Holding a special event is a great opportunity for non-profit organizations to draw awareness to their cause and raise money to help expand their impact. However, even with the best intentions and careful planning, there are still risks. Third-party claims of bodily injury, reputation or advertising injury, or property damage can drain a non-profit organization of vital financial resources.
To properly manage risk and ensure your event goes smoothly, it is key to plan in advance and understand what type of non-profit special event insurance your event will require. Follow the six preparatory steps below for your next non-profit special event:
1. Know What Your Coverage Includes
Ideally, your special event will be covered under your existing non-profit insurance package. These policies typically include the following.
- General Liability is a broad coverage category that protects against liability for bodily injury and medical payments for employees, volunteers, and guests as well as property damage to rented space caused by third parties.
- Automobile Liability coverage is necessary if you will be using vehicles to transport people and supplies when hosting a special event. Your insurance should cover damage and claims related to owned, non-owned, and rented vehicles. If you will be collecting and using driver and vehicle information, you’ll also want coverage for web-based auto-ID data.
- Property Liability covers losses related to buildings and structures, content within buildings and structures, and equipment breakdown. Like auto coverage, your property liability should cover damage to owned, leased, and rented property for reasons including theft, crime, fire, and extreme weather.
- Professional Liability covers claims and expenses of alleged negligence or professional error. Any non-profit organization that provides counseling, guidance, or care services can be accused of professional oversights or failure to provide the promised services resulting in expensive lawsuits.
- Directors and Officers (D&O) Liability covers losses related to the actions and decisions of leaders and board members of your non-profit. This protects non-profit leadership from claims of misuse of funds, unfair work practices, or inadequate security and safety.
Covered Event Types
Within your standard policy, there are a number of event types that are likely to fall within the parameters of your existing coverage. Common covered non-profit events include:
- Fund-raising dinners
- Golf tournaments
- Small concerts
- Fairs and bazaars
- Small block parties
Beyond the type of event, there are additional factors that help to determine if your event is covered within the standard policy, including the number of attendees, the location of the event, and the duration of the event. These are just a few of the factors that determine if you will be covered under your current policy. You should also be aware of some common disqualifying factors and event types that will most likely need additional coverage.
2. Know Which Events Need Extra Coverage
Events with large numbers of people and increased danger or chance of participant injury will almost always fall outside of a standard non-profit insurance policy and require additional coverage.
These may include:
- Extreme sports events
- Fairs with mechanical rides
- Shooting events
- Events with fireworks
- Events with moon bounces or other inflatable devices
These are just a few examples of event types generally not covered under a basic non-profit policy. Be mindful of any increased risk factors present in your event and consult with your insurance agent to be sure you’re covered.
3. Consider Your Liquor Liability
Sales and/or consumption of liquor is common at fundraisers, fairs, and many other non-profit events, but liquor brings additional risks and necessitates additional preparation.
First and foremost, check with your venue to see if they will permit the sale/consumption of alcohol on the premises. If they do, make sure you have the proper coverage to serve alcohol. Your General Liability policy may not cover damages resulting from alcohol-related incidents, and you may need to take out a separate liquor liability policy for the duration of the event.
If you or one of your participating vendors will be serving liquor at the event, it is absolutely necessary for both your non-profit and the vendor to have liquor liability coverage. Intoxicated guests are more likely to be involved in situations with potential legal ramifications. For example, intoxicated guests are more likely to:
- Fall and hurt themselves
- Intentionally or unintentionally damage property
- Get into fights
- Get into an automobile accident after consumption
Both the host and the vendor can be held liable for failing to serve alcohol responsibly and the resulting damages. Whether liquor is sold or offered gratis will determine the type of liquor liability insurance required for the event.
Additionally, if your employees or volunteers will be serving the alcohol, it is imperative that they receive formal server training, such as TIPS (Training for Intervention ProcedureS). This training program is designed to prevent intoxication, drunk driving, and underage alcohol consumption, by equipping servers with essential skills.
4. Confirm Vendor Coverage
As an event host, you will most likely be required to demonstrate proof of insurance to your venue and list them as an additional insured on your policy. Likewise, non-profits should make sure all participating vendors have insurance policies that list them as an additional insured.
Vendors should have insurance with the proper limits appropriate for the event type. If a claim does arise, the claimant may sue all involved parties: the vendor, the host, and the venue.
Therefore, adequate vendor coverage and additional insured endorsements are vital to protect you from being held liable for common vendor exposures, including:
- Food/alcohol poisoning
- Third-party bodily injury from slips and falls, broken glass, or collapsed temporary structures
- Damage to the rented property
In such cases, if the non-profit was named as an additional insured on the contractor’s policy, they can make a claim to pay for the damages and legal fees, rather than relying on their own insurance.
5. Draft Contracts to Avoid Undue Risk
In addition to the proper insurance coverage, the language in contracts with vendor and venue partners is also key to making sure each party owns its own risk. Non-profits need to understand which risks they are taking on and which risks should be transferred to other parties.
For assurance that participating vendors have the means to cover legal expenses in worst-case scenarios, request a contract clause with language that indemnifies you as the host from responsibility for legal issues that arise from contractor work. This indemnity clause is often referred to as a “hold harmless agreement” and is intended to be a risk transfer mechanism.
A non-profit may request various types of vendors to include hold harmless language in their contract. For example, you may have a moon bounce or a dunk tank at your event. In such scenarios, a hold harmless clause protects the event host from responsibility for injuries or damages resulting from the misuse or malfunction of the vendor’s operations or equipment.
As the event host, your non-profit organization may also be asked to sign a hold harmless agreement by the venue or a third-party, agreeing to indemnify that partner and assume responsibility for any incidents that happen during the event.
In both circumstances, it is important to only accept responsibility for factors within your control. Non-profit organizations should work with their insurance agent or legal counsel to determine when it is appropriate to accept liability, when it’s not, and the language to include in contracts to reflect these decisions.
6. Include Your Agent Early in the Planning Process
From ironing out contract language with venue and vendor partners to finding an insurance carrier that can provide coverage tailored to your exposures, there’s a lot that goes into planning a special event. It’s important to plan ahead and involve your insurance agent at the beginning of the planning process. Your insurance agent should help you determine:
- Which exposures your special event will have
- Which exposures are already covered under your existing non-profit policy
- Which exposures will require additional special events coverage
- Whether or not you will need a liquor liability policy
- The language to include in partner contracts to ensure you don’t take on any risks outside of your control
Source: Philadelphia Insurance Companies