As the days of spring get longer and the weather warms into summer, communities and towns across the country will come out of hibernation and celebrate – with fairs, festivals and open air festivities. Memorial Day, Independence Day and outdoor weddings; there are plenty of reasons to celebrate. As communities come together for these events public entities – your specialized clients – must be on guard to avoid and mitigate the unique risks of special events pose.
As a knowledgeable agent or broker in the public sector, you may be thinking that this does not apply to your clients; the insurance program you’ve placed is comprehensive and can sustain the inevitable highs and lows of the market and any claims related to an event. While this may be true, and most policies include coverage for events held on the public entity’s premises, what actually happens when a claim, especially a serious one such as a severe injury or death, occurs?
The unfortunate truth is that your public entity client may feel the effects of that claim, through pricing, adverse experience and many other important factors, for years to come. While even the best agent or broker cannot prevent claims, there are ways to help protect your clients when it comes to short-term exposures such as special events. To help solidify your partnership, obtain a thorough and deep understanding of the exposures your clients face, and the possible coverage options available.
Understanding the Risks
There are many types of special events that may take place in the communities your clients serve. From public events such as music festivals, parades and state fairs to private or for-profit events such as weddings and concerts, there are some common overarching liabilities and risks your clients must consider.
Facilities. Although each type of event has very different and specific facility needs (e.g., a concert requires a stage while a parade requires street closures), there are a few shared requirements for all. For instance, your client is most likely always considering parking at the facility or event, as well as the influx of traffic in the community or surrounding area. Similarly, public entities will need to consider equipment brought onsite by the event sponsor, as well as whether a separation between the event and event attendees is required for safety (such as a fence or security line).
People. No matter the event, public entities are concerned about the safety and protection of attendees, performers and any other participants. Even if the event facility is being leased by a third-party, risk managers should still be concerned with ensuring that the event attendee total falls within the safety capacity of the facility, that bathrooms are accessible and available at the event and that crowd control, emergency services or security services are available for use, if necessary.
Contracts. Every special event held within a city or town should require a contract. Be it with vendors supplying services or with a third-party sponsoring an event, public entities must pay very close attention to the contracts it enters and creates. In the past, these contracts were “easy,” only one or two pages, but today, contracts have become lengthy and convoluted, with easily missed clauses and addendums.
One of the most important ways an agent or broker can help their public entity clients is to offer to review such event contracts as well, to ensure the appropriate insurance needs are met. Some important items these contracts should contain include:
- Clear details about the event including date, time, location and the nature of the event, promotion or performance including duration;
- Rights regarding photographs, reproductions, recordings and merchandise;
- Specifics around terms of payment, permits and who is providing services such as lighting, sound etc.; and
- Terms of cancellation, a clear outline of insurance and security, and post-event expectations.
Depending upon what coverages and exposures are included in the general insurance program you have placed for your client, their current program may or may not already provide coverage for events.
However, when it comes to a short-term exposure such as a special event, agents may want to consider, or advise clients to consider, a Tenant Users Liability Insurance Policy, or TULIP.
TULIP is an insurance policy designed to provide low-cost, short-term general liability insurance for tenant users of venues or facilities. It is intended to protect both the user and the facility against claims by guests and attendees who may be injured as a result of attending an event. The cost of the policy could be as low as $100 to upwards of $1,000 or more with industry capacity up to $5 million.
You understand the risks your clients take when special events are held. All the considerations listed in this article and more weigh heavily on your public clients as well as the comprehensive insurance program you provided.
Separating the placement of coverage for a special event can help corral these exposures that may not otherwise be contemplated or intended under the overall policy. A TULIP policy is a quick and cost-effective strategy to prevent pressure on an insurance program, allowing you to focus on core operations and exposures and perhaps making subsequent renewals less challenging.
Furthermore, the costs of a TULIP policy may be shifted to the end user or event sponsor and is a viable strategy to transfer risk and protect your client’s experience as well as providing protection to the end user. For example, if a family would like to hold a wedding ceremony in a beloved community park, an entity can require the happy couple to purchase a TULIP policy – thereby providing protection for the couple, and the entity, should something occur during the ceremony that injures a guest.
Let’s consider a real-life claim scenario:
Every Fourth of July, a city enlists a local vendor for the purchase and exhibition of a fireworks show for the holiday. No formal contract is created, because the partnership is tradition and has been in place for many years, and as such, each party relies upon their own insurance.
After the big display, and during the clean-up and recovery process, an errant firework explodes, causing significant bodily harm to several innocent bystanders walking nearby. When the claim was filed, numerous insurance carriers lined up to protect their named insureds.
All participated in the claim, thus placing unintended pressure on the city’s insurance program. If the city had obtained a TULIP policy, its exposure may have been significantly lessened, and at a nominal cost.
Securing a TULIP policy is far simpler and far superior to administering an owner controlled insurance program (OCP) or the inherent pitfalls of tracking down additional insured endorsements or certificates of insurance.
Although an entity may be covered through their core program, why risk the negative effects, should a claim arise, when another low-cost strategy is available? By advocating the use and implantation of TULIP policies for your clients, you can provide valuable insight and protection for the communities your clients serve.