By Joel Gleason
Without going into detail, several years ago I assisted a client of mine who had planned on putting on a large event in a major U.S. city in September 2020. His organization wanted to purchase event cancellation policy. Fast forward to Spring 2020. With the COVID-19 pandemic, that city’s convention center turned into a backup hospital and the event had to be cancelled. And now my client has a $40,000,000.00 bucket on which to draw funds. You read that right, a $40 million claim paid.
The obvious question, how did my client get this gigantic payout when so many other event planners have not been able to be so successful?
In our line of work, negotiating with insurance companies, there is a specialized coverage referred to as “Show or Event Cancellation Insurance” that, if amended properly, would cover such things as the current pandemic. This is not a policy the standard insurance companies write as the coverage takes a certain expertise to handle, and since the “risk” has changed. The “risk” is no longer the building or the property inside the building. The “risk” is now the event itself.
Would, could or should claims due to this pandemic be covered by insurance? There are always exceptions to the rule, however in most circumstances there would not be insurance for it. Virtually all property policies only perform when there has been damage to the property (building, contents, etc.) itself.
So, the issue that underwriters and brokers such as myself need to address is what could possibly happen to stop or curtail an event or show? Of course, there are the usual concerns such as fire, smoke, wind, hail, vandalism, etc, that need to be insured against. And underwriters who handle “Event Cancellation” will readily offer coverage for these things.
However, as we have seen this year, this doesn’t completely address the problem. Again, the concern is now the event, not the property. So, how do the event organizers protect themselves against such unforeseen issues? Can the organizers even protect themselves against such concerns?
Looking forward, the quick answer is: “Yes.” A properly amended Show/Event Cancellation Policy can cover against most anything INCLUDING WAR, which is almost universally considered uninsurable! Labor strikes that threatens an event or show should most always be added. What if, at the last minute the entertainment backs out for one reason or another? Or what if transportation to the event becomes unavailable and the exhibitors and attendees can’t get there? How do the show’s exhibitors and/or vendors recoup their losses if they cannot get to the show? And as Covid-19 has unfortunately showed us; what if, due to fear of catching a communicable disease, the event itself gets shut down? ALL CAN BE INSURED AGAINST!
In addition to the above, there are different benefit levels to purchase. The organizers can elect and insure together or separately: incurred expenses; return of admissions; and even profits.
Price is a factor in most everything we do; however, as you can see from this case, it’s not the only thing, especially with insurance such as this.
Joel Gleason entered the insurance business in 1974, and in 1996 started Gleason & Associates in Bethesda, MD. NCSF members may apply for liability, property and D&O insurance through the NCSF Members Insurance Program, run by Gleason & Associates LLC. NCSF does not provide the insurance and all disputes are between the insured and the insurance company. NCSF does not receive an endorsement fee with this service.