Following a two-year period of widespread event delays and cancellations, the live events industry is roaring back to life with eager fans filling arenas and stadiums as leisure travel and spending returns to pre-pandemic levels. However, the COVID-19 economic rollercoaster may have permanently shifted how event organisers, venues and their insurers manage expectations and risk, with some insurers pulling out of the live events market entirely and others restricting coverages, raising premiums or requiring more in-depth details before providing a policy.
It would be easy for a busy event host or venue that previously was confident in their insurance coverages to miss these changes and how they affect ongoing operations. When an insurance incident occurs, the consequences of such an oversight could be financially devastating, even causing bankruptcy. Across the industry, insurers have updated how they provide coverage for incidents such as equipment damage in transit, loss through voluntary parting, damage to third-party equipment and full-cost equipment replacements.
For all those involved in organising live events, it’s important to ensure that current policies and coverages are sufficient to protect against all concerns and that both the provider and the insured agree they are on the same page regarding what is protected and what’s not. It is therefore recommended that event hosts, promoters and any others who harbour uncertainty should begin a dialogue with their insurance agent to verify details and update both needs and policies as required. Here, we will examine some of the specific changes occurring and how they may impact live event businesses going forward.
COVERAGE FORMS
Insurance policies covering property generally fall into two categories. Property policies cover buildings, personal property and anything that generally stays stationary or does not travel far, while Inland Marine policies cover property known to be mobile in nature. Inland Marine policies are often ideal for live event producers and contractors due to the nature of the coverages. Policies are also separated into three broad levels, deemed Basic, Broad and Special.
Basic policies cover 11 perils, including damage or loss caused by fire or lightning, smoke, windstorms, hail, explosions, riots or civil commotion, aircraft (striking the property), vehicles (striking the property), glass breakage, vandalism or malicious mischief, theft, and volcanic eruption.
Broad policies introduce coverage for the six additional perils of falling objects, weight of ice, snow or sleet, accidental discharge of overflow of water or steam from within plumbing or treatment systems, sudden and accidental rupture of heating, air conditioning, fire protective or hot water heating systems, freezing of plumbing or related systems, and sudden and accidental damage from artificially generated electrical current. While broad policies may seem all-encompassing, the highest tier of coverage removes all doubts.
Special policies are different from basic or broad policies because they do not list specific perils or occurrences, instead providing an “all risk” coverage plan with any exclusions specifically listed. This type of insurance is considered more complete, because coverage is assumed unless an incident specifically matches the stated exclusions.
MAJOR POLICY CONCERNS
One major coverage option that may need to be addressed is Voluntary Parting, which occurs when a third-party such as an equipment rental client or a transportation partner illegally takes possession of or damages property through fraudulent means, such as fake documentation or banking information. Inland marine policies may not automatically include coverage for voluntary parting, and it can even be excluded by default on special policies, so agents and insureds should discuss this potential and how it could impact the insured’s business.
Coverage territory is an important consideration as well, dictating which physical locations are covered. Most US policies sold by known and primary insurance carriers provide a coverage territory of the US, Puerto Rico and Canada. Specialised carriers such as Take1 Insurance often offer improved coverages, and in fact all of Take1’s Inland Marine policies provide worldwide coverage by default so all gear coverage applies regardless of location.
For non-owned equipment, such as semi-permanent stage, audio or lighting gear shared by all performers or vendors through an event, insurance protection is provided through a Care, Custody and Control coverage. This also applies to rental equipment. If, for example, an insured is working at a large festival where they are required to operate someone else’s FOH console, any damage caused to the equipment through negligence is covered. This provides peace of mind for both the operator and the owner and helps simplify and expedite financial restitution.
Virtually all live events involve travel and transporting expensive gear, making transit coverage another critical insurance protection. Instead of hoping an auto policy covers losses, insureds with Inland Marine policies like those offered by Take1 are protected specifically against losses in transit, regardless of whether the incident occurred due to an employee or a third-party transportation company. This means that if a transportation partner has an accident and equipment is damaged or destroyed, the automobile policy does not need to be applied, again providing more rapid issue resolution for the insured.
The last policy feature in need of review, and perhaps the most important, is whether coverage provides insureds with the full replacement cost of an item, or the actual cash valuation. Vehicle policies typically operate under the ‘actual cash valuation’ model, which depreciates over time so that a policy payout becomes less valuable as the equipment ages. Since new equipment is virtually always more expensive than the depreciated value of existing equipment, and new purchase prices also tend to rise over time, specialised carriers like Take1 offer full replacement cost coverage as a standard policy inclusion to guarantee insureds can continue their operations without interruption or financial loss.
GETTING BACK TO BUSINESS
The excitement around live events has never been higher, and the same can be said for the concerns of organisers, operators and vendors. Successful events involve the coordination and collaboration of many different teams and companies, tons of moving parts and inherent risks of weather, crowds and unscrupulous businesses or partners. The assurance offered by proper insurance coverage allows live event companies and gear providers to focus on producing the best event possible without worrying about the financial implications of unplanned incidents or equipment loss.
While the best, most attentive insurance agents are hopefully relaying these concerns to their clients, the onus for action is on the policy holder to double check that their coverages match their needs and reflect current market realities. When live events companies partner with specialised insurers who have intimate knowledge of all the protections a live event requires, they can work together to minimise the risk of losses and protect the company’s long-term financial wellbeing. As the adage goes, the show must go on, and currently that means protecting all entities involved with carefully selected insurance policies.
