Face it: we've all been there. Even though this is not your area of expertise – and you've said as much – the person asking you for help "just this once" is one of your best customers, your pastor or a teacher at your child's school. You've been asked to find special event coverage for a one-time "Fall Festival!" and you gamely said, "I'd love to help." After all, a quick look tells you that some carrier websites offer online application and payment in as little as 10 minutes! How risky can hayrides, a corn maze and a pumpkin patch be?
Clearly, you've never watched that new fall favorite, the “pumpkin cannon” firing its payload at speeds in excess of 400 mph at a target several thousand feet down range. And it's not just exploding pumpkin launchers that pose a threat to insurance agents at festivals, parades and other special events. Be warned: obtaining special events coverage generally is not the cakewalk you were expecting.
For starters, you need to consider for whose benefit the coverage is placed. This whole conversation probably began with the event venue demanding proof that it enjoys “additional insured” status on a liability policy with specified coverages. The good news here is that most carriers indicate that the venue may be added as an additional insured at no cost. That, of course, begs the question: did you follow through and add the venue to the policy? If not, you may have failed at your primary task.
Who else enjoys protection under the policy should they be injured by a misfired, airborne member of the squash family (or through more mundane perils)? Spectators, as a group, are almost certainly covered, but how about volunteers and other participants? The general answer is, "No." As you look at various special events coverage offerings you'll likely see assurances that "participant coverage is available." And what is the significance of that word "available" in this context? It means that “participant coverage” is not part of the standard offering. It, too, must be added – likely for an additional fee.
That is important information for your customer to have. More than one E&O claim has involved the situation where one of the event organizers, volunteers or participants, having been injured at their own event, is surprised to find that the policy does not cover their loss.
So what else may be "available," i.e., not on the standard form? Hired/non-owned auto coverage is available. Abuse and molestation coverage is available. And perhaps most important of all (in a festival setting): liquor liability coverage is "available," along with a number of other options.
You were surprised by the presence of a pumpkin cannon and beer garden. What else do you not know about this event? Once the sun goes down, will the aerial pyrotechnics come out? And if so, did you check the box for “fireworks” on the application and pay that additional premium? Otherwise, that coverage exclusion, too, likely remains in place.
A wrinkle not seen in most policies you procure is time. Because special events tend to be limited in duration – often a single day – the coverage is similarly limited. That means you need to enter the right date, because getting the right policy for the wrong weekend is a sure path to an E&O claim. Likewise, is setup & takedown covered on the front and back end, which may be free, but might have to be added? Did you check the box that, for a modest fee, will provide “rain date” coverage, or does your client just need “cancellation coverage?” Don't save these questions for the last minute, because special events coverage typically has to be procured at least 24 hours in advance.
Last, consider the location. For events held in town or nearby, that generally is not an issue. However, E&O claims have arisen where a special client event has been held outside U.S. territorial waters, e.g., in the Caribbean, which may well take the event outside the coverage you placed for it.
Granted, not every special events policy form is identical, and various carriers surely address these issues in their own, unique ways. But that just underscores the importance of addressing these issues by reviewing the coverage offered, closely examining the application and ensuring that your customer, your pastor or your child's school is taken care of. An old adage rightly declares, "Anything worth doing is worth doing well." So before you see the first rocket’s red glare and pumpkins bursting in air, do your part to ensure that your customer's special event doesn't go uncovered.
Tips:
- Allow extra time to review the application, ask follow-up questions, and get answers in time for coverage to be timely placed.
- Ask probing questions about dates, participants, and special activities or equipment. Will there be fireworks? Alcohol? Pumpkin cannons?
- Ask about special contractual requirements imposed by the venue. If available, obtain and review the requirements document yourself.
- Beware the boxes, e.g., not checking “fireworks” simply to keep the premium cost down.
- Beware the exclusions. E.g., "Liquor Liability" and "Miscellaneous activities and devices."
- Is a COI needed? Care is needed to be sure the COI is limited to coverage actually provided.
- If coverage cannot be obtained, you need to provide prompt notification to your customer.
