What if Mother Nature has a Bad Day during Your Big Event?
by Eileen Hoffman
It couldn’t happen to us, could it?
Everything’s all set, down to the most minute detail. But then a week before your event, Mother Nature gets grumpy and sends a tornado through your convention hall. You have no choice but to cancel. Not only will your organization face huge financial loss—it’s the biggest fundraising event of the year—but your attendees will want to be reimbursed for registration, flights and hotel fees.
In an instant, your big money-making event could become a financial catastrophe.
Why you need to consider Event Cancellation Insurance
The price can be high if you don’t have Event Cancellation Insurance for your annual meetings, seminars, trade shows and conventions. In the past, organizations usually purchased this insurance to cover events scheduled in wintry regions and other areas prone to inclement weather or natural disaster. Today, other potential problems concern nonprofit organization executives—everything from terrorism, to power outages to communicable disease exposures.
In you are responsible for the financial operations of your organization, you may not be involved in all of the logistical aspects of putting together an event. However, it is your duty to ensure that your organization’s financial stability is protected.
Many contracts are put in place for a single event—meeting rooms, food and beverage service, guest rooms, speakers, maybe even bus service for offsite excursions. With everything involved in planning a successful, meaningful events, your exposure grows. Event Cancellation Insurance helps alleviate some risks—risks that could wipe out your organization’s biggest fundraising event of the year and put your operations in a precarious position.
The Policy Pays for More than You Might Imagine
Event Cancellation Insurance provides financial protection if your event is cancelled, curtailed, postponed or abandoned due to the following:
- Inclement weather, including hurricanes, blizzards, ice storms, tornadoes and flooding
- Communicable disease exposure
- Labor disputes, includes coverage for air, train and bus tour transportation strikes and for strikes within the facility
- Non-appearance of a speaker
An Event Cancellation Insurance policy can even provide coverage if attendance is reduced and if certain events, such as a golf outing, are cancelled due to adverse weather.
Be sure to carefully review each insurance proposal because coverage can vary between insurers. For instance, some policies offer full coverage for communicable diseases, while other policies may specifically exclude losses due to SARS and/or avian flu.
Two Event Cancellation Claim Examples
Example #1: An insured organization called the insurer, frantic, because a hurricane was expected to hit on the first day of their exhibition. Hundreds of attendees and exhibitors were questioning whether the event was on or not. Would flights be canceled? Would hotels be open for business? Decisions had to be made fast.
Yes, the insured’s Event Cancellation Insurance coverage (purchased six months prior) would cover the organization’s loss. As it turned out, the organization canceled the exhibition and received more than $3 million from the insurance company to recover from its loss. The organization felt it was well worth the $30,000 in premium cost to cover the loss.
Typically, an Event Cancellation policy can be written two to three years before the start of an event. However, most policies require coverage to be in place at least 30 days before an event. Coverage begins when the premium is paid and usually expires five days after an event closes (to cover moving out and return shipments).
Example #2: A loss occurred at an organization’s annual meeting being held at a hotel. A staff member noticed that the room used to store some materials was out of sorts. An investigation found that several items, including a few laptops were missing. Insurance covered the losses.
The Event Cancellation policy also includes the organization’s personal property while in transit before, during and after the event up to $125,000 if the property is lost or stolen.
Tips When Reporting a Claim
If you experience a loss during an event, keep these tips in mind when submitting an Event Cancellation Insurance claim:
- Contact your insurance provider at the first sign of a potential loss.
- If a loss occurs, send written notice with the basic information. State what happened, where it happened and when it happened. Also explain if the event had to be canceled completely or if attendance was reduced.
- Keep good records. When a loss first occurs, you may not know the full impact. You may need to provide a claim adjuster with documentation of signed contracts, lists of attendees/exhibitors who were preregistered, actual income and expenses, and a financial history of the event.
Things to Consider Before Your Next Big Event
When your organization begins planning its next event, add up the financial consequences of cancellation. What would it cost your organization to cancel the event a week or a month before it’s scheduled to occur? Then consider what the loss would do to your organization’s financial well-being.
Event Cancellation Insurance can’t protect your organization from experiencing a disaster, but it can protect you from the negative financial fallout.
Eileen Hoffman is assistant vice president of Aon Association Services’ Showstoppers Event Cancellation Insurance Program. Email: firstname.lastname@example.org.