Event Insurance: How to Protect Your Event From Threats
There are a lot of complexities around event insurance, particularly in terms of event terrorism cover. This complete guide for event planners outlines the things you need to consider to ensure you choose the best cover for your events.
The face of terrorism is changing and so is the need for event terrorism insurance. With the escalation of terrorism we chart what you need to know about the increasing need for event protection.
Prior to 2001, terrorism causing an event stoppage or worse wouldn’t have made our radars. Sure, some of us may remember the plane hijackings of the 70s and 80s or the IRA incidents of the 1990s, but for most, at least in the U.S., a terrorist occurrence seemed almost as far off as being struck by lightning. Today, it’s not only a serious concern it’s one that’s evolving and something you shouldn’t take lightly.
Terrorist activities can impede your event in a number of ways including:
- Affecting your actual event (as in the shooting at the Jason Aldean concert in Las Vegas)
- Wounding attendees in a public area (like attendees being injured in a free evening out during your event)
- Tying up the transportation (during and after terrorist activities public transportation like the Metro and planes may be canceled, rescheduled, or immensely delayed as occurred with the bombings in the Brussels airport in 2016)
- Making people afraid to attend your event and requesting last-minute, emotionally-driven cancellations
- Destroying your venue
Without terrorism insurance you could pay astronomical expenses to the family of anyone who is injured at your event, not to mention exorbitant cancellation fees if the terrorist act occurs before your event and causes you to rethink your venue. There are a lot of areas in which you need to protect your event but exactly how do you do that? How does terrorism insurance work and what can you expect?
What Is Event Terrorism Insurance?
Terrorism insurance is additional coverage purchased under event liability insurance. It protects your event including event attendees, vendors, sponsors, and exhibitors from extensive legal expenses and judgments.
It’s fast becoming a big topic of discussion because if someone gets injured at your event due to a terrorist act, you may be held liable for medical expenses, loss of income, and other damages due to your unintended negligence if it’s found you didn’t have adequate security. In a terrorist activity, these expenses are often larger than a simple slip and fall because of the traumatic stress an individual can be under years later. The first lawsuit has already been filed against the hotel, concert organizers and others, following the Route 91 Harvest Festival Las Vegas shooting.
This type of insurance can be purchased for a variety of event types such as:
- Street festivals
- Sporting events
- Private parties
- Beauty pageants
- Carnivals and fairs
- Concerts (although these may be subject to underwriting guidelines)
- Theatrical and other art events
- Union meetings
- Product unveilings
The Escalation of Terrorist Activities at Events
While this information may be hard to hear, there has been an astronomical rise in terrorist activities around crowds. It’s also worthwhile to note that according to the Pool Reinsurance Company (the British government-backed re-insurer of terrorism risks), two-thirds of terrorist attacks in 2016 occurred in Europe, which may make insurance costs higher and more difficult to get than in the United States. (However, with the recent shooting in Las Vegas, this may change should the event be officially deemed a terrorist activity).
The Worst Terror Attacks Since 2012
Over the last five years terror attacks have increased in frequency at an alarming rate. Here are the details regarding some of the most deadly recent attacks. Note: in most cases the target is human life with less property damage.
April 2013 – the Boston Marathon Bombing killed three and injured more than 180 people when two bombs exploded along the race route.
November 2013 – Los Angeles International Airport shooting killed one and injured six.
June 2014 – Las Vegas shooting killed two police officers and one civilian in an alleged anti-government inspired plot.
June 2015 – in the Charleston, South Carolina church shooting, nine people were killed and one injured during a church service.
November 2015 – in the Paris terror attacks bombs exploded in several locations throughout the city killing 130 people and injuring hundreds.
December 2015 – in San Bernardino, California 14 people were gunned down and 24 injured.
March 2016 – a bomb exploded in three locations in Brussels including two at the airport and one at the Metro station killing a total of 32 people and wounding over 300 more.
June 2016 – in a nightclub shooting in Orlando, Florida 49 people were killed and 53 injured.
July 2016 – a truck plowed into a crowded sidewalk in Nice, France immediately following a fireworks display for Bastille Day. It killed 84 people and injured hundreds.
July 2016 – in Dallas, Texas a single shooter fired into a crowd of police officers killing five and injuring 9.
September 2016 – four bombings in the New York City metro area injured over 34 people.
November 2016 – a car crashed into a busy sidewalk on the campus of The Ohio State University in Columbus, Ohio. The attacker fled by foot stabbing some people nearby. The attack injured 13 people.
December 2016 – a truck crashed into the Christmas Market in Berlin killing 12 and injuring more than 60.
March 2017 – a vehicle mowed down pedestrians on Westminster Bridge in London killing four. The driver escaped on foot and later stabbed a police officer to death.
April 2017 – a policeman was killed and two others injured at the Champs Elysees in Paris. ISIS claimed responsibility.
April 2017 – In Stockholm, a truck crashed into a crowd in a popular shopping district killing four and injuring at least 15.
May 2017 – bombing at the Ariana Grande concert in Manchester killed at least 22 and injured 59 others, resulting in closure of a nearby train station.
June 2017 – Van mowed down pedestrians on the London Bridge, killing eight and then fleeing on foot and going on a stabbing rampage in an entertainment district.
August 2017 – Van plowed into a crowd at the Spanish tourist hotspot of Barcelona’s Las Ramblas killing 13, injuring more than 100.
October 2017 – a shooter stationed in a Las Vegas hotel high rise killed at least 59 people and injured more than 500 at a Jason Aldean concert with about 22,000 attendees.
As seen in these examples, crowd scenes are particularly vulnerable to terrorist exploitation and quickly become targets. Weapons vary from bombs and guns to vehicles. Security is important but you can’t frisk people for cars or guests at nearby hotels.
Event Insurance Options
Terrorist insurance is a component of event liability insurance. It is not cancellation insurance. That’s a separate policy otherwise known as an endorsement or rider. While a terrorist act could cause you to cancel your event, your cancellation insurance may cover that.
Terrorist insurance safeguards your event and organization from the extensive costs paid out to victims and their families should a court find you negligent in providing enough security coverage at your event. The policy may also cover losses associated with the interruption of your business such as equipment.
What It Doesn’t Cover
It’s important to note terrorism insurance most likely does not cover:
- Cybersecurity terrorism issues (unless the hack causes equipment to malfunction and someone was injured)
- Fire that occurs due to terrorist activity
- Nuclear, biological, chemical and radiological (NBCR) attacks (primarily in the U.S. – United Kingdom coverage with a Pool Re-insurance member may include it.)
- Losses due to canceled air travel (if most of your attendees are flying through an affected airport and can’t reach their destination, they will not be compensated, nor will you. This is one for travel insurance. However, if there was a known threat prior to booking, this may not even cover it.)
- Lack of attendance, disappointing ticket sales. Although, it is possible to insure ticket sales as part of revenue in an ongoing event where you have a history of selling out at the same time of year, at the same venue, with the same type of guest list.
- Fear of something happening or losses due to a terrorism threat
- Financial failure of a supplier or keynote to show up or perform
- Things that other policies cover such as flooding
- Political or war-related incidents
In the United States, losses are only covered if the Department of the Treasury, the Secretary of State, and the Attorney General certify the occurrence as an act of terrorism. An issue involving a disgruntled employee or crazed attendee would not be covered under terrorism insurance.
There’s also a financial component that goes into something being designated as an act of terror. No act will be certified by the Secretary as an act of terrorism if property and casualty losses are under $5 million. However, when estimating loss of life or even inability to work, this adds up fairly quickly.
Factors in the Cost of an Event Terrorism Insurance Policy
Things that factor into the cost of your terrorist insurance protection for your event include:
- Location. Is your venue in a rural or urban area? Crowded urban areas (and areas of crucial infrastructure) are greater targets so you will likely pay more in these situations.
- Continent. Since more terrorist occurrences have (historically) happened in Europe, a European event may cost more to insure.
- Indoors or outdoors. Outdoors makes for an easier target. These events will likely be more costly to insure.
- Business terrorism versus event terrorism coverage. You can buy terrorism insurance for business instead of your event (or in addition to). Those rates are usually less expensive and can range from $19 to $49 per million of coverage. Event coverage usually starts at $50 per million. Know that a business terrorism policy will not cover your event in the same way an individual event policy will. Business coverage will cover your equipment, your staff, your business location (not venue, unless they are the same), and loss of work. To protect against civil suits for attendees, sponsors, vendors, and others not employed by your event planning business, you need additional event coverage.
- Type of event. Some events have a higher profile than others. A 4-H event in a rural area will most likely be less expensive to insure than a high-profile, outdoor music festival in an urban park or a global economic summit.
- Time before the event. Secure your terrorism coverage as early as possible as last-minute purchases may not be available since you must pay the premium before the event and before coverage goes into effect.
- What you’re insuring. Are you insuring total revenue or just expenditure to date? According to Event-Assured, a total loss is considered unusual among underwriters, but it is possible. A total loss will be more expensive to insure.
- Referrals and multiple events. Some companies may offer discounts for referrals and multiple events when booked at the same time. Check with the insurer to find out how many events can be booked under the same policy in order to save on premiums.
- One-day versus on-going. Ongoing events may be less expensive to ensure than single-day events.
You can purchase event insurance options to cover:
- Event cancellation or disruption due to a terrorist activity
- Equipment insurance
As mentioned previously, terrorism insurance covers “certified” acts of terrorism in the U.S. Some policies will cover non-certified acts as well so it’s important to understand which type you’re purchasing.
Also, some event insurers will limit the size of the event or the location and time involved to help balance costs and risk. For instance, they may cover terrorism acts within 5-miles of your venue and five days before your event but if you’re six days out, you won’t be covered. This may not seem like a big deal but sometimes investigations close down local businesses or transportation hubs for over ten days as was the case with the Borough Market and the London Bridge terrorist incident.
Always make sure you read exactly what the policy covers, how far out, and the number of attendees. Inexpensive coverage often limits the payout as well.
As mentioned above, there’s a lot that goes into the price quote for terrorism insurance. In the US, it’s generally around $50 for every million insured while European policies cost about 1.50% per 100 Euros of coverage.
Government Involvement in Terrorism Insurance
In the U.S. after 9/11 and in the U.K., both governments require insurers to cover clients for terrorism risks. In the United States, the government issued the Terrorism Risk Insurance Act of 2002 (TRIA), which required property and casualty insurers to allow their businesses to buy terrorism coverage. It is optional. If you carry other forms of business insurance, check with your insurer to see if they offer it.
In the United Kingdom, most underwriters are members of Pool Reinsurance, the government-backed reinsurer of terrorism risk that was set up after the 1993 IRA attacks. As members of that group, those companies must offer their clients of other insurance policies, the right to purchase terrorism coverage. Their policies have no time or distance limitations and include nuclear, chemical or biological weapons terrorism. However, in order to be eligible you must insure your other business assets with a Pool Re member company.
The Fine Print
Always read every part of your insurance rider as there are many differences in policies and companies. Some insurers, for example, only cover total cancellation of the event, not something that helps you if the act of terror occurs prior to the event itself.
Know whether your policy covers postponement, relocation, abandonment or other significant deviation from the pre-planned event, content or timing. This is critical since for most events the preferred option is to carry on, if at all possible. For instance, both IMEX America and the Rodan + Fields Convention decided to carry on with their scheduled events despite the Las Vegas concert shooting the previous week.
As mentioned earlier, the United States government requires companies to offer business terrorism coverage to their client businesses. However, it’s important to note that these minimum requirements may not cover events outside of U.S. soil. Check with your carrier if you’re hosting an event overseas.
Some policies cover losses to commercial property but not life. They may also not cover private property so if you’re hosting an event such as a music festival on private property, pay close attention to what is covered.
The Future of Event Terrorism Insurance
Event planners aren’t the only ones purchasing event terrorism insurance. Sometimes they’re making it available to vendors too. Another trend in terrorism insurance is events that are now offering it for vendors and exhibitors. The IMEX Group, for instance, offers insurance against terror for attendees, vendors, and exhibitors. Think of it as a marriage of travel insurance and liability coverage. It’s also cost-effective. In their event in Germany in May 2017, they based their cost on booth size. Prices ranged from $26-233.
But the future of terrorism is also changing. While years ago acts of terrorism involved bombs or hostage situations, it’s now taken on a myriad of different looks. From cyber terrorism events to biochemical, from automatic weaponry to potential drone attacks, from vehicles in crowded space to aircrafts used as weapons, the methods are evolving and we can expect terrorism insurance will too.
“We need to close gaps such as business interruption that’s not the result of physical damage and coverage of cyber terror… we need to evolve the model in line with changing threats,” said Julian Enoizi, Pool Re chief executive officer in a phone interview with Bloomberg Markets.
Plus, it’s not always the actual act that affects your event. Just like in a hurricane or natural disaster situation, it’s often the aftermath that is the most disrupting. Delays and restrictions on airports, public transportation, and closed streets can kill an event more easily than a single shot fired.
Understanding what you’re covered for and the distance for which you’re covered can make a big difference in the outcome of your event. Many policies have distance restrictions that could mean you’re left effectively uncovered. For instance, let’s say your location is twenty miles outside of the airport and an act of terror occurs at the airport a day before your event. Not only will it be shut down and many of your attendees will be unable to access your event, you’re also likely outside of the scope of coverage. Talk to your insurance person to find out how you may extend coverage or look into purchasing a policy that has an unlimited distance stipulation.
Companies now also offer active shooter coverage because terrorism is becoming less about the cost of damage to facilities (like in 9/11) and more about the extensive loss of life. Physical buildings and property are less likely to be the targets and less likely to sustain damage. Gordon Woo, a catastrophist at Risk Management Solutions explains, “Today, as terrorism attacks intentionally target civilians to maximize media publicity, interest is growing among health and disability insurers to offer specific terrorism cover in their policies, which may otherwise be excluded.”
Event terrorism insurance is just another way to mitigate your risk. But unlike cancellation insurance or another form of coverage with a fixed expense to pay out if you don’t get it, terrorism costs to an event can quickly mount with death, impairment, loss of work, traumatic injury, and other pain and suffering costs. While you may not use it, the fact that it’s there gives some peace of mind. A single terrorist activity can cost your event millions of dollars in lost revenue, reparations for loss of life, and damage to your security reputation so it’s worth consideration and risk assessment.
Additional Information about Security at Events
10 Events that Take Security Seriously
Security, Streaming, Analytics. How Drones Will Change the Event Industry
Hacked Hotel Entry System Highlights Meetings Security Fears
Event Security 2.0: 10 Questions Event Planners Need to Ask Their Venues
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