Event cancellation insurance is a type of policy that provides an event’s organizers with coverage for the expenses or loss of revenue from an event that is canceled, interrupted, postponed or relocated because of a covered peril defined in the policy.
Typical Covered Perils Under Event Cancellation Insurance
Event cancellation policies do not always address a uniform set of event disruptions. The following perils represent some of the most commonly covered perils, but event planners should ask their insurance broker directly whether the specific perils they are most concerned about will be covered.
- Adverse weather, such as a major ice or snow storm, tornado or hurricane
- Natural catastrophes such as fires, floods and earthquakes
- Acts of terrorism
- Labor disputes, as long as they do not involve the insured or their employees
- Non-appearance of performers, teams or other key individuals scheduled to appear at the event
- A failure to vacate the venue of the event
- Other perils that may be covered by a special request
Perils That Are Not Usually Covered
It is essential for event planners to examine the provisions in their policy carefully to ensure they align with their risk appetite and protection needs. Certain perils are not typically covered in event cancellation policies, such as:
- Lack of support or interest in the event
- War or military action
- Pollution and contamination
- Nuclear, chemical or biological hazards
- Pre-existing or threatened circumstances
- Financial insolvency
- A fear of travel
Will Event Cancellation Insurance Apply To A Same-Day Cancellation?
In many cases, as long as a covered peril is the cause of the event’s cancellation, insurance will provide coverage regardless of when the event is canceled; this includes same-day cancellations. Many of the perils that are covered are impossible to predict even within a few days of the event, which is why this insurance can be so valuable.
However, it is a good idea for event planners to check with their insurance provider to make sure that the particular policy they purchase does not have any limitations on when the event must be canceled in order to qualify for coverage if they have any concerns that a same-day cancellation may prove necessary.
Because event cancellation insurance does cover a same-day cancellation in certain circumstances, there are limits on how close to the event it can be purchased. For example, there are some policies that can only be purchased up to 15 days prior to the date of the event.
How To Make A Same-Day Event Cancellation Claim
When a covered event needs to be canceled, the event’s organizers should contact their insurance provider immediately. They will usually be required to fill out a form supplying information about the circumstances surrounding the cancellation, which will then be assessed by a claim representative, who may ask for further information and documentation.
It is important not to wait too long after the loss because there may be a limit on the number of days after the initial loss in which a claim can be filed. Both the initial claim notice of the loss and the proof of loss may need to be submitted within a specific time period from the date of the cancellation.
Policyholders should also ensure they follow any instructions specified in their policy regarding the manner of notice, such as to whom it must be addressed, whether it must be submitted in writing, and what information must be provided in the initial contact.
To obtain full insurance reimbursement, policyholders must keep an accurate record of all their losses to support their claim, including copies of invoices, refunds, receipts, contracts, canceled checks, and other correspondence related to the event and its cancellation.
If the event in question is postponed rather than canceled, the insurer will typically pay the net revenue of the original event according to the policy. However, the final claims settlement will not normally be made until the rescheduled event takes place as the proceeds of the postponed event may reduce the overall loss for the insurer.
Keep in mind that the event in question must be canceled for a reason beyond the organizer’s control. A scheduling conflict, low ticket sales and other motivations for the cancellation are not covered. However, if the cancellation is due to something that cannot be controlled, such as a keynote speaker suddenly dropping out at the very last minute, the host city declaring a local disaster or the FAA grounding flights into the city where the event is being held, it will typically be covered.
The amount that will be reimbursed will depend on the details of the policy, but the insured party will typically be required to pay a deductible before coverage kicks in.
Get In Touch With Our Special Event Insurance Professionals
If you are planning an event, it is never too early to reach out to the special event insurance professionals at MFE Insurance Brokerage to discuss your coverage options and ensure you have the right protection in place.