The zombie virus has infected humanity, and the world is overrun by the undead. You need to get to the safety of a CDC camp, 3.1 miles from where you are standing.
Along your route are mazes, burned-out vehicles and, of course, hundreds of zombies. If you can make it to the finish, you will be rewarded with a "survivor" medal; if you don't, you will be doomed as "infected."
Not-so-fun claims
"Zombie Runs" are one example of the current trend of adding a nontraditional twist to special events that take place across the country and throughout the year. From obstacle courses that challenge participants with everything from mud pits to electric shocks, to bubble soccer tournaments that put players inside giant inflatable hamster balls, each event is different. However, they all have one thing in common: the need to manage the risk of loss.
Fun events can generate some not-so-fun claims. Bob Battaglia, assistant vice president of underwriting at Philadelphia Insurance Cos., cites a number of real-world examples: $100,000 paid for injuries after a fight broke out at a concert; $10,000 to a woman who cut her lip on a broken glass at an antiques show; $2,500 paid to a spectator struck by a ball at a golf tournament; $10,000 to a child who was bitten at a dog show.
"Every event has the potential for a liability claim, even very short-term events," he says. "You never know."
Festival fans pose at the Bonnaroo Music and Arts Festival on Sunday, June 12, 2016, in Manchester, Tenn. (Photo by Amy Harris/Invision/AP)
'Special' segments
The insurance market for special events divides into public events (such as trade shows, concerts and festivals) and private events, which can include weddings, wine tastings, birthdays and bar/bat mitzvahs.
In the public-event sector, the market further segregates into regular and short-term events, with each insurer creating its own criteria for which events fit where. For instance, specialty program underwriter K&K Insurance Group Inc. limits eligibility for its short-term programs to single-location events that last no more than 10 days and have a maximum attendance of 3,000.
Agents and insurers report seeing growth in both private and public events. "It's been a steady increase in business," says Battaglia. "Events mirror the way the economy is going. When the economy picks up, the number of events being held increases as well."
Revamped special events programs
In the public sector, running events have seen a particularly strong increase in interest. According to Running USA (a nonprofit devoted to improving the status and experience of distance running and racing in the United States), the number of event finishers has more than doubled from 2005 to more than 20 million. Plus, more runners now participate in newer events than in traditional races such as marathons.
From events such as Color Me Rad, which is loosely based on the Hindu Festival of Colors, to the Dirty Dash, which is a mud-run obstacle course similar to what you might encounter in a military boot camp, each 'fun run' has a unique twist that also presents unique risks for participants, says Pat Mills, vice president and managing director at Burns & Wilcox in Salt Lake City.
In response to the increased hazards presented by nontraditional events, Burns & Wilcox revamped its special events program in 2015 to include General Liability coverage for spectators as well as accidental death, dismemberment, and excess medical coverage for participants and volunteers. "With the growth and popularity of these events, we project that Burns & Wilcox will double the amount of special events we write in 2016," says Mills.
The risks might not be as evident on the private-event side, and people hosting a party or wedding may expect to rely on their Homeowners' policy for coverage. However, there are landmines to look out for, starting with Contractual Liability.
"We're seeing an increase in the number of venues asking for increased liability coverage limits. In the past they were asking for $1 million; now it's often $2 million or more," says Todd Shasha, managing director of Travelers' personal insurance product management.
These contractual demands, even if covered by Homeowners' forms, are why brokers recommend a separate events policy. Consumers and businesses alike that sponsor events also need to be aware of coverage gaps in standard liability forms.
In this Sept. 11, 2005 file photo, children play in a bounce house in Vidor, Texas. (AP Photo/LM Otero, File)
Obtaining proper coverage
"The more unusual the event is, or the more activities that occur at an event, the greater the risk of loss and the more likely it is that loss will not be covered by a General Liability policy," says Mark Beck, senior vice president at K&K Insurance in Fort Wayne, Indiana.
"Whether it's a public or private event, having a complete understanding of all the activities that will take place and communicating them clearly to the insurance company are critical to obtaining proper coverage," he adds. "Overlooking something like a petting zoo, bounce house or fireworks might lead to an uncovered loss."
Event organizers and agents should also assess the need for liquor liability, both to protect themselves and because it's often contractually demanded by the venue or municipality.
Wedding costs continue to climb. For covered causes of loss, having a cancellation clause in place becomes more important as the event's cost increases. (Photo: iStock)
Marriages at risk
Many event organizers seek special events programs for first-party wedding coverage. The most-used policy feature is cancellation coverage.
"Cancellations are the top claims we see," Shasha says. "Venues [can] go out of business. Photographers, florists and other vendors don't deliver what they promise."
Coverage is also triggered by other cancellations caused by events out of the insured's control, such as severe weather or a military deployment. However, coverage doesn't apply if the cancellation stems from either party getting cold feet at the altar.
For covered causes of loss, having a cancellation clause in place becomes more important as the event's cost increases. Wedding costs continue to climb, with several surveys putting the average price of tying the knot at $30,000 or more.
"There are regional differences in wedding costs as well," says Shasha. "In Connecticut, it's $41,000. In Manhattan, it's more than $80,000. That's a lot of money."
First-party coverages
Special events coverage forms also provide other first-party coverages or options, such as the expense of replacing gifts, jewelry, attire or photographs. "We offer coverage not just to replace the lost or damaged items, but also for the additional costs needed to reconvene guests for photo re-shoots. We know how important weddings and other events are to people, and that recreating what was lost is more important than money," Shasha adds.
The private event market is dominated by knot-tying. "A full 85% of what we write are weddings," says Sasha. "The other 15% are generally private-event parties. That percentage has held steady over the years."
When it comes to securing coverage for a particular type of special event, the rule of thumb is that the more "vanilla" the exposure, the easier it is to insure. The events that take the most time to underwrite include festivals, concerts, large golf tournaments — anything with a large audience, says Battaglia.
Philadelphia Insurance won't write events such as mud or color runs, events with a crowd control or high security exposure, or gatherings that will have a "significant" liquor exposure; political rallies are typically off-limits as well.
Runners frolic in a haze of colored powder in Sawyer Point Park after completing the Color Run All-Star 5K as part of the All-Star Baseball game festivities, July 11, 2015, in Cincinnati. (Photo: John Minchillo/AP Photo)
Producer growth opportunity
Agents may have little interest in being chased by zombies, getting electric shocks, crawling through mud or subjecting themselves to any of the hazards inherent in today's crop of themed events. However, helping special events organizers manage risk can make an agent or broker a winner in a competitive insurance marketplace.
"Special events occur in every community, all year long. They are a great opportunity for agents to grow business," says Stephanie Waldron, underwriting director at K&K Insurance Group.
One strategy she recommends is having agencies' newer producers focus on special events. "Even small events can be exciting to work on and can generate significant revenue, and they will allow those agents to become valued specialists in the agency," Waldron says.
"Special events insurance is a great lead-in for agents — an ideal opportunity to get familiar with a customer and cross-sell other products," says Shasha. He recommends that agents get out and about to develop their expertise.
"Attend seminars and trade shows related to weddings and other types of events, learn who the vendors in your area are, and see if you can get your own booth at shows," he adds. "Getting your name out there and networking is essential, because word of mouth is really powerful with this product."
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