from the venue’s coffee urn, their insurance will take the hit.

If you have a large display structure in your exhibit area and it falls over, injuring an attendee, you (as the organiser) will be in the firing line.

A very common form of third-party claim at events is damage to the venue itself by personnel working for the event organiser. We once witnessed a conference in Germany where one of the exhibitors dragged a 2.5 tonne machine they were displaying across a very beautiful oak parquet floor, causing hideous damage to it. Repairs ran to more than EUR 30,000. Did the venue sue the exhibitor? Of course not. They sued the event organiser with whom they had a contract.

Make sure your public liability cover is equal to the obligations you have in your venue hire agreement with respect to making good structural and cosmetic damage that occurs during your build-up and tear-down.

It’s worth remembering that, when bad things happen, lawyers of the injured party will often pursue multiple parties. If the venue happens not to have much money, they’ll come for you – whether it’s strictly your fault or not.

TLDR: Unless you like living life on the ragged edge – you want your own public liability insurance.

Employer’s liability insurance

It is important to note that public liability insurance absolutely does not cover you for any losses, damage or injuries suffered by your own employees.

If you are employing staff, whether they are paid or volunteers, you must have Employer’s liability insurance. This is a statutory requirement in the UK, most US states and many other countries. Failure to arrange this cover will leave you liable to criminal prosecution.

The only exemption is in the case of personnel who are sub-contractors, directly employed by another company contracted to provide services at your event – whose Employer’s liability cover is the responsibility of the company which directly employs them.

Nevertheless, as the event owner, it is your statutory obligation to provide a safe working environment.

Should a staff member get injured and deem that injury to be the fault of the event, and therefore their employer, they may take legal action. In today’s ‘no-win no-fee’ world, it’s becoming more and more likely that an individual will file suit against their employer, even for relatively minor accidents.

Employer’s liability cover should take care of the costs associated with defending the event (and its organiser) against a claim, while any pay-out will also be covered by the policy.

TLDR: Even if you enjoy hang gliding in remote mountain regions while drunk, Employer’s liability cover is a legal requirement and failing to arrange it is a risk too far.

Equipment / property insurance

Property insurance will cover you for losses and damage to valuable items in use at your event, whether as a result of theft, floods or other unforeseen circumstances.

Whether or not you need property insurance is likely to be determined by two main factors.

Is the event taking place in your organisation’s offices / building? If so, your property and equipment may already be covered by your existing business insurance policy. (You should check for exceptions around events involving members of the public or guests above a specified number).

If your event is taking place elsewhere, at a venue your company does not own, you might be able to negotiate an extension to your existing business property insurance. If not, you’ll need separate event-specific cover.

You’ll almost certainly need special property cover if your event is taking place outdoors (where more things tend to go wrong).

The second factor is, how valuable is the equipment you’re taking to the event? If it’s just a couple of old laptops and some roller banners, maybe you don’t care.

If, however, it’s a lot of expensive IT and AV equipment, plus stage sets that cost a small fortune, you should get a quote.

Many events have hundreds of thousands of dollars worth of high-end tech in use, but whether or not you need to insure that kit depends on whether you actually own it, and (if you don’t) on the precise contract you have with the supplier renting it to you.

When you hire equipment for an event, you will enter into an agreement with the provider. Check whether their insurance covers their loss while the assets are on your site. The usual rule of thumb is that, if the kit comes with an operator (eg an AV technician or camera person) it’s the supplier’s problem and their cover will suffice.

If the kit is being delivered and left with you for the duration of the hire period, you’re more likely to have liability while it’s in your care.

But hire agreements and terms vary, with or without an operator, so it is important to factor these considerations in to your insurance arrangements.

TLDR: Read the small print in supplier agreements and your own existing office policies. Find out how much you stand to lose and if you can afford to lose it. If not, get cover.

Cancellation insurance

Sometimes it’s impossible to avoid cancelling an event, and this can cause a significant commercial shock to the organiser. Cancellation insurance policies vary hugely, but in all cases we’re talking about a degree of protection of the event organiser’s budget, including expenses and, possibly, some realistically projected profit the event was expected to generate.

Any event organiser who is financially at risk if the event does not take place (or is postponed or curtailed) should consider buying this type of cover.

The need to cancel an event can occur through freak weather or the venue not being available on the day. In that situation, the venue will likely only refund the venue fee; they’re not going to pay for all the organiser’s other costs. Cancellation insurance is an indemnity policy which should (more or less) put the organiser back in the same position they would have been in, had the problem simply not occurred.

The problem with cancellation insurance is that, if it’s worth having, it’s almost certainly going to be expensive.

The key thing to understand about cancellation insurance is that it generally only protects lost expenses or revenue where an event is cancelled for reasons beyond the organiser’s control. This would typically include things like adverse weather, acts of God, venues suddenly becoming unusable due to damage or other issues, transport strikes or problems that prevent delegates or speakers making it to the event, etc.

Cancellation cover often does not include losses resulting from terrorism or civil commotion, but these can often be added as extensions of cover. Similarly, most insurers now offer cover if you’re forced to cancel due to government restrictions on movement relating to Covid. (Again, this will normally be at additional cost).

It’s important to know, however, that cancellation insurance varies considerably from provider to provider and there are some important exceptions.

The main exclusion is a lack of interest in the event or lack of ticket sales. If you’re simply no longer able to finance the event, and you need to cancel because the registration sales are insufficient, that’s almost certainly going to be excluded from your policy.

It’s a good idea to arrange cancellation cover as early as possible because the period of insurance is from the day you buy it to the end of the agreed cover period. As soon as you start spending money or taking on commitments (for example venue deposits) – even if the event is 12 months away – if you’re not yet insured, you may be taking on costs that are potentially non-recoverable.

Say the rail unions were to make an announcement tomorrow that there will be national strikes across the network for the next eight weeks. Organisers whose events are dependent on delegates getting across the country would immediately find it more difficult to buy an event cancellation policy to cover them for that particular problem. Whereas right now, before any announcement, there would be no exclusion for such strikes because there are none in play.

Basically, when a risk factor becomes prominent, it tends either to be excluded or too expensive. So have the cover in place as soon as to assume any financial liabilities for the event.

The best events insurance policies will help to cover additional expenses beyond simply paying for the problem (or ‘proximate cause’ as it’s known in insurance-speak). Cheaper policies may only cover the proximate cause, and this can be grossly insufficient to cover your full cancellation losses.

Say your venue has to close at the last minute because of water damage. A cheap policy might just cover you for the direct financial commitment to that venue. But if you need to cancel everything else you booked and refund attendees and exhibitors, that sum will likely be a drop in the ocean. No pun intended.

Buy the best cover you can afford

As with all insurance, there’s usually not much point buying the cheapest, most limited option because, if the worst happens, either you’ll be hit by the exceptions and exclusions, or hammered by the excess on the premium.

You shouldn’t cut corners when it comes to your event insurance. If a policy is too cheap, then it might contain a lot of fine print that excludes many possible scenarios.

If in doubt, get legal advice

If there’s something you’re not sure about, such as what you’re legally required to insure, seek legal advice. It can seem expensive (hell, it is expensive up-front) but knowing what you’re not on the hook for can end up saving you a lot of money in unnecessary cover over the longer term.