We are living through an event planner’s nightmare. As the novel coronavirus continues to spread across the country and world, and as local governments are shutting down public gatherings of all sorts, how are event planners supposed to sleep at night knowing their function may be the next one to be canceled?
Enter special events insurance — and specifically cancellation insurance.
Now, let’s be clear: If you are planning an event, and you have not already purchased an events cancellation policy, it is probably too late to get coverage this time around should your host city shuts down events due to the novel coronavirus.
While insurers are still writing cancellation policies, nearly every one that is currently offered is sure to have specific exclusions for COVID-19.
Still, this is a great opportunity to learn about special events insurance and what it can do for you in case the unexpected happens moving forward.
A word of caution
Special events policies are what are known as non-standard policies — meaning each one differs and is unique. There is no “off-the-shelf” example we can refer to. Before you sign on the bottom line, make sure to carefully read that policy to see what is covered, what is excluded, and what you need to do in case of a loss.
That said, in general, let’s evaluate what’s covered and what’s not covered by special events insurance.
The vanilla special events insurance policy is a liability policy. It is meant to shield you from claims in case someone is injured or sickened at your event due to your negligence. It also protects you from liability if the venue you are renting is damaged during your event.
What we didn’t mention here is cancellation.
In order to get covered for a cancellation, you will typically need to buy another layer of protection in a cancellation insurance policy.
But you have to realize what is and is not covered. For example, if you choose to cancel your event, you are almost certainly never going to be reimbursed, even if you are doing it for the health and safety of everyone involved.
Whether you choose to cancel it because you had low ticket sales, or because a scheduling conflict comes up, or even if your attendees are simply too scared to attend (because, say, there is a potential global pandemic in the making), you almost certainly won’t be reimbursed. The latter example is what is called a “disinclination to travel” exception.
On the other hand, if your cancellation is out of your control — say if the FAA grounds flights into your venue, or if your keynote speaker drops out unexpectedly at the last minute — or even if your host city declares a local disaster, you are more likely to enjoy some coverage.
The amount you will be reimbursed is again going to come down to the details of your policy, but you are almost certainly going to have to eat some of the costs in the form of a deductible, but hey, at least some coverage is better than no coverage at all.
Now, let’s say you go ahead with the event, but a virus spreads through your event like wildfire. If an attendee sued you for negligence, then your event general liability policy would most likely come into play to protect you. But again, check with your agent in advance to make sure a biological epidemic isn’t specifically excluded from your policy.
Timing is everything
Another detail to keep in mind comes down to timing. If it looks like you are going to have to make a claim against your special events coverage or cancellation policy, obviously, communicate with your provider as soon as possible. Don’t wait too long after the loss, because the clock is ticking, and it would be terrible to find out on day 32 that you only had a month from the initial loss to file that claim.
Since each policy is different, make sure the things that keep you up at night are going to be covered. While many cancellation policies specifically exclude epidemics and biological risks, there are riders you can purchase that will give you that extra layer of protection. But also keep a close eye on what else is excluded — often times labor disputes are excluded, as are risks from mass shootings, and in many cases weather events, such as hurricanes. If it is worrying you, you should work with your agent to ensure you have the coverage that is going to give you peace of mind.
And while most every new policy is going to specifically exclude COVID-19 moving forward, you can still get a policy that protects you from other biological outbreaks. Information is power. As you are planning your event, make sure you are thinking through all the applicable risks and securing the appropriate insurance coverage.
Michael Giusti ([email protected]) is a senior writer at InsuranceQuotes.com. He has worked as a journalist for more than 20 years. He specializes in business, insurance, finance, technology, automotive, and industry-focused writing.