The ROI of Event Insurance: How One Claim Can Justify the Premium

Events require a lot of time, effort, and resources. They often have multiple stakeholders, from sponsors to attendees to vendors, so if something goes wrong… the costs can be extreme. However, many event hosts still believe insurance to be an optional extra cost. This is highly risky because a single liability claim could easily cost you over $100,000.

In this guide, we will review the ROI of event insurance, risks if you forgo it, and practical advice for event organizers.

Understanding Event Insurance Premiums

Before diving into the return on investment of event insurance, we need to know its cost.

Typical cost ranges for event insurance

Event insurance usually costs between $80 to $500. Larger events or longer events may cost over $1000 to insure. Relative to your event budget, it is likely only a small portion.

Factors influencing premiums

Insurers assess your overall risk profile to see how much risk they take on for insuring your event. Here are the major factors that influence event insurance premium:

Size: How large your event will greatly impact how expensive the event insurance is.

Type of event: Some events are riskier than others. Small corporate parties have less risk than public sports competitions.

Location: Event location dictates what state laws and insurance regulations exist. For example, some states put all liquor liability on the event host if an incident takes place (dram shop laws).

Misconception

Too many event organizers fall prey to the misconception that premiums are a waste of money or an optional extra cost. The truth is, event insurance is an ROI-driven safeguard for something you cannot guarantee will be safe.

What Event Insurance Actually Covers

General liability

Event liability insurance’s purpose is to cover claims that arise from third-party bodily injuries and property damage that occur at your event. For example, event liability insurance can cover:

• A guest slipping and falling on your dance floor
• Your staff accidentally damaging the venue wall
• Legal defense fees for liability lawsuits against you

Event cancellation/postponement

Event cancellation insurance will cover your losses if a valid reason results in your event getting cancelled, postponed, or rescheduled. Valid reasons typically include:

• Unexpectedly bad weather
• Venue issues
• Non-appearance of key performers or vendors

Some insurance policies bundle together both event liability and cancellation, whereas others sell them separately. Check your policy details to be sure.

Vendor issues

Vendors may pull out of your event last minute. No-shows, service disruptions, and contractual issues can all cause serious disruptions to your event. Some event insurance policies will cover losses experienced due to vendor issues.

Specialized coverage

Liquor liability: Organizers require liquor liability insurance if any alcohol is to be served at the event. Otherwise, serious alcohol-related incidents can cost over a million dollars.

Cyber: Is your event digital or hybrid? You can benefit from digital event insurance, which can cover cyber issues like data breaches and technical issues.

Terrorism: Events can be susceptible to terrorist attacks, especially if the event is political in nature.

The “One Claim” Scenario: How ROI Plays Out

Let’s go over three example cases where event insurance helps maximize ROI following incidents.

Example 1

A guest slips and falls at your event, with a serious injury that leads to a $250,000 liability claim. You have $1 million in liability coverage, so the event liability insurance covers all of the liability claim judgment. This ensures the guest gets adequately recompensed and does not cause a media ruckus, ensuring you still have a good reputation as an event organizer.

Example 2

An outdoor wedding ends up needing to postpone the wedding because of a large, unexpected storm. The cancellation due to weather results in losses of $100,000. Fortunately, the expenses are covered by the $700 premium, allowing the bride and groom to afford the postponement without financial issue.

Example 3

A catering service you book for your event ends up telling you they went bankrupt just a week before your event begins. Their failure forces you to pay last-minute replacement costs to find a new catering service that is willing to cater the event despite no heads up.

Your event insurance policy includes vendor failure coverage, covering the extra thousands of dollars that you lose because of this.

The Hidden ROI of Event Insurance

Other than the ROI of event insurance’s ability to cover liability lawsuits and cancellation losses, there are hidden returns you may be overlooking.

Peace of mind

Event insurance reduces stress for organizers, sponsors, and partners. It will provide the knowledge in the back of everyone’s mind that if something goes wrong, insurance can pay most of the expenses. Investing in peace of mind is valuable for event organizers that want to maintain event reputation and continuity over the years.

Stronger vendor/venue negotiations

Carrying event insurance shows professionalism for both event hosts and vendors. Both the event organizer and vendors are advised to get their own liability policies. This is because if an issue happens at an event (e.g. food poisoning or attendee injury), it is possible that everyone involved will get sued regardless of who appears to be liable.

Protection of reputation

If you have event insurance, it lets you better handle any public crisis that comes your way. Which, of course, supports brand trust. The public usually knows that not every event is perfectly safe–how you deal with event incidents goes a long way in how the public thinks about you after an event.

On the other hand, if you are unable to afford the settlement for a claim, it could lead to serious reputational damage. The public may feel too uncomfortable to attend your event in the future.

Regulatory compliance

Having the right event insurance lets you meet both legal conditions and venue requirements.

You can expect states and municipalities to have event regulations you must comply with. For example, in Manassas, a city of Virginia, larger events are typically required to obtain liability insurance. If alcoholic beverages are being served, $5 million in liability coverage insurance is needed, including liquor liability insurance.

Venues also typically have insurance requirements. If you don’t carry enough coverage, they won’t let you rent the venue due to liability concerns.

Why Going Without Insurance Is Riskier Than It Seems

Small margins for error in large-scale events

If anything goes wrong, and things can easily go wrong, you would be on the hook for potentially millions in damages. An attendee could get injured, ill, or even die at your event. It is even harder to prevent incidents at large-scale events where there are crowds or people over the course of several days. Fights can occur, dehydration is a common risk, and crowd surges can be deadly.

Lawsuits and claims can bankrupt organizers

Liability lawsuits need to be dealt with. If an incident takes place, plaintiffs often sue anyone who is remotely involved, including the event organizer. This can bankrupt you, especially if you are found liable or need to settle.

All events face liability risks

Liability risks aren’t contained to a certain type of event. Essentially all events can face liability risks.

Even if you’re hosting a wedding with only family and friends, someone could get injured or ill.

You may think small events don’t need event insurance, but one person getting injured or an expensive property getting damaged could cause heavy financial losses.

As for non-profit and charity events, they can also have serious incidents occur. Even if you are making no money at all, it costs resources and deposits to host events, which means any liability claim would be painful.

Digital event risks shouldn’t be forgotten either. Digital liability can be a concern if you’re storing sensitive information but it gets leaked due to hackers, scammers, or a lack of cyber security.

Reputational and financial damage

If someone gets injured or venue property gets damaged, but you can’t afford the lawsuits against you because you lack the event insurance, your reputation and finances can both take devastating hits. Uninsured losses can be huge problems, whether you’re running a business or personal event. They could prevent you from being able to host another event in the future because sponsors, venues, performers, and vendors may refuse to work with you.

Practical Advice for Event Planners

Calculate potential risks vs. premium costs

First, get a quote for your event insurance policy. Then, calculate potential risks: what if someone injures their spine at your sports event and it was your fault? What if the venue’s stadium breaks because you put heavy props on it?

Choose coverage amount based on realistic “what if” scenarios

Coverage amount can greatly affect event insurance premium. If you’re hosting a smaller event, it probably doesn’t need multi-million dollars worth of coverage. It may make more financial sense to settle for lower coverage amounts. However, this completely depends on your risk tolerance.

Work with insurers who specialize in your type of event

While generic event insurance is convenient and affordable, it is ideal to work with an insurance company that has a long history in your particular event type. For example, consider choosing a wedding event insurance company if you’re organizing a wedding, since it will have more suitable features and benefits.

Factor insurance into the budget early, not last-minute

Better late than never, but buying event insurance early can actually be helpful. It means if you suddenly need to cancel your event a month before it takes place, your insurance will be able to cover the costs. If you didn’t buy insurance yet, then you will have to suffer the cancellation losses yourself.

Future Perspective

Rising litigation costs

Lawsuits and litigation are actually becoming more expensive for a wide range of reasons, from trial lawyer tactics all the way to economical factors. These rising costs of litigation are making event liability insurance more valuable because it can cover legal fees and lawsuit losses that could follow a liability incident at your event.

Tailored packages

More event insurance companies are starting to offer tailored packages specifically for ROI benefits. These let you be more financially efficient.

Bundles are also a good option if you want to increase the value of your insurance policies. Bundled insurance policies can be more convenient to obtain or more affordable than buying separate policies.

Growing recognition of insurance importance

Even though high-profile incidents occur often at events, many organizers still overlook it. As awareness of its importance spreads, more events will automatically incorporate insurance into their risk mitigation strategies.

Conclusion

Event insurance is not an optional expense—it’s a crucial investment. If one claim gets covered, it could save you a whole life of premiums. Lawsuits are getting increasingly expensive, which means any incident that happens could cost thousands or even $1 million+.

Carry enough event insurance to ensure your event’s success and financial stability. Check out the best event insurance options to protect your event today.