It's almost the holiday season, and office parties and celebrations are just around the corner. Do you know if your business is protected? Your small business liability isn't confined to the walls of your office. Most small businesses, at some point or another, will sponsor events, parties, and even professional conferences. As with any event, there is a risk of damage and claims directed at your business if you are the hosting and therefore held liable. There is a type of insurance, known as Event Insurance or Special Event Insurance, that you may want to consider for your next sponsored outing. Here we explore which situations call for this additional policy, and which you might be able to get away without it.
What is Event Insurance?
Event Insurance is a specific policy that is intended to cover third-party damage claims as a result of a business holding a specific event outside of their traditional workspace. This type of insurance typically comes into play when the business lacks a general liability policy, requires additional limits, or anticipates risks outside of the scope of a traditional general liability policy. A standard event insurance policy has a limit of $1,000,000 and includes coverage for:
- General Liability
The general coverage of event insurance focuses on personal and property damage and will cover claims resulting from accidents during the event. For example, if you are hosting a holiday party and an employee’s spouse fell and hurt themselves, this insurance would cover the claim. This applies to other attendees like vendors, and even employees. The majority of traditional liability policies have an exclusion for claims that occur while on property not owned by the insured. This is known as the CCC exclusion (care, custody, and control). Event insurance is a perfect solution for these exclusions.
- Liquor Liability
Just about every general liability policy will have an exclusion for liquor, and liquor liability is a significant reason businesses purchase event insurance. This coverage will provide protection for your business in the case of claims arising due to the selling and consumption of alcohol. This could include alcohol accidentally being given to a minor, or failing to meet the ordinances and regulations relating to the sale, distribution, and consumption of alcohol (which varies by state).
- Cancellation Coverage
Cancellation coverage is the second bracket of event insurance. This coverage can help protect the investment your business makes into events in case there is a cancellation due to unforeseen circumstances. For example, if your business is hosting a sponsored conference and you invested $50,000 into non-refundable vendors, and you have to cancel due to a Covid-19 outbreak, this insurance would reimburse you for the loss. This is one of few policy options to offer this type of coverage, and especially for small businesses, it is worth the investment. Policies tend to be affordable and can offer a huge security blanket in the event of illness, weather, or necessary cancellations.
Should Your Business Purchase Event Insurance?
With a general understanding of what event insurance is, you may still be wondering if your business needs it for your upcoming events. The first thing to check when deciding if you need event insurance is the requirements of the venue. Some venues actually require your business to purchase this insurance, regardless of whether or not you already have a general liability policy. If they do require it, make sure you check on their requested limits and purchase a policy accordingly.
The next reason to consider purchasing event insurance is if you plan to serve alcohol. Whether the alcohol is from a cash bar or drinks provided by a vendor, if you are hosting the event it is your responsibility. Even if you don’t foresee an issue with alcohol, the costs of liquor liability claims can be extensive and you should always be prepared.
Finally, if you are hosting any type of large event you should purchase a policy. Not only are you liable for your guests, but all vendors, and employees of whoever is in the space of your hosted event. In addition, large events typically come with a large investment. In today's world with pandemic shutdowns and severe weather threats, you never know what could put your event to an end before it starts. This insurance will keep you confident that regardless of unforeseen circumstances, your business won’t experience a loss.
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