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Fun exposures: numerous liabilities and exposures exist inside fairs and festivals, and insurers offer various coverages if things go awry.


In 2008, a South Florida mother fractured her clavicle and ribs after a kiddie ride she and her son were on at a local fair tipped over and landed on top of her.

A few years earlier, a man was fatally shot and three others were wounded when a gunman opened fire at a community festival in New York. The festival, dubbed "Montbella Day," draws hundreds of event-goers annually and is packed with vendors, cookouts and basketball games.

What is supposed to be a fun-filled time at a local fair or festival can occasionally prove otherwise. Sometimes, unexpected dangers lurk inside the events.

But are organizers aware of potential exposures they may face when something goes awry?


A lot has changed around festival coverage over the years, said Linda Roth of Allied Specialty Insurance Inc.

"In the past, municipalities and venues often covered or did not require insurance for fairs, festivals or special events. Our litigious society has moved us in a direction of tighter controls and risk transfer. Whether due to budgetary constraints or risk management, the responsibility of insurance has shifted to the event coordinator."

But they don't always fully understand the risks associated with putting on an event, she said.

Those exposures run the gamut--everything from animals running loose into a crowd to patrons being thrown off a ride.

"The event coordinator is the party ultimately responsible for any losses to attendees of an event or to the venue itself due to the contractual language of a signed lease agreement or usage contract," Roth said. "The event coordinator and/or venue can become the primary target in a lawsuit."


The good news, said James Chippendale, president of CSI Insurance Group, is that while there are many moving parts to insuring a festival or fair, "organizers are fairly insulated from exposure if they contract their event properly and hire the right service support companies."

Thrill Seekers

Earlier this year, 13 people were injured, two of them seriously, when 60 mph wind gusts collapsed a food tent during the Florida State Fair in Tampa. About 50 people were huddled underneath the tent seeking shelter from the storm when it collapsed, according to news reports.

Fortunately for the organizers, liability fell on the tent owner.

But the Florida State Fair Authority wasn't so lucky a few years earlier when several children became ill with E. coli infections after coming in contact with animals at the State Fair's petting zoo. After claims against the petting zoo owner exceeded his insurance payouts, the State Fair Authority was left footing the rest of the $100,000 bill from its insurance coverage, said Carla Carman, who handles claims reporting for the Florida State Fair Authority.

What can event organizers do from an insurance standpoint to mitigate their risks?

The most common coverage for fair and festival organizers is commercial general liability policies, or spectator liability, said Robert Battaglia, assistant vice president of Philadelphia Insurance Cos.' commercial lines division. The policies offer broad-based protection for bodily injury or property damage to third parties, while also affording additional insured status to owners of premises, sponsors and co-promoters.

"The most important change of note that I have seen recently is that, more and more, insurance carriers are requiring that vendors/exhibitors and/or subcontractors provide event coordinators with certificates of insurance, which evidence adequate limits of liability and include additional insured status for the event coordinator and/or venue," said Roth. "Most common today is a required liability limit of $1 million per occurrence."

Vendors can either purchase a stand-alone general liability policy or pay premiums to belong to a purchasing group or master policy access "to make it easier to access insurance if they don't carry it on their own," said Lori Shaw, sports and leisure practice leader for Aon Entertainment Group.


That's where Tenant User Liability Insurance Protection policies can step in to help. Philadelphia Insurance Cos.' TULIP policy provides short-term liability insurance coverage for tenants of facilities or venues for events that cannot be covered under their current insurance or for which they have no other coverage.

Fair and Square

Many fair and festival organizers' coverages don't just end with general commercial liability protection.

More are adding event cancellation insurance to their list of coverages, said Chippendale of CSI. Last year, the Dallas-based carrier insured 500 festivals, from small community fairs to the three-day music festival Lollapalooza.

Event cancellation policies can include coverage for events such as fire, earthquake or other damage that cause a venue to be unusable; specific weather conditions such as floods, hurricanes, tornadoes, blizzards, lightning or other life-threatening weather conditions; unavoidable travel delays, equipment delays, mechanical breakdown or power failures; or national disasters, he said.


"Most people think you have to cancel an event to get paid," Chippendale added. "But the coverage is much broader than that. It will actually pay any additional costs incurred to keep a festival going or move it to another venue if necessary."

Recently, torrential rains nearly forced one of CSI's clients to cancel its festival to protect the safety of patrons and avoid damage to the venue, he said. "But the event cancellation carrier asked what it could do to keep the event going to avoid paying out millions of dollars. Instead, it paid only hundreds of thousands of dollars for hay, additional staff, pumps, and drainage to hold the festival."

Weather insurance also is piquing more organizers' interests. The policies protect any financial loss an insured may incur due to specific weather perils such as rain, snow, extreme temperatures, lightning or wind.

The policies can help offset decreased attendance and/or sales by insuring expenses and profits.

"Since weather insurance rating is specific to time, date, location and amount of insurance, every quote has a rate constructed just for that exposure," said Chippendale. "Rate base includes hourly statistics for every day for thousands of locations over many years. Even a one-hour shift in the time insured can result in a different rate."

Chippendale also suggests organizers seek non-owned and hired auto coverage for vehicles coming in and out of the festival grounds. "We run MVR reports and do behind-the-scenes risk management to ensure everyone representing the organizer is a safe, properly licensed driver. Organizers also should ensure they have proper coverage to protect the liability and physical damage to cover golf carts, rented cars, vans and employee vehicles used for business, along with coverage to protect them if suppliers' vehicles don't have adequate coverage."

Equipment coverage also needs to be an essential part of organizers' risk management strategies, he said.

"Nearly 80% of organizers don't realize contracts they're signing with supply companies name the organizer responsible for all equipment on the festival grounds. Organizers should either push coverage back onto stage and lighting companies or ensure they're protected with an inland marine/miscellaneous equipment floater."

Liquor Liability

One bone of contention for some carriers is when liquor is part of a fair or festival. Liquor liability policies are designed to cover losses when alcoholic beverages are distributed, sold or served.

"An organizer may be held liable if they cause or contribute to the intoxication of a person, accidentally furnish alcoholic beverages to a person under the legal drinking age or under the influence of alcohol, or don't abide any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages," said Chippendale.

Carriers differ in what liquor liability risks they're willing to write. "For us, that depends on the event itself and the controls that are in place," said Battaglia. "We are not a market for an event where the sole activity is alcohol-related, but we'll generally take on the risk for a family-type affair where alcohol is being served."

Chippendale said it's also important for organizers to purchase host liquor liability insurance when handing out "free alcohol to bands, family, friends and others."

Risky Business

"It's inevitable that something will go wrong during an event," said Chippendale. "It's a matter of organizers taking time to do proper risk management up-front to limit their exposures."

Not only does that insulate festival coordinators from risk, but it helps lower their insurance costs and creates a safer event that people will want to return to year after year, he added.

For instance, organizers with inflatables or moon bounces--which have contributed to numerous participant injuries over the years--should follow manufacturers' restrictions and limitations and hire trained operators to set up, operate and tear down the equipment, said Chris Rogers, Aon Entertainment Group's senior consultant and director of risk control.

He also suggests organizers post signs at petting zoos to educate event-goers about sanitation, provide hand sanitizer, and have a veterinarian on site to identify if animals are under distress or sick, to avoid contamination or E. coli infections.

As for ride safety, Chippendale said there's been "a groundswell by some states for better, strong inspections of the attractions."


And, he added, more fairs have been stepping up their security.

"We've seen numerous incidents where situations like lighting rigs have toppled onto bleachers and millions in equipment destroyed. That would have been an organizer's responsibility if they hadn't taken the time to do proper risk management up-front and ensure they had inland marine coverage or put back coverage on support service companies," Chippendale said.

Added Shaw, "Awareness and sophistication continue to grow in this industry segment. And, people are purchasing higher coverage limits than ever."

Fair and festival attendance also seems to be rising, said Battaglia. "The poor economy hasn't had an impact on special events."

In fact, he said he's seen an increase in the number of events over the past several years.

That's because even during a recession, "people still need to go out and be entertained," Chippendale said. "Instead, they cut back on material goods. People would rather spend $150 on a concert ticket than on a new shirt."

Key Points

* State of the Market: The economy hasn't slowed down the number of fairs and festivals being held.

* What's Happening: Event organizers are turning to various types of insurance coverage to protect against risks and exposures.

* What's to Come: Event cancellation and weather insurance are just some of the policies more organizers are looking to purchase.

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Title Annotation:Property/Casualty: Festival Insurance
Comment:Fun exposures: numerous liabilities and exposures exist inside fairs and festivals, and insurers offer various coverages if things go awry.(Property/Casualty: Festival Insurance)
Author:Chordas, Lori
Publication:Best's Review
Geographic Code:1USA
Date:Aug 1, 2010
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