I UNDERSTAND that an article about insurance is probably the last thing you wanted to read in Special Events Magazine. Believe me, when I walk into a networking meeting, most people say “hello” with great enthusiasm. Then they see my name tag, and all of a sudden a single man has to go find his wife.
But try to keep an open mind. Stop and pay attention to this article about insurance because, after all, we all need it.
Think not? Let me walk you through an event scenario that could happen to you:
You are producing a fabulous gala or even just an ordinary party. You have copies of all of the vendors' insurance coverages (the “binders” that name you as an “additional insured”). The party is moving along superbly, the food is wonderful; there are a few back-of-the-house problems, but the client does not know. They're just having a great time.
Suddenly the event takes a turn for the worse. Your staff is breaking down the party, and one of your food servers knocks over the Sterno, which burns down the table runners and the organza. It also leaves a nasty burn on the table.
When the owner of the venue comes to you and asks you for your insurance, you show him your policy. But you only have Errors & Omissions — this is not what is needed to cover the accident.
As a result, all event profits go to fix the client's property, or the expense comes out of your pocket.
Don't feel alone; I've been in your shoes. I have made plenty of mistakes in the nine years I ran my catering and event planning company. There is no manual for event companies that teaches you what to buy, which licenses to get, what certificates are needed and what insurance to purchase. I hope I can give just a glimpse of what insurance you may need and why.
The story above is not made to scare you, but to point out the failure to carry proper insurance coverage can happen to anyone. Insurance is a three-party policy: the insured, the person filing suit and the insurance company. I ask you to think about what coverage is missing from your portfolio. Unfortunately, most people do not know what coverage they have until something goes wrong.
People tell me that they can get a $200 policy from the Internet. If you are one of these people, don't panic. You may have coverage, but please ask to get a copy of your policy and read what it covers and all of the exclusions — that is, items not covered with your policy. You would be surprised how many event planners can relate to the story above.
As the former owner of a catering and event company, I can understand the need to save money and get only what you think is necessary, but this is Mistake No. 1.
In order to avoid this mistake, you need to design a budget in your business plan. Give yourself enough money to obtain and maintain the correct licenses, certificates and insurance. It is better to get the coverage now because an incident could close you before you open. This can be one of the reasons restaurants and catering companies go out of business so quickly.
In the past, the trend with catering and event planning companies was to buy one-day policies for $350 to $1,000. These policies covered you for the event and nothing else. You would have received Commercial General Liability coverage, covering you and your guests from slip-and-falls and fire-related accidents. This is referred to as a “Business Owners Policy” that may or may not fully cover you and your guests, unless you and your broker or agent discussed what you do in detail and by viewing your exclusions and endorsement page.
You can still get a one-day policy but … this is Mistake No. 2. There are ways to fix the mistake of high-priced policies and save you money in the long run. There are new products on the market that cover your company for slip-and-falls for you and your guests and will also combine your E&O or professional insurance (malpractice insurance for event planners), while giving you Hired & Non-owned Auto so you and your staff can rent trucks and other vehicles. I understand that all companies are different, but the minimums in coverage for an annual policy range from $1,875 to $3,000, which can be higher depending on company type, products and gross income. If you added up your entire single-event insurance costs, it most likely will make more sense to purchase an annual policy.
In the event industry there are so many things happening at once and so many ways someone can get hurt. I know you're thinking that nothing has ever happened to you, and you are asking yourself, “Why should I spend $2,500 or more on insurance?” Every event is different, and so are problems and mishaps. You can have meeting after meeting going over every possible issue and how to be covered for them, but sometimes one can sneak through the cracks …
Which is Mistake No. 3. This is how you fix Mistake No. 3 and become fully and correctly covered. Bear in mind, brokers or agents will usually give only what they think you need, but not what you really need.
GO AHEAD AND ASK
To make your life easy, please shop around for a broker or agent and find one you feel comfortable with and who has your best interest at heart. You must get to know your broker or agent — ask as many questions as you can. Make sure that he or she knows exactly what you need due to the nature of your business. In the end the broker must feel right for you. Most people assume that their broker or agent will know their business. Remember, it may cost more to be overinsured, but think of the cost if you're not fully insured.
Here are some of the different event polices on the market:
- Inclement weather
- Wedding cancellation
- Concerts cancellation
- Catering endorsements (allowing off-premise catering operations)
- Liquor liability
- Off-premises coverage
- And many more …
The main insurance policies you will need as an event planner — or any business owner, for that matter — are Commercial General Liability and E&O, if you as the event planner make a mistake. You may need to get Directors & Officers insurance if you are incorporated and would like extra coverage, Products & Completed Operations if you sell or make a product other than catered food, and Workers' Compensation if you have employees. You can always add or delete coverage or the endorsements from the list provided.
Before we wrap up this insurance journey, I would like to explain about work comp. Follow this simple rule: If you can prove that your freelance workers work for others as well as you, you might not need work comp. If you ask your “workers” to come in at a certain time each day and they work for you alone, guess what … you need work comp. This is a nonnegotiable policy and must be purchased, or you are setting yourself up for lawsuits. There are plenty of lawyers who send their kids to Ivy League schools off these lawsuits.
My hope is that the word “fear” is no longer associated with insurance. It's like years ago when nobody knew which wine to ask for with dinner, yet now everyone is an expert. I would love to have a similar impact for you and for the insurance industry.
Life's problems come at you fast, so make sure you discuss your plans with someone who has done what you are trying to do.
Happy planning, and may all your events run smoothly.
Steven Vincent is a broker with Mission Viejo, Calif.-based Bittick Insurance. He can be reached at 949/454-1242 or [email protected].