Managing Risks via Special Events Insurance
To raise funds, nonprofits often turn to large-scale special events, which can prove lucrative but also carry significant risks. Proper insurance coverage will help protect your organization from those risks.
Special Event, Special Planning
By definition, a special event typically falls outside of a nonprofit’s core functions. As a result, the organization may be uncertain about the many details involved in hosting a successful event. This is particularly true of smaller not-for-profits with limited staff resources or relative inexperience sponsoring events.
Risks associated with special events run the gamut from accidents and personal injury, to fraud and theft, to cancellation due to inclement weather or nonappearance by a featured performer. Securing appropriate insurance coverage should be the first step you take to protect your profits.
Applicable Insurance Coverage
Today, it’s possible to buy designated “special events insurance.” These policies provide coverage for lawsuits and claims brought by a third party who suffered a loss connected to the event. Coverage may include liquor liability coverage that protects your nonprofit against postevent calamities, such as an auto accident caused by an event guest driving under the influence.
Special events insurance for a single event generally comes with a high price tag, however. Depending on the specific type of event and your current coverage, it might be more cost-effective to obtain coverage by extending one of the following types of insurance policies rather than dealing with a new and unfamiliar insurer for special events coverage:
Comprehensive/commercial general liability. CGL insurance provides coverage for claims that allege bodily injury or property damage. When necessary, the coverage usually can be extended to members, volunteers, temporary or leased workers, co-sponsor organizations, outside sponsors, board members and landlords.
Directors and officers liability. D&O insurance covers claims arising from the management or governance of the organization and can include coverage for both the members of the board and high-ranking staff.
Product liability. This type of insurance will cover claims arising from injury or loss that results from the malfunction of any products sold or distributed at the special event.
Nonowned/hired automobile liability. You may need this coverage if volunteers or staff will use their own vehicles during the event, or if rented or hired cars, such as limousines, will be used. It covers claims made against the volunteers or staff related to the vehicles’ use and arising from the rented or hired cars.
Fidelity. Fidelity bonds guard against the loss of money or property due to the dishonest acts of staff or volunteers.
Weather. Weather insurance provides coverage for losses resulting from weather-related event cancellations. It’s particularly important for outdoor events, but not restricted to them.
Nonappearance/cancellation. Some events are built around the appearance of a specific performer or personality. This insurance protects against losses that result when a featured guest fails to appear.
You probably already have some of this coverage under your current policies, but check with your insurer to ensure that the special event will be covered — and, if not, whether you could pay a one-time additional premium for protection. In addition to obtaining the relevant coverage above, you should consider adding policy amendments to broaden the coverage and extend it to additional insureds who may not otherwise be covered.
Before Your Next Event
Whether it’s your first special event or the “25th annual,” conduct a pre-event assessment to identify any potential exposures. While you can’t eliminate every risk, your financial advisor can help you secure the appropriate insurance to limit any adverse financial effects.
Looking for assistance with properly identifying your organizations insurance needs? For additional information on our nonprofit services, please contact Jon Moll, CPA at 302.225.0600 or click here to email Jon. In a brief consultation he can assess your situation and determine the best way to proceed.