Planning a special event can be exciting, but the unpredictable nature of holding a big event can also make the process stressful. Event cancellation insurance is a proactive way of providing additional protection if things do not go according to plan and the event must be postponed or cancelled due to circumstances beyond the host or honoree’s control, and it can be surprisingly affordable.
What Is Event Cancellation Insurance?
Event cancellation insurance is a type of policy that offers protection for cases where special events that have been planned in advance must be canceled or postponed because of unforeseen circumstances. These policies may cover lost costs if, for example, a weather emergency occurs or a vendor providing a service for the event fails to follow through.
Factors That Influence Event Cancellation Insurance Cost
According to some estimates, the average cost of this type of insurance is 90 cents per $100 of exposure to be insured, but this can vary dramatically. There are several factors that can influence the cost of event cancellation insurance.
Type And Size Of Event
For example, the type of the event and its size and duration will play a big role as the possibility of financial damages is significantly higher for larger and longer events compared to shorter and smaller affairs.
Location And Time Of Year
In addition, the location and time of year the event is taking place may also play a role. For example, an event that will be held outdoors in Florida during hurricane season carries a higher inherent risk than an indoor event in a part of the country with more predictable weather.
Timing Of Purchase
Event cancellation insurance coverage can typically be purchased anywhere from one year in advance to 15 days prior to the first day of the event. Buying insurance ahead of time can allow a policyholder to lock in better pricing and terms.
The expenses covered by event cancellation insurance vary among providers, and this is another factor that will influence the cost of event cancellation insurance. Outlined below are some of the major expenses that such policies may cover.
- Nonrefundable down payments on the venue, photographer, caterer, entertainment providers and other vendors
- Special attire and jewelry for the event, such as a wedding ring or dress that is damaged
- Gifts that are given or received as part of the event
- Counseling that may be needed as a result of undue distress over having to cancel the event
How Event Cancellation Insurance Works
Event cancellation insurance bears some similarity to travel insurance in the sense that policies offer reimbursement for financial losses if something related to the event goes awry, whether a vendor backs out at the last minute or nonrefundable deposits are lost due to a last-minute cancellation.
It is important to keep in mind that these policies will carry an outer coverage limit, which is a maximum amount of reimbursement a policyholder can expect to receive if the event must be postponed or cancelled. It may also be necessary to pay a deductible before the policy will pay the claim, much like the way homeowners or car insurance works.
These policies will not cover losses caused by bad marketing, a lack of interest in the event, or losses that arise from poor event planning.
The Types Of Events Cancellation Insurance May Cover
Here is a look at some of the event types that this type of insurance might cover.
- Anniversary parties
- Award ceremonies
- Baptisms and baby showers
- Bar or Bat mitzvahs
- Charity functions
- Company parties
- Conferences and conventions
- Corporate hospitality events
- Major sports events
- Motorsport events
- Product launches
- Retirement parties
- Trade shows and exhibitions
- Theater productions
What Causes Of Loss Does Event Cancellation Insurance Cover?
Although the specifics vary by provider, some of the triggers that will activate event cancellation insurance might include:
- A natural catastrophe, such as a major flood or earthquake
- A power failure affecting the venue
- Labor disputes or strike risks
- War, political unrest, terrorism, or sabotage
- The spread of communicable diseases (note that COVID-19 is currently excluded as it is considered a pre-existing condition)
- Damage to surrounding venues or infrastructure that impacts access to the event venue
- Damage to leased or rented venues
- Inability to erect facilities at the venue
- The non-appearance of vital speakers, personnel or performers due to illness, injury or death
- Weather-related perils such as heavy snow, wind or rain
- Military deployment if the guest of honor must postpone the event because of an unforeseen deployment or the withdrawal of a previously granted leave
Get In Touch With Our Special Event Insurance Professionals
If you are seeking protection for an upcoming event, reach out to our special event insurance brokers at MFE Insurance Brokerage. As an independent insurance brokerage with offices on both coasts of the United States, we offer policies from a broad range of carriers. This allows us to find you the most competitive price possible and tailor our offering to ensure it meets the needs of your special event.