The event is going great. Sure, there have been some minor hiccups, but your staffers have fixed the issues and everyone seems happy with how things have gone.
Then it happens. The caterer--not one of your employees--leaves a station for a moment and a child burns himself on a heating pad. In the chaos of the scene, a candle gets knocked over and a tablecloth catches fire. The automatic sprinklers go off before your staff can put the fire out.
People are coming to you, the event director, for answers. The injured child’s parents want to know whom to send the medical bills to, and the owner of the venue wants to know how you’re going to pay for the water damage to the building.
THE RIGHT TYPE OF INSURANCE COVERAGE This scenario, though possibly not related to you directly, is entirely plausible. No matter what type of event you are overseeing, there are always things that can go wrong.
This is one reason why the majority of event directors have insurance that covers the event. But should event directors have to cover the costs of accidents that were caused by independent businesses--such as the caterer--even though they aren’t part of the event staff?
A growing trend within the industry is to have event directors purchase insurance only for their operations and have vendors purchase their own insurance, adding the event as an additional insured. Being an additional insured means, in the above example, that if the caterer had liability insurance--with the event as an additional insured--you would be protected under their policy for the accident they were liable for, in case the guests wanted to take you to court for damages.
There are many benefits to this insurance approach, both for the event directors as well as the vendors.
BENEFITS TO EVENT DIRECTORS One of the most obvious benefits to this approach is that you will probably save money on your insurance premiums. Because you are insuring only your operations and employees, there is less of a chance that your trained staff will cause an accident, which means you won’t have to purchase more expensive insurance options to cover the liability of all the vendors, increasing your risk by assuming their liability.
In the past, when you insured the entire event, if an independent vendor caused damages or injuries, your insurance would cover them. But there was also a high likelihood that your premiums would drastically increase or, in a worst-case scenario, the event would be subject to non-renewal of its insurance.
With this new approach, event directors can be reasonably assured that their event won’t become uninsurable in case of a claim against one of its vendors, and also effectively saving money by not having to purchase the higher risk policies to cover their vendors' risk. They can then use the extra cash for other purposes--maybe even decreasing the booth fees for vendors, thereby benefiting them as well by defraying the cost of buying their own insurance.
BENEFITS TO VENDORS While some vendors may look on the requirement for them to have their own insurance as a negative thing, it is actually something that can work in their favor. The event insurance, even though it insured them, is probably not as comprehensive as the vendor would like. With this new approach, vendors can purchase insurance that fits their own circumstances and not have to rely on someone else’s policy that may not fit their unique needs.
In addition, when vendors purchases their own insurance, they can be insured wherever they go--not just at or during the event. For example, what if the caterer causes an accident while taking his or her equipment back to their truck after the event? What if guests claims they became ill from the caterer's food? If caterers don’t have their own policy, they could be out of luck.
REQUIRING THE RIGHT COVERAGE With this new approach, it is important that you, as the event director, require the right insurance coverages so that both the event and the vendors are protected. Any policy that the vendor purchases should have, at the very least, the following:
- General Liability: Coverage for bodily injury or property damage caused by direct or indirect actions of the insured person. A coverage limit of at least $1 million per occurrence.
- Damage to Premises Rented: Coverage for any property damage to a rented facility. A coverage limit of at least $100,000.
- Medical Expenses: Coverage for bodily injuries to third parties. A coverage limit of at least $5,000.
The coverage limit is the maximum amount the insurance company will pay, after which the person or company insured must cover the rest of the costs. The listed coverage limits, and the actual coverages themselves, are an example of the minimum amount you should require. The vendors can usually choose to pay a little extra to increase those limits and to include other coverages. It is also a good idea for you to speak with legal professionals while you develop your plan to protect your liability from vendors’ mistakes.
HAVING INSURANCE HELPS Whether you decide to insure the entire event (including the vendors), or you want to try this new approach and have vendors purchase their own policy, having insurance can be vital to the success of your event. Don’t let a seemingly minor accident turn into a financial disaster that drains your bank account and cripples the future of the event. Insurance not only offers protection to the event and its vendors, but it can also take away some of your stress by knowing that even if a child touches a heating pad and a tablecloth starts on fire, you have the coverages you may need to safeguard your finances.
Daryle Stafford is president and CEO of Veracity Insurance Solutions. After seeing a need in the market, Daryle and the Veracity team partnered with Great American Insurance to create the Food Liability Insurance Program. FLIP offers affordable liability policies to food vendors, manufacturers, distributors and other types of food businesses--including catering--in all 50 U.S. states.