AI, Drones, and Tech at Events: New Risks to Insure Against

Introduction

AI and drone tech are everywhere in live events, and this rapid rise means hosts have new risks to insure against. AI personalization features bring cybersecurity risks–few incidents are more costly than a sensitive data breach. Drones provide valuable aerial footage, but can malfunction and cause injuries and property damage.

New tech is exciting. It draws people to support events they might not have otherwise. But the emergent liability concerns are no joke, potentially costing you millions. Let’s go over the new risks that come with AI, drones, and other cutting edge tech at events, and what insurance can protect you.

How Tech Is Transforming Events

If you’re running a live or digital event, you’re probably wondering how to leverage AI without hurting your bottom line. Live and digital events can benefit greatly from modern technology. Let’s look at some of the ways tech has transformed the event landscape in recent years, from safety monitoring to increased engagement.

AI

Chatbots help with guest support and reducing the cost of customer support staff members. It’s also useful for analyzing guest interests and priorities, providing smart networking, and tracking engagement during events in real time.

Data-driven personalization can work great for giving each attendee of the event a more unique, tailored experience.

Drones

Aerial photography and livestreaming are the two largest reasons to use drones for events. But did you know crowd monitoring can greatly improve your event safety? Drones can be integrated into your crowd management strategy, which is necessary for in-person events. Monitoring drone footage with AI or a person allows you to more quickly react to problems, like violence or crowd crushes.

Other innovations

Have you visited an event and seen a VR or AR exhibit? Many art museums and events use VR art to enhance visual experiences, making them more immersive.

Robotics is also seeing significant advances, paired with AI. You can see life-like, humanoid robots or cute delivery robots that work far better than earlier prototypes. The most famous is perhaps the Figure 03 robot that can learn from people and perform numerous general tasks.

Cashless payments are an older invention that has spread across the world by storm. It is rather difficult for merchants and vendors to operate without cashless payments nowadays, as smartphone wallets are easier to protect and use.

The New Risks of AI and Data-Driven Tools

Privacy and data breaches

Data leaks are so prevalent these days that users are no longer surprised when their private data is stolen by malicious parties. Not surprised, but definitely angry. Failing to securely store attendee data can take down an entire company.

GDPR and CCPA compliance is also necessary. You need to go through a compliance checklist before running your event with advanced tech. The wrong move could get you seriously penalized.

Bias or errors in AI systems

Although AI can mitigate human errors, it can still be fallible. Any biases or errors in AI systems can lead to lawsuits and damaged reputations. Examples include:

• Facial recognition misidentification
• Lack of security for AI chatbots
• Accessibility issues

Cyber liability

Did you know that events can be quite vulnerable to cyber security issues? Any hacks or digital problems that disrupt event operations can take a long time to solve, longer than the event itself. Lawsuits often follow serious cyber liability incidents.

Reputational risks

Social media and news cycles mean that if your event goes wrong, it will probably get a lot more eyes on it. Any cybersecurity, drone, AI, or event issues can lead to serious reputational harm.

Drone-Related Risks

Physical accidents

Drones can crash into attendees or third party property. You would likely be sued for the personal injury or property damages.

An attendee’s personal injury claim can cost as low as $1000, or as high as over $1 million. Event insurance should cover injury liability, but drone liability may be excluded from standard event insurance plans. This is a great risk to take, so it is important to carry special drone insurance (which may be required based on local law).

Airspace violations or broken laws

You must take FAA airspace regulations seriously if you plan on doing anything in the air, such as using drones at your event. Drone operations can be federally fined for $75,000 per violation. Noncompliance with FAA or local drone regulations can result in serious legal problems.

In addition, if you bring a drone to an event internationally where drones are illegal, you could get your drone confiscated. Or far worse. Legal crimes could mean you get detained or barred from entry into the country. Always check laws against drones before traveling with a drone or hosting an event with one.

Equipment failure

There is always a chance that a drone fails at your event. Technical glitches can lead to liability claims or drone losses. A basic drone might only cost $100, but a serious drone for recording and monitoring events can cost over $10,000. Each drone that fails is a financial loss you’d have to deal with, not to mention if you fail to provide any contractual, promised data (e.g. videos for a wedding), it can lead to more losses.

Privacy concerns

Be careful about privacy concerns, which may be regulated by local laws for surveillance or events. Any unauthorized recording or surveillance claims can be problematic and result in lengthy lawsuits. This depends on state laws, sector-specific laws, and international laws.

Insurance Coverage Options for Tech-Driven Events

Cyber liability insurance

Cyber liability insurance is the classic, generic type of liability insurance for cyber concerns. It can cover data breaches and other digital disruptions. It could also cover legal fees, settlements, PR restoration, and crisis management expenses.

However, cyber liability may not be specific enough for your needs. It may even exclude your desired tech or AI usage from coverage due to the risks.

Drone liability insurance

Drone insurance is required in many jurisdictions. It covers accidents and damages that are related to your drone. Flying drones without sufficient insurance can lead to penalties and financial risks.

Drone liability insurance typically costs around $100 a month, but you could also find policies that insure by the hour. It is hard to obtain event insurance for multi-day events that last over a week, though, and you may need specialized insurance endorsements and policies for that.

Technology errors & omissions (E&O)

E&O insurance protects against professional failures. Technology E&O policies more specifically protect against AI or software-related failures, but they can be very expensive due to a lack of regulation and standardization for AI insurance.

General liability insurance extensions

Now, a good general liability insurance policy might cover tech or equipment risks. However, check your policy to be aware of exclusions. For example, drones may be excluded from general liability.

Any new tech that comes into the market after you have already purchased general liability insurance may also be excluded.

Special equipment coverage

If you have any high-value tech assets, you probably want to get equipment insurance to protect against their loss or damage. Different equipment may require different insurance.

Real-World Scenarios Where Insurance Matters

You might be thinking you or other people host events without insurance, without problem. And it is true–some host events without coverage and get to save some money on insurance because nothing happens. And yet, countless people also do get into incidents at their events, and they do get sued for hundreds of thousands of dollars (or more). Just to avoid paying a few hundred dollars in event insurance? The risk is not worth it.

Let’s take a look at a few real-world incidents where event insurance makes a big difference.

• A drone crashes into a guest at a wedding. The organizer’s drone liability insurance covers the $30,000 of personal injury expenses
• An AI-powered online forum system gets hacked, leaking passwords and other sensitive data, requiring AI cyber liability insurance to cover the data breach costs
• A VR headset malfunctions at an art show, causing vision damage. Without any insurance, the incident spirals into injury lawsuits and reputational damages

What Organizers Should Do Proactively

Proactive risk management prevents catastrophes. Here are some practical steps to take.

1. Audit technology use

Any drones, AI, VR, or cashless systems should be noted for security. Software updates, models, and other factors can play a big role in whether the tech is safe to use for your event. For example, an outdated software system or model can be vulnerable to data breaches and cyber attacks.

2. Confirm compliance

Local drone laws, cyber security regulations, and other event requirements should be checked when you plan an event. Failing to reasonably comply can lead to severe penalties.

3. Request proof of insurance

Whether you’re working with a photographer, a performer, or a tech vendor, you should request proof of insurance. It ensures that everyone involved is better financially protected in case of an incident at your event. Which is important, since oftentimes, injured attendees will be advised to sue everyone involved.

4. Review contracts for liability allocation

Don’t accept an event invitation or project before carefully drafting or reviewing contracts. Check the liability allocations to see if it is a risk you are willing to take.

5. Consult insurers about emerging tech endorsements or add-ons

If you’re trying out an emergent tech with less public knowledge or testing, it is important to ask your insurance company if it will actually be covered. Tech insurance companies may exclude new, unknown, or unmentioned technology.

In case your desired tech usage is not covered, your insurance company might let you purchase an event insurance endorsement or rider.

Future Outlook

AI

Regulation-wise, AI is a controversial and unpredictable topic. It is hard to predict how AI will be regulated in the future for events. Insurance companies and event hosts are both leveraging AI to reduce risks and improve efficiency, but changes may be needed if regulations impact AI usage at events more.

What we can say for sure is that tech and event insurance companies will quickly adapt their policies to cover fast-moving tech innovations. Keeping up with the tech waves is crucial for survivability and competitiveness.

Specialized event insurance

Event industries are extremely lucrative, but the risks are also high. An injured attendee, a tournament gone wrong, data leaks, a wedding venue destroyed by malfunctioning drones and equipment… there are many ways you could be sued when organizing an event. It makes sense that cyber policies and specialized equipment policies will expand to cover specific events, providing event organizers with more insurance options.

Ai risk management for insurance

AI is being used more in event insurance underwriting and claim processing. This may be able to improve responsiveness of event insurance claims so you can receive almost-instant claim results. Terribly convenient for when you need the money for damages immediately.

Conclusion

Tech can make events smarter, safer, and more engaging, but it unfortunately adds multiple layers of risk. Specialized insurance is typically needed for emergent tech, like AI virtual assistants, drones, and other tools.

You can protect yourself from lawsuits and liability risks using the best event insurance.