Events insurance: Misconceptions and considerations

28th October 2009

The recession has inevitably affected event organisers, with some high-profile events being cancelled and exhibitor numbers at shows falling.

Calling off a convention is extremely disruptive for event organisers, exhibitors and visitors alike, so it is not surprising that cancellation insurance becomes important for people within the industry.

However, events professionals need to be aware of what a policy protects them against.

Rob Bentley, director of Event Assured, said that his company has seen an increase in the number of people asking about insurance covering cancellation of shows due to lack of finances or exhibitor and visitor numbers.

"We have had enquiries from people who are looking to cover that sort of risk, but there's a common misconception about what event insurance does and doesn't cover," he said.

"It doesn't cover cancellation due to insufficient funds or insufficient interest. It's not designed - no insurance is designed - to pick up on what we call a 'trading risk', the risk of being an entrepreneur if you like," Mr Bentley explained.

In fact policies cover forces outside the control of events organisers, which are usually called 'acts of God' by insurers.

"It is designed to pick up the effect on the revenue or expenditure due to disruption to the event. It basically covers any cause beyond their control and then has certain exclusions, which would include lack of interest, lack of finance," Mr Bentley said.

"The normal perils would be things like damage to the venue, weather, strikes, utilities not being available - for example if there was a power cut on the day of the event and the venue was shut because it didn't have electricity or heating.

"Also, denial of access - so if there was a major delay on the roads or a police incident - those sorts of things are all included in the standard cancellation policy," he explained.

Another thing to look for is whether the insurance covers acts of terrorism, as Mr Bentley said that some policies include this as standard, but others do not.

Illness is another grey area, according to the expert.

"Communicable disease is a hot potato at the moment, due to swine flu. That's a particular peril which is difficult to buy at present," he explained.

Cost cutting has been a major concern for companies in the recession, not just in the events industry, but in the wider economy as well.

This has been reflected in enquiries for insurance, according to Mr Bentley.

"We've certainly still had a lot of interest from people looking into events insurance but that's probably people who aren't existing clients of ours and are clients of a competitor looking around to see if they can get more competitive quotations," he suggested.

"That's certainly a factor we've seen and that's probably been brought about by the recession, with people looking to cut their overheads. So that's been quite useful from our point of view," he added.

So does that mean event organisers are looking to get the cheapest deal at the expense of policy details?

"That depends on the client," Mr Bentley said. "Some clients only look at the premium, possibly seeing event insurance as another 'box to be ticked', others are keen to make sure that the cover is correct and will protect them properly in the event of a claim."

The same is true for the extent to which the reputation of the insurer is a consideration for event organisers, he continued.

"Those who are more worried about the fine detail of the policy, will probably also be more worried about being 'comfortable' with the provider," he concluded.