Why Live Event Planning Requires Smart Strategies To Manage Or Transfer Risk (Guest Post)

By Mona Grabowski

Two words that should become the watchwords of every special event producer or promoter on the day that planning starts? Risk transfer.

Whether the event is a music festival or an art fair, the risk of something going wrong is big and the cost of covering potential damages is growing. That’s especially so given the prevalence of nuclear verdicts of $10 million or over.

It’s become mandatory for every event planner to enlist a broker experienced in event insurance to ensure that exposures are managed, risks shared and the right lines of coverage in the right amounts are secured to meet venue requirements. 

And it’s especially important to understand why third-party risk transfer should be at the heart of the event’s insurance coverage strategy – mitigating exposure for clients and carriers alike. Say a case of food poisoning is tracked to a food vendor that’s not insured against a claim. The promoter is then deemed the responsible party, incurring the insurance claim and getting the claims hit, along with higher premiums moving forward.

Here what’s important to know.

Build a ground-up protection plan

At the outset, detailed plans for the event must be shared with the broker so the scope of risks are identified, along with contractual requirements from the venue. In fact, every contract – venue, entertainment, vendors, security, and more – should be reviewed by the broker before anything’s signed.

Optimal coverage means everything is factored in: Indoors or outside? The nature of the event – rock concert or craft fair? Features like overhead lighting and how it’s secured. Special features that can send up red risk flags, like pyrotechnics. The number of vendors and type, worker requirements, security requirements. An emergency action plan is a must, anticipating and responding to everything that can go wrong – adverse weather plan, crowd management strategies, and active shooter protocols provide structure and guidelines during a crisis.

This provides context for insurance coverage, but in any case, baseline coverages must be placed: a general liability policy; hired, non-owned auto coverage; workers’ compensation and employer’s liability. State and venue permit requirements determine the limits of liability placements. Higher limit requirements are placed through an excess liability policy.

Beyond the baseline

Festival and live event promoters and producers are encouraged to go beyond the baseline, with higher limits for the general liability, employers liability and non-owned auto policies. With subcontractors, contracts play a significant role in determining liability and relationship. It is important to note that the determination of independent contractor status can be complex and can vary depending on your state.  A fail-safe workers’ comp policy will protect the promoter when deemed responsible if uninsured subcontractors are injured on the job.

Other coverage that might be worth considering includes:

• Third-party property damage. This is useful for covering damages to venue property for which the promoter is contractually responsible, regardless of negligent responsibility.
• Inland marine. This covers rented and owned equipment and gear necessary to put on the event. 
• Event cancellation. Provides financial protection against losses due to an unexpected cancellation, postponement or relocation caused by an event that is out of your control and not otherwise excluded from the policy. This is essential for covering losses when anything from adverse weather, artist death or injury or civil commotion threatens the show. The insurance typically covers gross revenue, costs, and expenses.
• TULIP policy. The “tenant users liability insurance policy” – also called a buy-in – provides the opportunity to buy into a master General Liability policy specifically for the event. It’s a low-cost way for newer artists just starting out, or mom and pop food or craft vendors to protect themselves, the promoter, and meet venue requirements.

A master vendor contract is key for appropriate risk transfer

One of the more common mistakes in event management is failure by the promoter to put a master vendor contract in place. Without this, the right level of risk transfer from all vendors may not be obtained – a costly mistake.

A master vendor agreement between the promoter and primary vendor is the ideal solution. This framework agreement defines the promoter/vendor relationship, terms and expectations for the event. It clearly defines the insurance requirements, including limits through a qualified carrier. And its provisions set or shift responsibilities for potential liabilities – through indemnification, hold-harmless clauses or other measures.

Once the master is completed, it’s the legal foundation for other vendor contracts; the promoter can be confident that it is compliant and meets both venue and city requirements. The show can go on – hopefully without incident, but even so, with protections in place.   

Mona Grabowski is Vice President in the Entertainment Specialty Practice for Hub International insurance brokerage. She is a seasoned insurance professional with over two decades of experience in the entertainment industry= and currently serves as a Vice President of the Entertainment Specialty Practice with a specialized focus on the dynamic landscape of live events, including Music Festivals, Experientials, and Touring.