Special event liability insurance - what's really covered?
Most purchasers of special event liability insurance understand that the policy provides coverage for “slips and falls,” but often wonder what else it covers. In generic terms, special event liability insurance covers the costs of damage to a third-party’s property or bodily injury caused by you or your employee and for which you are legally liable. Beyond that, it depends on the policy language. Typically written on a non-admitted form, the coverage does vary tremendously from carrier to carrier. While not universal, many policies will cover some or all of the following.
Most policies will contain coverage for “host liquor,” but many are confused about the need for additional liquor liability. Host liquor includes liability for bodily injury or property damage arising out of the serving or distribution of alcoholic beverages by a party not engaged in this activity as a business enterprise. An insured party will need additional liquor liability coverage if the named insured on the policy is “in the business” of manufacturing, selling or distributing alcoholic beverages. Is money being exchanged for alcohol? If the answer to this question is yes, then additional liquor liability needs to be added to the general liability coverage.
Additional supplementary medical coverage may be added to your liability coverage as well. If an accident occurs and someone other than your employee is injured, coverage is provided for any associated usual, reasonable, and customary medical expenses for each injured person, up to $5,000. Note that this is typically a separate policy, but packaged with your special event liability. It benefits any temporary employee or volunteer that may become injured and require some basic medical care. It is not meant to replace an individual’s own medical coverage, or an employee’s workers compensation coverage, but is supplementary to those individual’s own medical coverage or to that may be contained in your liability policy. The intent of the coverage it to address minor medical payments, such as stitches or an ER visit, without impacting the loss history of your liability policy.
Duty to defend is an important part of your event liability coverage. If a third party brings a lawsuit against you, your insurance carrier will assign legal expertise, if necessary, even if the lawsuit is groundless. Because the insurance carrier has a duty to defend, they will pay these costs on your behalf. Most policies will pay these costs without any reduction in your overall limit, which is an important feature to look for in any coverage you are considering. Why? Imagine if you are sued and in defense of that suit, the legal fees amass to $250,000. If your policy reduces your limit by these fees, and you have a per-occurrence limit of $1 Million, your policy would therefore only pick up $750,000 of any payment to the injured third-party. Make sure, when examining any potential coverage, that this would not be the case, as legal fees can add up quickly. In addition to legal defense costs, many policies contained a predefined limit per day for your loss of earnings incurred as a result of you assisting in the defense of your claim against you (research costs, time to appear for depositions, court appearances, etc.) as well as interest on any damage awards. Ideally, you would want this coverage, as defending a lawsuit can be very time consuming.
There is a couple of other coverage additions that are available from some insurers that mat be beneficial depending on your own specific needs. One such option is protection against the unintentional use of a third party’s advertising idea if it is used as part of your advertising. This coverage protects you if your advertisement or marketing materials infringe a third party’s copyright or trade slogan. Most policies also provide coverage that protects you against claims of libel or slander for which you are legally liable. Some policies will contain coverage for damages related to digital property. If an insured or their employee damages a client’s property (e.g., a computer server) and the client’s electronic data is damaged, some policies will cover any damages up to your limits of insurance for which you are legally liable.
It is important that you read your policy, or any policy that you may be considering, as all policies are not created equal. This is especially sound advice if you are considering a change in carriers, as your coverage may therefore also change. Or better yet, make sure that your agent reviews both policies and makes you aware of any differences in coverage you may have by switching carriers. It is also a good idea to review your policy throughout the year, or whenever your situation changes, as a good way to make sure that you do not have a lapse in coverage. And if you ever have any questions about your coverage, contact your agent in writing – email is fine- and make sure that you receive the answers to your questions in writing. That way, there is no confusion about what has been represented to you.
By: Robert Holmes, Spectrum
SpectrumWeatherInsurance.com
Phone: 816.810.2346
Fax 816.301.6221