The Unexpected: How Event Organizers Prepare.

We love to be entertained and inspired, whether indoors or outdoors. We enjoy hearing from experts and learning from speakers: at festivals, fairs, sporting events, live theater, and corporate events. Business meetings, conferences, trade shows, and other events in the United States provided approximately 5.9 million jobs in the past year. Organizing and planning events are crucial to producing a quality experience for everyone involved. To successfully organize and run an event, you must invest in the venue, promotion, and people to succeed. But what happens when circumstances outside the event organizer's control force the event to be canceled or postponed? Event cancellation insurance can be helpful in the event of unforeseeable circumstances, such as illness or injury to a critical person. It is essential that this coverage is purchased in advance to protect the event organizers, sponsors, and rights holders. Policies can be purchased up to three years in advance, depending on the event type.

CAN ANYONE PURCHASE EVENT CANCELLATION COVERAGE? Generally, carriers seek out individuals who are involved in an event in a financially insurable way. Insuring concert promoters, event organizers, band managers, fairs and festivals, sporting events, venues, theaters, media companies, sponsors, advertisers, trade shows, conferences, and exhibitions are possible. In addition, such parties may be covered for personal or private affairs. WHAT IS COVERED BY EVENT CANCELLATION? Event cancellation policies can cover two types of losses, although policies do not cover both losses at the same time. The first option covers the costs and expenses (excluding profits) incurred in putting on the event. It is possible for an event organizer to want to cover their expenses. Another option would be to cover Gross Revenues (including Profit) earned by the event when it was established to make money for its backers.

A lot of events are not designed to generate revenue. Corporate meetings, for example, and some conferences might be in need of an event cancellation policy to cover costs and expenses. Many other events, such as concerts, theaters, sporting events, trade shows, and others, expect to make a profit through ticket sales, food and drink sales, and merchandise sales.

These types of events may consider purchasing both types of policies, covering Costs and Expenses and Gross Revenues. There are Fewer than 20% of event creators' revenue derived from merchandise sales, food sales, and sponsorships. For 48% of all events, ticket sales constitute 60% to 100% of revenue. Music is a big business. There were over $8 billion in gross sales from concert tickets sold in North America in 2017, and the average revenue per show was nearly $1 million.3,4 That is an enormous amount of music. Broadway is also a substantial business. According to The Broadway League, touring Broadway shows generated $1.63 billion in revenue in 2019-2020, and Broadway productions in New York City generated $1.83 billion.5,6 The live theater industry is composed of only two segments.

Whether it is the big leagues of Broadway or small regional theaters and production companies, what happens when a show is sold out and must close for a night or a week due to unforeseen circumstances? To prove that the expenses and costs for the event were covered, it will be necessary to provide copies of receipts, refunds, invoices, and contracts if a loss occurs.

As part of determining the amount of the loss under the Gross Revenues policy, the insured must be able to establish the loss with reasonable certainty. To ensure the underwriter understands what documentation or other information they will require in the event of a claim, you should discuss this in advance with the underwriter. A first-time event may be more challenging than a recurring event with historical evidence of ticket sales, merchandise sales, and other revenue generators. UNFORESEEN, UNCONTROLLABLE, AND UNPREDICTABLE

The ticket holders spent considerable money to see their favorite pop star. However, the headliner has broken her knee and is unable to perform. The theater has been damaged by fire, making it unavailable for a local movie festival. There is no electricity at the location where the company conference is taking place due to a massive storm. What types of circumstances may trigger your event cancellation coverage? Depending on the type of coverage you requested to be underwritten, the following circumstances may apply:

• Non-Appearance of an Individual or Team (Also Extends to Non-Appearance Due to

• Illness or Death of a Family Member)

• Adverse Weather

• Accident or Illness

• Failure of Utilities

• Natural Perils, i.e., Earthquake, Windstorm, etc.

• Public Transport

• Failure Third-Party Strike Action

• Denial of Access

• Damage to Venue Death, Accident, Illness or Travel

• Delay of Key Speaker/Performer

• Terrorism or Threat of Terrorism (May add via Endorsement)

• Civil Commotion (May add via Endorsement)

• National or State Mourning (May add via Endorsement)

• Communicable Disease (May add via Endorsement)

The majority of these coverages can be added to your policy as a rider or endorsement. If you are concerned about a particular peril, please discuss it with your underwriter. BEFORE PURCHASING COVERAGE If you are purchasing an event cancellation policy, please note that once the policy period commences, the insured or the carrier cannot cancel the policy. Generally, premiums must be paid before the activation of the policy or the start of the event, and they are fully earned, meaning there are no refunds. In order to ensure the policy is structured based on the unique aspects of your event, discuss with your underwriter exactly what and how you need it structured.

There are several ways in which the policy can be constructed to provide coverage at various points, such as including set-up and teardown. If a golf tournament is scheduled to begin when the first ball is thrown and end when the last ball is thrown or to cover the weather for the duration of the tournament, these decisions will affect the policy's pricing.

ONE POLICY IS NOT THE SAME AS ANOTHER. In spite of the fact that even policies offered by the same carrier may provide event cancellation coverage, terms and conditions vary widely. Several factors can affect terms and conditions, including event attendance, location, performance, number of days, and more. Specific perils must be covered by a rider or endorsement. For example, communicable diseases are not typically included but can be added. Before purchasing an insurance policy, carefully examine the details of the quotes you receive. Some carriers offer an 'All Cause' option.

Depending on the size of the request, there may be sub-limits or minimum losses before coverage begins. Event Cancellation policies are flexible, so coverage can be tailored specifically to cover perils such as adverse weather, non-appearance, and terrorism.

Non-Appearance It is optional to provide coverage. If an individual or group is expected to appear at your event, you should consider it. Examples include wedding officiants, guest speakers, performers, and sports teams. When a significant star cancels an event, the loss can be steep if the caterer, florist, or other major vendor fails to provide their promised services. This also applies to caterers, florists, and other major vendors who fail to deliver the service. After sustaining an injury to her right hip in 2013, Lady Gaga had to cancel her tour, resulting in a loss of approximately $30 million.8 She was forced to cancel 22 tour dates because of the injury. Madonna experienced injuries during her live concerts in recent years and had to cancel her shows. Weather. The likelihood of weather affecting an event increases as weather patterns shift globally. Weather can adversely affect any event if the weather is significant enough. As a result of Hurricane Harvey and Hurricane Irma, college football and other sporting events had to be canceled, postponed, relocated, or rescheduled, causing losses of $10-$15 million.

Broadcast Events.

What happens if an event is being broadcast or televised in the media, but the broadcast transmission fails? A separate insurance policy will be required in this situation. An event cancellation policy can be purchased to cover any interruption to a live television signal caused by a third-party responsible for the broadcast. Exclusions are included in every policy. It is common for policy structures to include exclusions related to financial failure, insolvency, or default, withdrawal of support by any party, lack of sales, and radioactive contamination, among others. That's right, don't expect there will be coverage if an event has to be canceled or rescheduled because the insured is experiencing financial difficulties or if ticket sales are low; likewise, if a sponsor resigns. Even though these are challenging circumstances, they are not intended to cover them.

Conclusion Although it is unlikely that events canceled due to the Coronavirus will be covered under a typical Event Cancellation policy, it is important to check the policy language for specific exclusionary provisions. There may be coverage if an insured has a current policy with a Communicable Disease rider. You need to make sure you have a cancellation policy in place if you are planning an event, no matter how large or small it is, in order to protect your investment and your revenue. It is very important to work with an event cancellation specialist to ensure you are aware of all the options available in the marketplace to ensure your investment in the event is protected.

Contact your Brokery Insurance Rep for more information.