Do Vendors Need Their Own Event Insurance—or Does Yours Cover Them?

It’s hard to imagine hosting an event without blooming flowers, delicious food, and expert photographers. Event success depends greatly upon the vendors. Because of this, you might think the organizer’s event insurance covers everyone involved, but this is a misconception. Vendors typically need their own liability insurance.

In this event insurance guide, we will go over why vendors should carry their own insurance for events and what the best insurance types are.

Understanding Event Insurance Basics

Organizer’s event insurance typically covers:

General liability: Covers third party bodily injuries and property damage, such as if a guest at the event gets injured from a slip and fall.

Event cancellations: If the event gets cancelled due to an eligible reason, you can get reimbursed for losses. Common reasons include unforeseen storms and key personnel getting hospitalized.

Host liquor liability: In many states with dram shop laws, the event host is automatically held liable for alcohol-related incidents if they serve alcohol. Host liquor liability is crucial coverage because it protects the event host from liquor-related incidents.

Exclusions

Host event insurance does not cover everything. Its exclusions might leave vendors unprotected, so it is in the vendor’s best interests to carry insurance. Common exclusions that might affect vendors include:

Vendor property and inventory: Most event insurance policies don’t cover theft or damage to vendor property, only the event’s venue property and host assets. Vendors need to insure their own gear, display booths, and products.

Vendor liability: If a customer slips in the booth of a vendor or a guest gets an allergic reaction due to negligence, the host event insurance will probably not cover it. Vendors need their own liability coverage.

Product liability: Organizer’s event insurance policies usually exclude harm that comes from food, beverages, and products distributed by vendors. Vendors need to protect themselves using their own product liability insurance.

Lost income: If the event gets cancelled, host event cancellation insurance can reimburse the host for losses. However, the organizer’s insurance will rarely cover lost business income or wasted travel costs for vendors.

Workers’ compensation: If the vendor brings their own employees, those staff members should be covered by the vendor’s workers’ compensation insurance.

The Role of Vendors in Event Liability

Vendors need to bring their own staff, equipment, and products to the event. No matter how responsible and professional a vendor is, they still bring new risks to the event. Here are some of the most common examples of vendor-related event liability claims and risks.

Caterer’s food causes food poisoning

Food poisoning is very common. It ranges from mild discomfort to severe poisoning and even death. What happens if a caterer brings food or drinks that sickens a guest? Caterers need to be covered from product-related liability.

DJ damages venue flooring while moving equipment

Preparing the event is a part of event organization. Vendors need to set up their stall, DJs need to haul various cables and gear. When a vendor or performer moves equipment, it can damage the flooring, ceiling, or walls. The venue could be damaged, and it can be very expensive to repair. What if a singer’s equipment smashes into the church’s pews? What if a DJ’s gear accidentally causes an electric fire at a waterfront venue?

Vendors should carry their own liability insurance so that if they accidentally damage valuable property of the venue, they can afford to repair or replace it. This is particularly important if you’re a vendor working at a venue with historical or high-value property.

Florist’s setup injures a guest

Florists bring beautiful sights and aromas to any events. They help people celebrate their most momentous occasions. However, flower setups can injure guests or cause allergic reactions. It is important for florists to carry enough liability insurance for events.

Distinction between organizer’s liability vs. vendor liability

The organizer’s liability is different from the vendor’s liability. If an incident occurs, it is possible for the angry guest to sue both the vendor and the event organizer for damages.

If you’re a vendor selling alcohol or giving it away for free at an event, you probably need your own liquor liability insurance event if the host carries liquor liability insurance. This is because of insurance requirements and financial protection. A liquor-related lawsuit can cost millions of dollars. Overserved guests can get into serious trouble.

Organizer’s Coverage vs. Vendor’s Coverage

Organizer’s policy

Event insurance for the host serves to protect the host from claims tied to the overall event. It focuses on risks to the host, such as if they have to cancel the event or if there are accidents involving the venue or guests.

Vendor’s policy

The vendor’s insurance policies are meant to protect vendors from claims arising from their services or equipment. If incidents occur at the vendor booth or near vendor equipment, they might be liable for the incident. Vendors at least need general liability insurance. If they’re selling products or alcohol, they also need product liability and/or liquor liability insurance.

Overlap potential

If an incident occurs and both the host and a vendor/multiple vendors are affected, insurance claims can get messy. The host, vendor, and guests might need to file multiple insurance claims. The gray area can lead to lengthy, expensive lawsuits, especially if there are significant bodily injuries or damages.

Many venues require proof of insurance

Venues often have insurance requirements for event hosts. They can also require vendors to carry a minimum amount of insurance. Proof of insurance may be necessary before participation is allowed.

Types of Insurance Vendors May Need

General liability insurance

General liability insurance is the standard business liability insurance. It covers third party bodily injury or property damage, which is important for vendors attending events.

Product liability

Product liability insurance is a specialized liability insurance type. Caterers and any vendors who are product-based might want product liability insurance. Distributing products that cause injuries, illness, or death can lead to large lawsuits and heavy medical expenses.

Workers’ compensation

It is generally required that employees who are on the clock need to be covered by the employer’s workers’ compensation. This goes for both the event organizer and any vendors. If a vendor brings employees, they need to carry workers’ comp.

Commercial auto

Auto insurance is not the same as commerical auto insurance. If vendors need to transport goods, equipment, or staff members for the event, they probably need commercial auto insurance.

Business interruption

Business interruption insurance is similar to event cancellation insurance. If the event gets cancelled or postponed due to weather, power failure, or other unexpected problems, business interruption insurance can help businesses recover from the lost income and travel expenses.

Business interruption insurance is highly recommended for vendors who rely on success at large events or seasonal sales. For example, a Halloween vendor can go bankrupt if an event gets cancelled in October.

Professional liability (errors & omissions)

Also known as errors and omissions insurance (E&O), professional liability insurance can cover service mistakes or negligence. Professional liability insurance might be useful for vendors who do creative or specialized work at events, such as wedding planners, photographers, and DJs. Professional liability can cover claims that arise from failure to deliver services on time and professional mistakes.

Why Requiring Vendor Insurance Protects Organizers

Reduces claims filed against the organizer’s policy

Your organizer’s event insurance policy doesn’t provide unlimited coverage. There will be claim maximums and coverage limits that restrict how much loss you can absorb. If you need to file a lot of insurance claims, it could also raise your premium if you need to buy more event insurance in the future. Reducing the number of either frivolous or severe claims can be useful for keeping your event insurance premiums low.

Prevents disputes

If the vendor does not have liability insurance, it can lead to disputes in case of an incident. Nobody wants to be liable for the problem and have to potentially pay millions, going bankrupt, over an event incident. Insurance assures the party that they have a financial cushion and it will be easier to prevent disputes over responsibility.

Having vendor insurance also means if an incident happens, it will be quicker to resolve and receive financial compensation. A fast response time to incidents can be crucial for the long-term success of both vendor and host.

Helps meet venue or municipal requirements

There might be local or venue insurance requirements that you need to meet before you can host an event. Vendors are also often expected to carry sufficient insurance, otherwise they will not be allowed to attend an event.

Demonstrates professionalism and due diligence

Vendors who have insurance are likely more reliable and financially stable to work with. It is also easier to build up a good relationship if the vendor and organizer both carry sufficient insurance coverage.

Practical Tips for Event Planners

Ask vendors for a Certificate of Insurance (COI)

Before contracting a vendor, it is a good idea to ask them for a certificate of insurance (COI). The COI provides details about the vendor’s insurance policy, such as coverage limits. If they add you as an additional insured, you would be able to file claims under their insurance as well.

Set minimum coverage limits

The coverage limit is the maximum per-claim or per-policy payout the insurer will give. A minimum liability amount is practical because you will know how much financial value the insurance policy can provide. Most events want a $1 million liability coverage amount. More is better, particularly for bigger or riskier events.

Clarify insurance requirements in contracts

When drafting contracts with vendors, make sure there is a clear statement about what insurance is required. Make sure it is written down and signed. Verbal agreements are much harder to prove.

Work with your insurer

Communicate with your event insurance company to ensure adequate protection for all parties. If there are any insurance requirements, they can help you decide how much coverage is needed.

Communicate requirements early

Don’t chat with a vendor for months before the event and only tell them you require them to carry event insurance last minute. It is best to communicate your insurance requirements early to avoid last-minute cancellations and problems.

Case Studies

Here are some scenarios where requiring vendor event insurance or not can make a big difference.

• At a wedding, the band’s faulty equipment causes a fire, damaging the venue and hurting attendees. The vendor’s liability insurance covers most of the losses, preventing millions in financial loss

• At a street festival, an organizer doesn’t require insurance because they want to show they trust the vendor. However, the vendor accidentally causes bodily injuries. Without vendor event insurance, there becomes a dispute over liability. The host ends up needing to cover a significant amount of the losses themselves after a lawsuit.

• During the setup of a trade show, a vendor accidentally damages the venue by shattering a glass door. The vendor’s general liability insurance is sufficient to pay for the damages quickly

Conclusion

Vendor liability and losses are not covered by organizer event insurance. If an incident happens and a vendor doesn’t have insurance, the event host might be sued for it. It is best for hosts to require vendors to carry their own insurance so that everyone is financially protected.

A layered approach protects all parties at an event. Cover your event today with the best event insurance policies.