Imagine you’ve just set up the perfect event: tables of food, live music, and best of all a bounce house for the kids. One adult gets a little too enthused and joins in on the fun, exceeding the maximum weight. In the blink of an eye, that adult’s gotten injured — and has set you up for a financial and legal nightmare.
This is just one example of the countless risks that come with operating an event business and why obtaining the right event insurance coverage is essential.
We sat down with Sharla Cartzdafner, Director of Operations at The Event Helper, to discuss the importance of event insurance for vendors and bust some common myths.
1. You Only Need One Type of Insurance
It can be tempting to think that once you get one type of event insurance, usually a general liability policy, you’re protected against anything. Because first-time event business owners are focused on early growth and short-term profitability, this leads to many thinking that they can save money by not spending on certain policies — but this sacrifice actually has the opposite effect.
“Some insurance claims cost tens of thousands of dollars,” Cartzdafner says. “Some have gone up to $1 million, and these can also go to court. A common mistake that many event vendors and organizers make is solely buying a general liability policy, thinking it covers everything.”
This doesn’t mean that you need to purchase every type of event insurance. But it does mean there are some other coverages other than general liability insurance that your company should consider:
- Commercial Auto Insurance - Covers fees if an accident happens while using trucks and other vehicles to transport inventory or get from event to event.
- Commercial Property Insurance - Protects your properties such as warehouses and headquarters from theft, fire, etc.
- Commercial Umbrella Insurance - Serves as an extra layer of protection to general liability insurance. Especially helpful with items of risk (i.e. bounce house, climbing wall).
- Workers Compensation Insurance - Covers wages, benefits, and care when an employee suffers work-related injury or illness.
- Business Interruption Insurance - Covers any income you may have lost in the case of unexpected events such as inclement weather or fire.
This list is not exhaustive. It is important to do research into the other coverages your company may need. Cartzdafner suggests that you call insurance companies and tell them what you want covered so that you know you’re getting the right policies for your unique business.
2. Insurance Has No Limitations
Even with multiple policies, it is important to note that insurance does have its limitations. Just because you have coverage doesn’t mean you’re covered against every risk.
“A vendor being hired by an organizer is not covered by the organizer’s policy.” Cartzdafner notes. “And, venues have their own requirements as well.”
Consider this: A wedding couple has an insurance policy, and hires a caterer who has their own coverage with the venue. During the event, the floor gets scratched. The caterer, not the couple, is responsible.
Vendors need their own policies. It's important to talk with venues ahead of time to determine all the specifications and limitations you need to follow. Here are some common limitations you should consider when selecting a policy that aligns with the venue’s requirements:
- Coverage Limits - The maximum amount insurance companies will pay in the event of a claim; the remaining costs are out of pocket.
- Deductibles - As with any insurance, you will need to pay a certain amount before the insurance coverage kicks in.
- Location Restrictions - Coverage can be limited to a specific venue or location; make sure the event is in a designated area under your provider.
- Cancellation Coverage - Not all policies cover the costs if an event needs to be canceled or postponed due to unforeseen circumstances.
- Alcohol-Related Incidents - If an event involves alcohol or there is an alcohol-related incident, coverage may be limited or excluded.
Always read the fine print and requirements. Take advantage of consultations. Do your own research. Make sure that you know your event and what it needs, and that you’re covering all your bases, as limits and requirements can pop up out of nowhere.
3. Your Business Doesn’t Need Insurance at All
It can be tempting, especially when starting a company, to not want to deal with the cost of insurance. You’re at an early stage of your business and don’t feel like you can afford the time and money that goes into getting several policies. However, this is one of the biggest mistakes you can make.
“Many people wait too long to get event insurance, and by then it’s too late,” Cartzdafner says. “You want to make sure you’re prepared.”
Often, you may not even be able to provide your services to a venue without coverage, as venues typically require a general liability policy. That’s right — you may be losing more revenue than you realize by not getting properly insured.
There are also countless risks that have a much more harmful impact when you don’t have insurance. All the situations and risks below require different insurance:
- Property Damage - You’ll have to cover the costs of repairs and replacements if any accidents happen and property is damaged without insurance.
- Weather-Related Risks - In addition to postponing events, unforeseen weather can damage items and venues.
- Vendor Issues - From caterers to photographers to entertainers, there are so many vendors that go into an event. If one doesn’t show, insurance can cover those losses.
- Legal Costs - If you face any lawsuits, disputes, or legal claims, insurance can help cover those expenses.
- Accidents / Injuries - Both workers setting up and guests attending an event are at risk of injury if something unexpected happens. Medical expenses or compensation can be covered with insurance.
This list isn’t exhaustive — in the event rental business, anything can happen. This is why it’s important to be prepared for anything. Whether you’re a new business owner or have been in the industry for decades, insurance is a must if you want to protect yourself, your team, your clients, and your business’s reputation.
Pro Tip: Secure your insurance coverage in advance. While the exact timeline varies based on the complexity of the event and the services it requires, it’s always better to be safe than sorry.
Factors to Consider When Choosing a Provider
In addition to thinking about what the policy offers, you should also vet your event insurance company and provider. You should have a clear understanding of how they handle claims, what their policy flexibility is like, and what their coverage limits and excludes.
When comparing providers, you should examine their:
- Reputation and reviews
Cartzdafner explains, “As your business grows, you’ll need more and more complex insurance. This is a good thing! It means your company is scaling. Don’t be scared of this; there are people and providers out there who are more than happy to help.”
Event insurance has the potential to save you thousands — and even millions — of dollars in claims and legal fees. It’s not only a good investment for event professionals; it’s a necessary one.