What to Know About Special Event and Cancellation Insurance

Oct 29, 2020

By Chris Ingelsby, Manager, Altus Corporate Risk

Planning an offsite conference, fundraiser, holiday party or other corporate function is no easy feat—just ask anyone who’s ever organized one and they’re sure to have a horror story or two about company events gone wrong. When you’re busy vetting vendors, compiling guest lists and nailing down a venue, insurance coverage is sometimes an afterthought or a necessary evil.

But special event and cancellation policies can be a lifesaver when one of your vendors is a no-show or a major storm crashes the party. This coverage can provide protection for expenses you otherwise couldn’t recoup and safeguards against lost revenue.

In-person gatherings may have taken a backseat to virtual meetings in recent months, but despite these temporary circumstances, corporate events will make a comeback—and when they do, you’ll want to be prepared. To determine whether you need cancellation insurance or extra coverage for your next special event, it’s helpful to understand the basics.

Special Event Insurance vs. Cancellation Coverage

Special event insurance and cancellation coverage are not interchangeable, but rather two different types of coverage. When a business is hosting a private or public event, special event insurance can protect against bodily injury and property damage losses. Event cancellation insurance will protect against loss of revenue and/or additional expenses due to an event being cancelled or modified. These types of policies cover a wide range of events, including:

  • Employee retreats
  • Holiday parties
  • Tradeshows and conventions
  • Annual meetings
  • Fundraisers and charity functions
  • Sporting events
  • Retirement parties

Cancellation coverage can be purchased to protect expenses or revenue associated with the event if it is cancelled or postponed due to circumstances beyond your control. Natural disasters—floods, hurricanes or other major storms—are the most common causes of an event cancellation, but vendor, keynote speakers or venue abandonment can also come into play. Without event cancellation insurance, you run the risk of paying for these costs out of pocket.

COVID-19: Covered or Not Covered?

Bad weather is one thing, but pandemics are another. Before March of this year, event cancellations would cover losses due to communicable diseases for an additional premium. Once COVID-19 became widespread in the United States and around the world, insurance carriers were no longer offering the coverage. It is surprising to many to learn that COVID-19 was covered by several event cancellation insurance policies, especially since many in the insurance industry are saying that pandemics are uninsurable. However, unlike property insurance policies that are obtained by most companies around the world, event cancellation is a specialized coverage. This allows event cancellation insurance policies to provide coverage for risks not normally covered by your standard insurance policies. Similar to how you cannot buy insurance once you have a known loss, event cancellation policies are no longer providing coverage for COVID-19. If you have a planned event in 2021, there is a very good chance that your event cancellation insurance policy will not coverage any losses due to COVID-19.

When to Purchase a Policy

Not every corporate function requires extra coverage—in fact, many events that take place are likely to be covered under your general liability policy. However, there are many reasons to purchase event cancellation coverage, including protecting your liability insurance policy from claims occurring at the event and/or protecting loss of income or additional expenses incurred as a result of the event getting cancelled or being modified.

If you’re unsure whether you need special coverage for an upcoming function, consult your insurance broker for more information.