Who is Covering Who?

Sometimes arranging insurance for your events can leave you feeling as confused as Costello in the famous Who’s on First comedy routine:

Abbott: Who.

Costello: The guy on first base.

Abbott: Who is on first.

Costello: Well, what are you askin’ me for?

Abbott: I’m not asking you–I’m telling you. Who is on first.

Costello: I’m asking you–who’s on first?

Abbott: That’s the man’s name.

Costello: That’s who’s name?

Abbott: Yes.

Spring means the return of baseball and while there is no “off season” in the event industry, spring marks the start of a busy time of year for many CanSPEP members.  With so much already on your plate, making sure that you and your client have the right insurance in place for your event can be as frustrating as trying to hit a curveball.  Who is responsible and who is covered?  You, the event planner?  Your client?  The venue?  Suppliers?

For most event planners, the insurance discussion starts when the event venue requests a Certificate of Insurance.  More often than not, the venue will require that a certain limit of liability insurance is evidenced and stipulate that the venue is scheduled as an “Additional Insured” on the requested document.  So, what does this mean?  And who should be responsible for obtaining the corresponding liability insurance policy?

Let’s start with the first question.  As part of a sound risk management practice, the venue wants to make sure that they will not incur any costs if someone is seriously hurt or property is damaged at an event you are managing because of negligence stemming from you, your client or your suppliers.  The venue wants to ensure that a Commercial General Liability (CGL) policy or an Event Liability policy is in effect to pay their legal defence costs for the situation where they are “unfairly” named in a lawsuit bearing no responsibility for the unfortunate incident causing injury or property damage.  

The second question can be addressed in a number of ways.  The simplest answer is that your client is responsible for obtaining an insurance policy that protects their interests while you maintain a CGL policy that protects your interests.  Your client may have a CGL policy that renews every year and covers them over the course of a 12 month period for all of their activities and operations if sued alleging responsibility for causing bodily injury or property damage.  If this is the situation, advise your client to contact their insurance broker and satisfy the venue’s request for a Certificate of Insurance.  If your client does not have an existing CGL policy, then an Event Liability policy may be the most sensible solution.  An Event Liability policy functions the same as a CGL policy (i.e. responds to a lawsuit alleging responsibility for bodily injury or property damage) but it is solely issued to insure your client for the duration of the event and only for the exposure of the event itself.  As such, the cost of an Event Liability policy is a fraction of the cost of an annual CGL policy and PROLINK or another experienced broker will be able to assist them with this solution.  

A more preferred but expensive approach for some event management companies is to obtain an annual CGL policy that not only insures the event management company per se but also their clients’ event related exposure.  This solution is more commonly acquired by larger event planning businesses that can manage the lump sum cost assessed at the start of the policy term and then charge appropriate portions of the annual premium back to their various clients throughout the policy year.  It is ideal for event planners with a relatively established schedule of client events over a twelve month period.  Such a solution is mainly beneficial from an administration standpoint: it saves the event management company the effort of ensuring their clients have the proper event coverage and going through the application and quoting process to attain a new policy for each of the events that they manage.  

How do your suppliers like audio-visual companies, caterers, security firms, entertainment, etc. fit into the equation?  Well, you should think like the venue which requested a certificate of insurance from you and your client.  You should do your best to ensure that you and your client will bear no costs as a result of the potential negligence of a supplier.  This means requiring that your suppliers evidence their own independent Commercial General Liability insurance and ideally it should list you and your client as “additional insureds.”  Such a scenario will mean that their policy covers your legal defense costs if you are unfairly named in a lawsuit because of a bodily injury or property damage incident caused by the supplier.  Otherwise, you will need to rely on your own CGL policy to respond to the lawsuit and be subject to rate increases due to claim activity.  Most insurance companies surcharge for claims up to 5 years after they occur and so this practice can save you and your client a great deal on future insurance costs.  An experienced insurance broker will be happy to review the Certificates of Insurance that you collect from your suppliers and verify that they are properly indemnifying you and your client for their potential negligence.

Properly insuring your business and your client for the events you manage can be confusing but it doesn’t have to be.  The key is good communication between you and your client, you and the venue, you and your suppliers and perhaps most importantly you and your insurance broker.  Executing great events is like a team sport: when you know where all of your teammates are on the field and cover for each other you usually achieve a positive outcome.

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