Whether you're throwing a super bowl party, a wedding, concert, or anything in between, special event insurance can provide additional coverage not available in your homeowners or general liability policies. Chuck Hembree joins the program to discuss the benefits of special event insurance.
Below is a transcript of the episode, modified for your reading pleasure. For more information on the topics discussed in the episode, see the links at the bottom of this post.
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Grant FINLEY: Welcome to Your Insurance Connection Podcast, I'm your host, Grant Finley and I'm joined by Chuck Hembree, the President of CLH Insurance. Chuck, how are you today?
Chuck HEMBREE: Doing well, thank you, Grant.
FINLEY: Well I don't know if you noticed, but the Super Bowl is - the stage is set. We've got two teams and they'll be playing in Houston soon and in honor of the "big game" I thought we would maybe talk about special event insurance. So, I want to paint a scenario for you and get your take. Say I'm hosting a Super Bowl party and we're going to have food and we're going to have alcohol provided but anyone is welcome to bring their own food or beverages as well and the party is going to start early afternoon, before the pre-game and it will last after the game obviously, into the night. Do you see any red flags with this scenario that I'm painting?
HEMBREE: (Laughs) Well, all over. And, great opportunities and great times too. An insurance person, if they're a risk manager they're going to see all the exposures that are out there and we see all the claims that come in, so yes, red flags always go up. But we never want to forget that we can manage risk in a way that can take care of a lot of those exposures so we can enjoy the event. So, let's walk through some of those red flags because there can be many, we just have to exercise good care and good prudence. So, the first thing I would think about is: where are we holding this event? Are we holding it at our house and we're just inviting over some neighbors and good friends or are we a business and everybody is invited to the Super Bowl party that we're going to throw here? Or are we an organization that says, "Hey, we want to bring our employees in or our clients in that we work with and provide them with a good time and everybody watch the Super Bowl?" So, there could be a whole different set of circumstances for each one of those and we have to treat it in a slightly different way.
FINLEY: Okay, so we've got some different venue options here. What exposures are going to be present at each one?
HEMBREE: Well, let's think about each one. Let's start off with our homeowners first because a lot of us are just going to be sitting down with chili and appetizers and some grape drinks and so forth. The vast majority of things we would encounter at a Super Bowl party like this are taken care of underneath our homeowners. If somebody trips and falls while they're there, our homeowners does a great job of taking care of that. If somebody gets sick on some food because of that, yeah, if we can tack it down to who provided that food yeah, homeowners liability can help with that type of thing. But you had mentioned before maybe we're having alcohol or some other types of libations and there's where we need to think smart. We've seen cautions all through our life about the use of alcohol and using it properly and at the proper age. So, our homeowners is not going to provide us with good coverage if we don't use good prudence. If we serve under aged drinkers - we're starting to see more and more of this where parents, because they want to be friends, are not using wise judgement and they serve alcohol to those underneath the legal age. That's a no-no and the homeowners is not going to respond because we take care of legal liability not illegal liability. Then, we have to think about those we might over serve. Again, we have to be responsible for those people who are our guests and who we want to show hospitality to. Just like businesses are responsible in some respects there, we have to be responsible too. So, if we over serve someone then we need to carefully take care of them until they're able to function on their own, so that may mean saying, "Hey, we don't want you to go out and drive home. We'll provide you with some housing overnight here until you're in a better condition to do that," or we need to make sure that we safely get them home and that we're in a condition to get them home too. So, great prudence when alcohol is there because alcohol will not be covered underneath a homeowners policy if we act outside of the legal limits. We do have some coverage for over serving but we have to show that we acted as responsibly as we could, and gross negligence in those areas is going to be looked at very harshly by the courts.
FINLEY: So, before we move on to those other two venues you talked about, if I over serve somebody in my home and they - we let them drive, they get in an accident, how is it possible that I can be on the hook for that?
HEMBREE: Well, you were the provider of the alcohol. So, you didn't show good due diligence with them and good prudence when you over served them and then you allowed them to leave putting themselves and others in danger and yes, as much responsibility as the driver has, the server of the alcohol or the place where that alcohol was served is going to be held liable too. We think when something occurs like this and there's harm to either the driver or someone else that just one person is going to be sued? No, attorneys are smarter than that and they'll bring claims against the driver, they will bring claims against those who served the alcohol and will you have enough limits in your homeowners liability to take care of the bodily injury or the property damage that's caused, especially if there are multiple people involved.
FINLEY: So, then, let's move back to the other venues. I think you mentioned if we're having an office party. I imagine some of the exposures are going to be the same but what's different about the office party?
HEMBREE: Well the policy responds in maybe a different way. A business policy, a lot of times has a coverage in it called Host Liquor Liability. So it is giving us a little bit broader coverage for that type of exposure if we're not the seller of that liquor but we're just merely supplying it and it's not our business. We're just doing it to be hospitable. We have some of the same prudence that needs to be shown in over giving of alcohol to others or, again, if there are minors there, in protecting those minors and acting in a legal way in that response. The stakes are a little higher because it's not just our home and our personal liability that's at risk like we used at the other venue, but now we have our entire business exposure at risk. And really, that's the way we ought to think about it. It sounds like that's over the top, but no. When we get into situations like this we're exposing our entire business, so we want to make sure we have good precautions and have thought through who are we inviting, how long is this going to be, and take care of it in a good manner. And, I might also say, that there's some other legal liability issues with the Super Bowl, whether it's an organization or a business. If we're bringing these people in and they're our guests, that's one thing, but if we're also bringing them in and we're making a small charge, we have to be very careful because the NFL has their own restrictions. We can't show the NFL's insignia on any of our advertising. We can't use the word "Super Bowl" as well, so, "come to the big football game!", will be better to use. We're not allowed to use any other big screen or anything else other than what's normally acceptable and available to us within the business. So, if you already have a big screen, you're good. But, if you're going to go rent a big air pump-up screen and project the game up there, you may run into some problems. Now, I realize I don't know that the NFL has their people out walking around, going to every business, seeing what's there but know that you do have some liability according to NFL standards and the court has upheld those.
FINLEY: So, then how would this differ if you're taking employees out? I think that was the third venue we talked about. So, what are the differences in that description?
HEMBREE: Well, we talked about an organization where we're having maybe clients in and maybe we're not-for-profit. We have some of those same things, so we have to be careful. But, then with employees, just like with any gathering, then we have to be mindful of how the employees interact with each other. We want to prevent situations where we could have sexual harassment accusations and be subject to employee injury because if we're expecting our work comp to respond, well, is that really under the scope of work? Well, no, it's not so then we enter into a lot of grey exposures when we don't think through our event well no matter where it's being held.
FINLEY: We've kind of tackled all these red flags and these various locations -
HEMBREE: Tackled, red flags, that's really good for football.
FINLEY: Right, I'm going to challenge that. But, so then how does the special event insurance policy put the umbrella over all that? How does it help you cover, if you are going to host an event?
HEMBREE: Well, if we think we might have more than normal exposure to liquor liability or if we are going to make a charge, there are some insurance products that we can purchase that will give us that extended liability and we won't be held to the limitations in our normal commercial policy. We can buy a liquor liability policy just like a bar would or any purveyor and yet they can be limited down to what we're doing so the cost may not be quite as bad. And, special event insurance in its entirety is a great little off-shoot of regular insurance. It kind of picks up some of those activities that we don't have covered in our regular commercial policy and allows us to do it with protection and so there's just a whole range of it. Not just alcohol but we see hole-in-one special event coverage, weather insurance, cancellation of concerts, all of the things that go on that our general liability's not going to cover we can tailor that special event insurance to cover that great special event that we're doing even if it's a super bowl party.
FINLEY: I'm curious then, whether it's on the personal side or commercial side, say I reside in one state and let's say it's a destination wedding or whatever the case might be, in a different state, how does that work? Where would I get the insurance would it be in the state it's going to be in or will I get it in the state I live in, or how does that unfold?
HEMBREE: Well, generally, the special event is going to follow us no matter what, so destination weddings and so forth and the policies that we sell are good in the United States, its possessions and territories and in the state of Canada. So, they'll extend to wherever we go, now we usually have to name where we're going to do it. Where's this event going to be held? What are the days we're going to hold it on? We want those because that helps us be more economical and bring the premium down. The more specific we can be, the better premium we'll have.
FINLEY: So, to talk about the premium then, what is the price of this coverage based on? Obviously exposure, but what is it based on and how far in advance do I usually need to purchase this before the event?
HEMBREE: Those are great questions. The range on the premium can be just all over the board. Depends on how big the event is or how small the event is. We may be able to get down to a $50 or $100 minimum premium for a little super bowl party. On the other hand, if we're doing a big event and there's going to be thousands of people and it's going to be held at an outdoor amphitheater we can get into thousands and thousands of dollars and we've done all those things before. Premium is based on the amount of exposure so the more specific that you can be with your agent in describing how many people are going to be there, what the event's going to be and what's entailed, the better job we can do in tailoring that special event coverage right for what you're needing. And as far as how far out in advance, as far as you can do it. Yes, we can do things quickly but it doesn't allow us the investigation, the availability to check several markets, we'll have to go to those that we know are the most expedient despite what the price is. So the more advanced notice you can give the agent or broker with a good understanding of what's happening and when the events are, the better. I would say at least thirty days. Now, yes, we can provide it quicker than that but thirty days is a good amount of time to allow a broker and an agent to do a good, comprehensive search for you.
FINLEY: Good stuff as always, Chuck. Unless you have any closing thoughts, I think we'll wrap it up.
HEMBREE: The only thing I'd add is for a simple wedding reception and so forth, we may not need special event insurance. Sometimes our homeowners will cover us just fine, but there's parameters. So, again, check with your agent and your broker so they can advise you the best way to proceed.
FINLEY: Perfect, and anybody out there who's listening, feel free to give us a call and we'd be happy to walk through any scenario you have with you and we'll try to get you guys the coverage you might need if you are thinking about taking on one of these events. Thanks again, Chuck and thanks again for everyone who listened today. We'll catch you on the next episode.
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