All I need is a certificate of insurance…
Event producers have been saying this for years now, purchasing insurance because someone required them to show proof of insurance for an event. Well let’s take a look at the exposures that an Event Producer might have.
Defining an Event Producer
First, the producer is a business broker of sorts. You are contacted to provide some sort of entertainment for a corporate event. The client will rely on your professional knowledge to find the correct fit and to handle all the details to get that entertainment to the event. You charge a fee for doing this. You will handle everything from the contract, booking flights and transportation, hotel, staging, lights, props, etc. You are paid the contract amount, and then you pay the entertainment and sub contractors from the proceeds. Your income is what is left.
The venue or client asks you for proof of insurance and to name them as additional insured. You call up your insurance agent and ask for a certificate naming the venue or client as additional insured to comply with the request for that event. Everyone is happy because that little piece of paper is in some folder somewhere, but are you covered?
What a general liability policy covers
A general liability policy covers you, your company, officers or members if it is an LLC, employees and volunteers for a lawsuit that is brought for YOUR negligence. It does provide coverage for any “sub contractors”. So if you have someone working for you and do not want to pay taxes, you call them a sub contractor and issue them a 1099. Your entertainment that you hired is a sub contractor, the staging and lighting company also falls in there and the list continues.
Bottom line there is no coverage for the sub contractors under your policy or certificate of insurance! So that piece of paper that you provided does nothing for the event other than complete someone’s checklist. So, what is the correct way to keep you out of court?
Coverage for employees
Any body that you hire needs to be on payroll as an employee to provide you the correct coverage under your general liability policy. All entertainers need to have their own insurance and name you and the venue as additional insured. If you contract any work with sub contractors such as a limo service, staging and lighting, props etc. you should require that they also name you as additional insured along with the venue. If they are driving on the premises, you should also be named on their commercial auto policy as well as their workers compensation policies. This will protect you and the venue for any incidents that might happen as your policy will not pick up these risks.
Why is having insurance coverage for your event planning business so important?
Why, you might ask? What a pain you might say. I will have to hire someone just to handle the insurance you might argue…. You are a professional, you charge professional fees, and you are expected to perform at a professional level. And if something goes wrong at the event, be assured that you WILL be named in a lawsuit. You might want to turn to the sub contractor and want defense costs covered but if you did not request the additional insured endorsement, they have no duty to defend.
Now what the heck could happen? You might say I have never had a claim in 15 years… Ok, let’s look at a scenario that might have taken place in the last couple of years. A 5 piece band was hired for a corporate event to play on stage. A member of the band got up and tripped knocking over the speaker stand which fell off the stage hitting a man walking by the stage. He needed 7 stitches in his head. Of course he was out of work for 7 months with extreme head aches and then could not return to his desk job because of an alleged shoulder injury from the same incident where the speaker hit his head and shoulder. Claim was for $4,000,000. The event producer, the venue, the stage company and lighting company, the manufacturer of the speaker and speaker stand, the band, the bands producer, and the company that held the event were all named in the lawsuit and had to defend themselves.
That’s what I have insurance for, right?
That is what I have insurance for said the event producer, right? Unfortunately, the carrier for the producer denied defense costs due to the fact that none of the acts that caused the claim were done by the producer. The band had no insurance. The venue cross sued the professional event producer because the contract asked for insurance and the event producer should have known his insurance did not cover the band’s actions………… Today we are in litigious times; you are dealing with corporations that have attorneys that are on payroll. Do not get caught in court paying your own way because you did not know that your policy did not cover this exposure. Do not get caught in a deposition saying that you did not understand but you charge professional fees for your services. A wise judge once told the audience, ladies and gentlemen, ignorance is not a defense…..
Work with an experienced insurance agent
Work with an insurance agent that is knowledgeable about your business and the exposures. Purchase the correct insurance to cover you, your business and your employees. Purchase Professional Liability insurance also to defend you since professional liability is excluded in a general liability policy and you do have the exposure. Make sure that your sub contractors have insurance and you are named as additional insured. Insurance is much cheaper than the defense costs for one lawsuit!!!
Now grab a bottle of your favorite Cab, sit in your favorite chair with some great jazz playing, and review how you are operating your business, what insurance you actually have and what it covers. Make that piece of paper that you purchased worth something, do it right!
Larry Cossio has been insuring the entertainment industry for over 30 years. Posted on March 26, 2012 Categories Events Articles