Saturday, August 8, 2009

Event Cancellation Insurance: Protecting Your Big Event

The event was the COMDEX convention held at the Georgia World Congress Center in Atlanta. COMDEX was the annual global IT convention, featuring the newest computers, electronics and gadgets. This was the biggest convention held in Atlanta each year. 200,000 people would attend the convention over four days.

Two days before the convention opened, a category 3 tornado struck downtown Atlanta. The twister tore off 100,000 square feet of roof from the Convention Center and dumped hundreds of thousands of gallons of rainwater inside. Local news footage showed water cascading down a big stairway like a waterfall.

COMDEX was cancelled. The financial losses for the event planners fairly boggle the mind.*

What if the show can't go on? The consequences — particularly for a corporation staking big bucks on a marketing event or for an association that gains most of its revenue from an annual conference — can be dire. One safety net is event cancellation insurance, which can protect your event investment against catastrophes, strikes, earthquakes and snowstorms.

Event Cancellation Insurance has been around for decades, and has a long history of protecting special events from conventions, to trade shows, to exhibitions, entertainment or sporting events.

An insured may have incurred expenses all year long preparing for an event but can't afford for an unpredictable event to cause its cancellation. Think of the costs for travel, venue deposits, rescheduling costs, as well as other costs including planning.

Often the kinds of problems that can lead to postponement, cancellation or relocation of an event are out of the planner's control. Look to Event Cancellation Insurance for the kind of coverage needed to protect that financial exposure.

Whether planners should invest in cancellation insurance depends upon how important an event is to an association or corporation financially and what kind of risk it is assuming. If your group event is planned for 50 people, you’d probably not buy this policy. But if 500 or 5,000 people were expected to attend, event cancellation insurance could be crucial to your bottom line.

Sometimes, event planners don’t think about event cancellation insurance. They either are unaware that such coverage exists, or mistakenly rely on the insurance of the event a convention hall. The venue’s insurance will help them rebuild or repair. But it won’t help the event planners find another venue, or compensate them for the costs they incur or income they lose from cancellation.

Coverage and Cost

The rule of thumb is that cancellation insurance covers perils that are beyond the control of a planner, such as inclement weather, strikes, outbreaks of disease and so on. You can also purchase coverage for “Non-Appearance,” in case your event relies on the appearance of a person or group (speaker, performers, player, invited guest). The policy also covers things such as extra expenses for trucks and workers in case an exhibitor doesn’t break down his exhibits. What is not covered are lack of planning, low attendance from a lack of interest or poor marketing, or bankruptcy of the planner.

Coverage begins as soon as the premium is paid and usually extends for five days after the event. Coverage purchased well before an event can be a godsend if something happens to the facility where you’re booked, as the coverage would cover costs of relocation and notifying attendees.

The cost of this coverage is calculated on a policy-by-policy basis. Every event is different and each has unique risk exposures. The standard costs of this coverage run about fifty cents per $100 of coverage. However, variables like location (areas susceptible to hurricane or earthquake) or season (winter is higher than spring, summer or fall) can push the price up towards $1 per $100 of coverage. So, a $1 million policy might cost up to $10,000 or more.

When To Buy

Event cancellation insurance is usually less expensive if purchased far in advance. Insurers increase the premium rate, theorizing that the closer the event is, the more desperate the planner must be for coverage.

We recommend that you get at least two price quotes before making a buying decision. We also recommend that you review a sample copy of any policy before purchase to determine what is covered and what is excluded.

Then, have a super successful event!

*This catastrophe was entirely fictitious.

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