When you’re planning an event, the last thing you want to imagine is a natural or national disaster intervening on its scheduled date. However, with the ongoing COVID-19 epidemic, event productions like festivals to parades to the Olympics have been postponed, cancelled, or left with uncertain futures.
If your organization held events cancelled due to COVID-19, it’s important to understand event cancellation coverage, and how it applies during an epidemic. In this short guide, we’ll explain this type of insurance and how it works for COVID-19, as well as what steps you can take to move your event online.
What is Event Cancellation Insurance?
Event cancellation insurance is an insurance policy that protects an event planner from liability in the case that something prevents (or significantly disrupts) a scheduled event. Depending on the specifics of your policy, your event cancellation insurance can protect you from liability when it comes to:
- Expenses related to the event
- Revenue or profit from the event
- The cost of postponing or rescheduling the event
For small events that are not expected to generate any revenue, this type of insurance may not be necessary (or available). For large events that require months of planning—not to mention countless invoices and checks—it’s a must-have.
What Event Cancellation Insurance Can Cover
Event cancellation insurance can be a prudent investment for any event that may lead to significant financial loss. While it might be hard to imagine an earthquake interrupting your music festival or a labor strike shutting down the site of your awards ceremony, the current COVID-19 pandemic demonstrates that something can always go wrong.
Event cancellation insurance can cover a wide range of scenarios. Some “All Cause Coverage” policies cover any circumstance that keeps your special event from going forward as planned. However, most are narrower. Depending on the specifics of your policy, event cancellation might protect you in the case of:
- A power outage affecting your venue
- Crimes or natural disasters that render your venue unusable on the scheduled date
- Disease outbreaks
- Labor strikes that make it impossible to staff the event
- Acts of terrorism that disrupt transport or affect security
- Disruptions to transportation, rendering attendance impossible
- Disruptions due to weather, including snow and hail
- A speaker or performer’s no-show
How Much is Covered?
Depending on your policy limits, you may be able to recoup all or part of your expenses and lost profit related to the event. When it comes to insurance, your payout is limited by two numbers: your deductible and your policy limit.
- Your policy limit is the maximum amount your policy will pay out in the event of a covered cancellation.
- Your deductible is the amount you must pay out of pocket before your insurer will make a payment.
Let’s look at an example of how event cancellation could work. Imagine that you’re hosting a day-long VR conference. You’ve rented a venue, as well as paid out money for space rental, conference programs and badges, a catered lunch, coffee service, and speaker’s fees. You have a $100,000 policy limit and a $5,000 deductible. If your losses due to a fire at your venue amount to $60,000, your insurance would cover:
- All of the money already paid out in nonrefundable expenses: lunch, coffee services, printing services, etc. (Refundable expenses aren’t usually covered.)
- The lost revenue from the conference registration fees that would have been paid at the door had the event gone on.
- However, you would have to pay $5,000 deductible out of pocket before your insurance would kick in. This means that your insurance would pay a total of $55,000.
- If you choose to move the event, rent out a new venue, and reprint all programs and brochures, your insurance could potentially cover those costs. In this event, you would not be able to recoup costs from lost revenue or from services you transferred to the new venue, since the event did in fact go on.
In this case, we’ve assumed that the event was cancelled due to a cause covered by the event holder’s policy (fire). It’s important to note that for anything to be covered, your event would need to be protected with an appropriate policy that applied to the actual cause of its cancellation. Next, we’ll take a look at specific types of policies for different events.
Who Can Get Event Cancellation Coverage?
What is an appropriate policy for your event? It all depends on the kind of event you’re hosting. If you could face significant losses (from expenses or revenue) as a result of your event’s cancellation, it is worth considering an event cancellation policy. It is possible to buy specialized insurance specifically for your public or private event, and indeed, you may need that kind of policy even if your business or organization already has insurance.
Let’s take a look:
Businesses, nonprofits, and other organizations hosting events can take out event cancellation insurance for their public events. The following kinds of events may qualify for event insurance policies:
- Trade shows and exhibitions
- Sporting events including games and tournaments
- Fairs and festivals
- Concerts and theatre production
Planning your public event may have already incurred significant expenses, from professional event planning services, to space and technology rentals, to catering, to printing services, and beyond. Moreover, you may need to refund ticket fees and return sponsors’ money, or you may never be paid by your attendees and sponsors at all. This is where event cancellation insurance comes in.
Even if your business already has general liability insurance or professional liability insurance, it’s important to note that these kinds of policy cannot protect you in the case of event cancellation.
- General liability insurance can protect your company in the event that a client or third-party suffers from bodily injury or property damage during the course of your business (including attending your event). This kind of insurance is important to have in case someone is injured or has their property damaged at an event hosted by your organization, but it cannot protect you if your event is cancelled.
- Professional liability insurance can protect your organization in the event you’re accused of errors or omissions related to your professional services, including professional negligence. This kind of insurance is important to have in case your event leads to someone else’s financial loss, but it cannot cover a cancelled event.
As you can see, other types of insurance can help your organization if your event leads to someone else’s loss. However, if your public event is cancelled, you need to protect against your own financial loss.
While some event cancellation insurance is meant for large, public events, you may have significant financial risk tied up in a smaller, private event. Special event insurance policies can cover events including:
- Engagement parties
- Retirement Parties
- Smaller business meetings and corporate events (as opposed to expos and conferences)
While you may have incurred fewer expenses than someone planning an industry expo, a wedding is still an expensive affair. Should your venue be made inaccessible by natural disasters, you may lose your deposit, as well as need to pay for the cost of a new venue, rearranged transport, and more.
Is your event cancellation covered in the midst of the current coronavirus outbreak? The answer depends on whether you already have event cancellation insurance, and the specifics of your policy.
According to Allstate, you may be able to take out insurance that begins two years before your event, but you also may be able to find a policy with as little notice as two weeks before your event. So if your event is one month away, can event cancellation insurance help you in the event of its cancellation or postponement?
- If you already had insurance before the COVID-19 outbreak, and your policy covered cancellation due to disease or government shutdown, you may be covered. Check with your insurer to find out for sure.
- However, if your event is coming up (or just passed) and you’re hoping to get event cancellation insurance now, it’s most likely too late. This is because COVID-19 is now considered a pre-existing condition.
You may already be familiar with the idea of a pre-existing condition from debates around healthcare insurance. Some insurers won’t cover someone with a pre-existing medical condition, because they’re considered too high-risk. Similarly, most event cancellation insurers now consider COVID-19 a “pre-existing condition” making it likely and even inevitable that events will be cancelled. Now, most events for the spring (aside from virtual events) are too high-risk.
Moving Your Event Online
Whether or not you’re currently covered by event cancellation insurance, you can always consider postponing your event or creating a virtual experience instead. With new innovations from Zoom conferences to virtual marathons to digital expos, there are more options than ever for digitizing your event! Check out Vario’s guide on rebounding from a cancelled event.
In the event you are covered by event cancellation insurance, keep in mind that your insurer might even help cover the costs of new planning, software, and hardware associated with the transition online.
Although the world has, in many ways, stopped, life goes on—and your event can, too. Our 20+ years of experience planning events with hybrid, interactive, and online elements makes us the go-to choice for connecting with your audience in virtual space. If you’re looking for innovative ways to take a rescheduled or upcoming event online, get in touch with Vario today.