If you run a nonprofit organization, such as an association or public charity, events likely play an important role in your operations. Some nonprofit events generate significant revenue, accounting for a sizable portion of the operating budget. Others are critical to serving the organization’s members or other constituents.
You know that a successful event demands diligent planning and effective execution. But you might not realize that insuring the event with proper coverage is equally critical.
Nearly any event your nonprofit hosts could expose you to risk. Whether it’s a major trade show or conference, a small dinner or reception, a golf outing or other fundraiser, or an off-site board meeting, any time you gather people together—especially at a third-party site—you need to consider the risks and whether your current insurance protects you sufficiently.
For most nonprofits, there are two main risks associated with hosting events, both requiring proper insurance.
Think about what could go wrong when you hold your annual conference at a hotel or other venue, for example. With potentially thousands of registered attendees, in addition to speakers and exhibitors, there is always the risk that someone will get injured or cause damage to the property.
Yet it doesn’t take a large event to create a liability exposure. Even a small reception for 50 guests can open your organization to liability risks, especially if you serve alcohol. And in today’s litigious society, liability settlements and jury awards can be astronomical.
If you’re hosting an event that typically generates substantial revenue or entails very large expenses for your organization, and the event needs to be cancelled, postponed, or curtailed, you could face two forms of financial risk: the lost revenue, as well as any out-of-pocket expenses you’re still liable to pay to the venue or vendors even if the event doesn’t take place.
And while no one wants to think about these possibilities, there are many incidents that could keep your event from proceeding as planned. A hurricane or blizzard could trigger power outages, cause damage to the venue, or make travel to the area impossible; the venue could sustain severe fire damage; or a sudden and catastrophic incident could shut down travel, as we learned on 9/11 and when the COVID-19 pandemic was declared. (It’s important to note that event cancellation policies no longer include COVID or other communicable diseases as a covered exposure, after insurers incurred billions of dollars in losses due to pandemic-related event cancellation claims.)
The trouble emerges when a nonprofit organization discovers the insurance policies that they currently have in place don’t provide sufficient coverage for event liability or cancellation.
For instance, a standard general liability (GL) policy might exclude or limit coverage for your nonprofit events, especially if they draw large groups, include high-risk activities, or involve alcohol. In some cases, the GL insurer is willing to underwrite and schedule the event onto the policy; otherwise, you’ll need a separate event liability policy.
On the other hand, event cancellation always requires a standalone policy. Event cancellation insurance protects your nonprofit against loss of revenue or commitment of expenses if the event is cancelled, postponed, or curtailed due to a covered peril. Often, insurance carriers are willing to cover multiple events under a single policy—assuming you can provide all the data the underwriter needs—but each event is underwritten and rated separately.
There is no one-size-fits-all answer to the question of how much insurance it takes to properly cover your nonprofit events. Factors like the following will impact the amount of insurance you need, how easy (or difficult) it will be to obtain, and your premiums.
Given all those variables, how much coverage should you secure for your event?
The key to ensuring your nonprofit event is covered is to plan and communicate early. When your insurance advisor knows your plans well in advance, they can assess the market, determine your options, and secure the insurance you need to avoid an uncovered loss. If you’re considering an activity that may be too high risk to secure coverage for, your advisor can let you know before you finalize your plans.
B. F. Saul Insurance works with nonprofits of all types, helping you reduce your exposure to risk. When it comes to events, we talk with you about your plans at two critical times: during a mid-term policy review and as the policy is coming up for renewal.
If you’re planning to host events during the next policy period, we obtain the information to determine if your GL carrier is willing to write the event onto the policy or if we need to secure a standalone events liability policy. For event cancellation coverage, starting the planning process at the right time is critical since most carriers won’t allow you to implement an event cancellation policy more than 24 months before the event or within 30 days leading up to the event.
We also review any third-party contracts associated with the event, to ensure you’re meeting your contractual obligations and you aren’t unknowingly exposed to risk. For example, most venue contracts stipulate minimum event liability limits, though we can often negotiate those on your behalf. And contracts with third-party vendors (like entertainers, photographers, and others) should specify that they carry their own liability insurance and indemnify, defend, and hold you harmless, along with listing your organization as an additional insured where applicable.
If your nonprofit is planning to host events, contact the advisors at B. F. Saul Insurance to learn how we can help insure them against risks!