Chances are if you hadn’t heard of event cancellation insurance before, you’re aware of it now.
A specific type of risk management insurance, event cancellation insurance covers organizations and event planners against the loss of revenue or committed expenses if an event is fully or partially canceled. And while loss from communicable disease was excluded from many event cancellation policies, before COVID-19 it was often possible to buy back this coverage for an additional premium. Organizations and event planners who did so are now reaping the benefits as underwriters pay out an unprecedented number of claims. Sometimes, as the saying goes, it is better to be safe than sorry.
Event cancellation has been on everyone’s mind recently. But it’s just one of the risks for which smart meeting planners plan. We spoke to three risk management experts to find out what’s changing in the field of event insurance and how meeting planners and associations should protect themselves moving forward.
Mitigation First
There’s more to risk management for meeting planners than merely event cancellation insurance.
“Risk management from a meeting planning perspective is really taking a look and defining what all of those risks could be, preparing for the worst and doing what you can to avoid those risks and mitigate those in advance,” said London Docherty, the American Society of Association Executive (ASEA) manager of meeting operations and event experience.
To give a simple example, planners should begin by making sure the wires crossing the floor of the venue are taped down. They should do their due diligence and double check that motorcoach drivers have excellent driving records. And then once they’ve mitigated risk to the greatest extent possible, “of course it’s important having that insurance as extra coverage should something not go according to that plan,” Docherty said.
Insurance Protection
When their best laid plans do go awry, insurance meeting planners and associations will be relieved to have, among other types of insurance, professional liability insurance and property insurance. The former, also known as errors and omissions (E&O) insurance, protects against lawsuits brought for negligence because, in essence, work doesn’t meet a client’s standards. It covers issues like defamation and copyright infringement that could occur during the course of a meeting.
Property insurance “protects you if your property gets stolen, lost or damaged,” said Jeffrey S. Tenenbaum, managing partner at Tenenbaum Law Group PLLC. “In connection with events, I’d say that property insurance is as important as various types of liability insurance. If you’re an association that’s bringing a lot of property to events, you want to make sure you have good property insurance.”
And then there is commercial general liability coverage, also known as “slip and fall” insurance.
“It covers third-party injuries where, if someone, for example, were to fall down and get hurt during an event, they could sue the organizer,” said Seth Fleischer, business development professional at Aon Affinity | Affinity Nonprofits. “While the event venue might have their own liability coverage in place, they’re going to typically require anyone coming in and using their venue for an event to have their own liability insurance as well. Because it’s possible multiple people could get sued if something were to happen at the event.”
Just as the venue ensures that anyone using its space is insured with commercial general liability coverage, so should associations and planners make certain that exhibitors and vendors have it. A certificate of insurance generally should provide all the proof needed, according to Tenenbaum. And as for the insurance itself, commercial general liability coverage will protect across the board against mishaps at meetings; no special liability insurance is needed. That holds true no matter what state the event is in, although, as Tenenbaum said, liability insurance has “a different construct for overseas events.”
Contracts
Though, according to Tenenbaum, “it’s absolutely a best practice for every association to have all of the major forms of insurance,” he called contracts another important tool to protect against risk during an event. From hotels and convention centers to transportation vendors, caterers and more, associations and meeting planners should be trying to shift risk off to event partners contractually.
“You want to say, ‘If we the association get sued because of your negligence, you’re going to indemnify us and step in and pay our legal fees and judgements against us,’” Tenenbaum said. “A lot of associations will require exhibitors or others to name the association as an additional insured on certain insurance policies. That’s another way to contractually help shift the risk to other parties.”
And then there is force majeure, a contract clause that Tenenbaum said “many people didn’t really pay close attention to in the past, but they most certainly are now. It’s the provision that helped hundreds of our clients get out of their conference contracts last year, because it states that if some unforeseen event happens that makes it illegal or impossible to hold the event, then either party can get out without penalty. We’re seeing a loosening of restrictions on large meetings, and so force majeure terminations are really not possible right now. But it’s also a provision that we’re seeing much more heavily negotiated.”
New Considerations
Because event cancellation policies vary somewhat from insurer to insurer, it’s difficult to generalize about crisis coverage. However, thanks to the financial devastation wrought by the pandemic, “the optional buyback of the communicable disease exclusion is no longer available,” Fleischer said. “That’s just it across the entire market.” For those seeking protection against other kinds of risk, like adverse weather, labor disputes and terrorism, expect to pay rates higher than at any time since the September 11 attacks.
In light of the COVID-19 pandemic, associations and meeting planners are scrambling to try to find ways to mitigate risk around the virus. Tenenbaum said his practice is seeing an increasing number of associations mulling over imposing a mandatory vaccination requirement on meeting attendees.
Docherty said that ASAE might ask that meeting attendees expressly accept health risks in writing.
“We’re considering using liability waivers that participants would sign to make sure that they’re accepting their risk if they attend these in-person, face-to-face events again,” she said. “Making sure that all of this is communicated to attendees is going to be an important step for us to make sure that they’re aware of risks and we’re protected as well through that communication.”a
