It is ten days before your client’s multi-million dollar, world famous, music festival. You receive news that a CAT 5 hurricane is heading right for the event. If this storm hits, it will wash away equipment, fans and profits. After a few moments of panic, you sit back, reflecting on the months of planning and work you have done to properly protect this event. The process began even before the last artist exited the stage at last year’s festival.
The organizer knows that all it takes is one major catastrophe and all the hard work, time and money invested may be lost. Risk management is taken seriously and the protection of the artist and patrons is a top priority.
One month after the festival ends, a wrap meeting of all the key suppliers and companies associated with the event takes place.
What did we do wrong and how can we do better? We discuss and review situations that arose during the festival and ways to prevent them from occurring again are pondered.
The planning begins
The coverage review between the risk manager and the organizers corporate counsel begins.
Event Cancellation. This is a key coverage to protect the festival organizer’s investment. Coverage is based on the event budget and can be expensive. However, not having it could be financially devastating for the organizer.
Do we have the proper event cancellation coverage in place? Does it cover artist non appearance? Does it provide coverage for hurricanes, bird flu and/or terrorism? Does it cover partial event cancellation?
Weather Insurance. This helps to supplement the organizer’s revenue should they experience rain, wind, lighting or other defined perils causing cancellation or decreased revenues. Does the event have large walk up ticket sales? Will a large amount of rain, wind or lightning cause the event to be cancelled or cause a decrease in attendance and vending sales? What hours are the most important hours to insured and what amount rain is going to keep people away?
General Liability. The is a “must have” coverage for any festival, large or small. Coverage should be written on a broad form CGL policy. Policies can vary greatly from company to company so coverage forms, exclusions and limitations need to be reviewed carefully. Do we have adequate liability limits and coverage to cover worst case scenarios? Do we have all co-promoters’ sponsors, venue, city, county, etc., all properly included on the policy? Do we have coverage for third party property damage and damage to rented premise? Are our limits compliant with our all the contractual obligations?
Vendors. Dozens of vendors will be on site during the festival. Their insurance requirements need to be clearly outlined in a standardized contract signed prior to the event. In addition, vendors must provide a certificate naming the organizer as additional insured with minimum liability, auto and comp limits clearly outlined.
Artists. Hundreds of artists will be performing at the festival. It is a necessity to use standardized contracts clearly outlining insurance requirements for the band, insurance limits the promoter has purchased, and what is and is not covered.
Suppliers and Support Services. Each supplier has their own set of rules and requirements when it comes to insurance. All supplier contracts are reviewed by the organizer’s in-house counsel and risk management team prior to the event. This is a key role. If a contract is signed, agreeing to coverage or limits the organizer does not have, the result may be gaps in coverage and/or additional cost to the organizer. If the supplier does not have adequate insurance it will leave the organizer exposed.
Non-Owned/Hired Auto. Hundreds of vehicles will be coming in and out of the festival grounds during the event. Do we have proper coverage to protect the liability and physical damage to cover golf carts, rented cars, vans and employee vehicles used for business? Do we have coverage to protect us if our suppliers’ vehicles do not have adequate coverage?
Equipment coverage. This is an area that always seems to initiate confusion. There will always be last minute changes and additions. We prepare the underwriter in advance. With millions of dollars in equipment exposed, this is an essential element in the risk management program.
Money. Hundreds of thousands of dollars in cash are floating around the festival. Do we have enough coverage to protect the maximum cash exposed before pick up?
Workers’ Compensation. It will take hundreds of employees, contract labor, personnel and volunteers to allow the event to run smoothly. While it is mandatory in most states this issue is often overlooked by festival organizers.
Finding the market
So after months of tossing around limits and coverage needs, it’s our job to search the market and find the best insurance company available. Ten to 15 quotes are received. The in-house counsel, organizers and risk manager analyze the pricing and coverage forms, exclusions and conditions. At the end of the day, it is about choosing the one that provides the best overall protection, at a premium that fits within the budget.
When the day finally arrives, the fans see good music in a safe environment. Little do they know what actually goes on “backstage.” So, after hours and days of reflection, research and review, we can confidently pick up that phone, call the organizer and say, “Yes, we have it covered.” And what happened to the festival that was in the path of a Category 5 Hurricane? It turns out, Mother Nature is a music fan.
James Chippendale is president of CSI Entertainment Insurance, a full service insurance broker providing access to a vast array of coverages needed by the entertainment industry.
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