Mind the Gap
By Marc McNulty, CIC, CRM
SPECIAL EVENT EXPOSURES
Work with your company underwriters to craft the right coverage for your clients’ events
You’re an up-and-coming producer, and you’re working hard to build your book of business. So far you’ve written a nice mixture of personal and commercial accounts and are now feeling knowledgeable enough to be dangerous.
The phone rings and you take a call from a commercial client with whom you’re starting to develop a nice relationship. After the obligatory chitchat, you’re ready to get down to business, expecting to discuss a policy change or address a billing question. Before you know it, the client mentions he or she is planning a special event that will take place in a couple of months.
Your client’s commercial general liability, property, or business owners policy will not provide the coverages needed for a special event unless you add endorsements to address the exposures.
You hesitate for a fraction of a second before confirming that you can indeed help your client arrange coverage for the event. The wheels in your head start spinning. You ask the client for details that might factor into the rating process. You conclude the call by telling the client you’ll be back in touch soon.
You hang up the phone and ask yourself: “Now what?”
The issue and why it matters
The first thing to understand is that your client’s commercial general liability, property, or business owners policy will not provide the coverages needed for a special event unless you add endorsements to address the exposures. What’s more, some events will require coverage that your carriers don’t provide.
For example, alcohol is served at many special events, and the ISO general liability policy contains a liquor liability exclusion.
In addition, numerous special event situations aren’t even contemplated in CGL and BOP policies. Among these are lost revenue because of inclement weather and cancellation of the event.
All that said, you may not need to arrange a separate policy for the event. Depending on the carrier that provides your client’s commercial general liability and property coverage, you may be able to endorse the package to address the event’s exposures.
For example, I insure a fraternal organization that has a fundraiser each fall that features food, alcohol, and music. Fortunately, I was able to place the package with a carrier that was willing to cover the event exposures.
The carrier added a special event code to the general liability policy (for an additional premium, of course) and added liquor liability coverage for the temporary license the client obtains each year. I also added the CG 20 02 endorsement, which includes club members as additional insureds. Because a lot of cash is handled at the event, I arranged an endorsement that includes volunteer workers as employees in the policy’s crime coverage.
Not every situation can be addressed by endorsing your client’s existing policies. Let’s say your client is planning a concert or music event that features special effects, or a car show, rodeo, or auto race. In cases like this, you’ll probably need to turn to the E&S market to get the coverage you need.
When you receive the quotes, pay special attention to the exclusions because they are likely to be numerous. Ask your carrier for a full specimen policy. At a minimum, ask for copies of any endorsements with which you aren’t familiar.
I recently obtained a special event liability quote for a Corvette giveaway and concert that one of my insureds will be hosting this summer. Forty-five forms were incorporated into the specimen policy, 19 of which were exclusions or amendments to exclusions found in the CG 00 01.
Usually the exclusions are acceptable and won’t affect the coverage you are seeking; however, I have seen cases where an exclusion is slipped in and needs to be removed so that coverage isn’t jeopardized or restricted. The key is to look at the policy forms list and make sure that you—and your client—are comfortable with what is being offered.
Let’s go back to the Corvette giveaway/concert event. My client will be on the hook for six figures in expenses (because of the band that has been engaged) should the event be canceled for one of several reasons. I was able to obtain an event cancellation and adverse weather policy that provides coverage for the client’s nonrefundable expenses.
The policy covers “the unavoidable cancellation, abandonment, disruption or rescheduling of the event for reasons beyond your control and the control of the participants.” Covered perils include adverse weather, and coverage can be arranged for perils such as terrorism and non-appearance of individuals, groups, or teams. Although the premium isn’t cheap, it isn’t prohibitively expensive given how much is at risk.
If my client’s event were a fundraiser, I could also arrange coverage for loss of sales that results from adverse weather.
Remember how you asked yourself “Now what?” when you took that special event phone call? Have no fear: now you’re armed with enough information to be dangerous! Get as many details as you can, formulate a game plan for what needs to be covered, then start working with your underwriters and/or brokers to arrange coverage that will address your client’s exposures.
With any luck, your client will be so happy with the program you’ve put together that you’ll get a free pass for the event … and will be able to enjoy it with no losses to worry about!
Marc McNulty, CIC, CRM, is a principal at The Uhl Agency in Dayton, Ohio, and has been with the agency since 2001. He divides his time among sales, marketing, technology and operational duties. You can reach Marc at firstname.lastname@example.org