The hidden risks of organising small events – BIBA advice for consumers

Society is becoming increasingly litigious and consequently these days the organisers of even the smallest events, such as pancake races, are faced with the threat of lawsuits, warns the British Insurance Brokers’ Association (BIBA). In these advice notes we explain how to simplify the process of obtaining adequate insurance for events, no matter what the scale.

When it comes to insuring an event even for an experienced organiser can find it a daunting prospect. This is because when organising both licensed and non-licensed events, not all events will attract the same risk rating structure. But they can be broadly divided into three risk categories: low, medium and high.

Low Risk Events

Low risk level event tend to include fêtes, garden parties, jumble sales, car boot sales, antique fairs, functions, conferences, small concerts, dance demonstrations, local theatre groups and weddings.

For these events usually only basic information is required in order to apply for an insurance quotation. Nevertheless, a common stumbling block for organisers is the setting of the indemnity limit for public liability. Although this limit should normally be decided by the local authority or venue managers, in some cases it may be necessary to leave the insurance broker to use their knowledge of similar events in order to set a figure of one, two or five million pounds (or even higher if necessary).

The other main rating factor is the number of attendees expected. For example, a minimum level of first aid and marshalling support must be organised in respect of these numbers. And in certain circumstances the local authority, police and emergency services’ will need to grant their permission for the event to take place. Once these factors have been established and normal underwriting criteria are in place, including a check that no previous claims have been made, the quotation can be given. This can start from as little as £75 for an event lasting up to four days.

Although this may appear to be a lengthy process, once a satisfactory proposal form – usually only asking up to a dozen questions – is received, cover can be confirmed in writing and the policy promptly issued. Often this can be arranged almost instantly.

Medium Risk Events

Organisers should also be aware that the boundary between low and medium risk events is often a blurry one. Any of the events previously categorised here as low risk can easily fall into the medium category instead, should alcohol be served. It is then deemed necessary to increase the level of vigilance in order to stop unauthorised drink and drugs being brought in to the event.

Pancake races, street festivals, fun runs, bikeathons, sponsored walks, buskers, street traders, charity collections, child performances, karaoke and concerts with up to 5000 attendees also fall into the medium risk category.

To obtain cover for this type of event it is prudent to draw up a checklist of all aspects of safety and associated activities. The advantage of doing this is that it may show the insurer that in fact the event need only be awarded a low risk rating. At least seven working days should be allowed to arrange this level of insurance.

High Risk Events

All sporting events , nightclubs, hypnotism, large music/rock concerts, firework displays, jousting events , battle enactments and alike, bouncy castles, inflatable bungee jumps etc, circus, marches, cinemas and theatres, fun fairs, raves, motorised vehicles, mechanical rides (including bucking broncos etc) are classed as high risk.

This type of risk must meet stringent underwriting criteria. Before seeking cover it is essential that full health and safety plans are drawn up, to include staff as well as attendees. Using a safety consultant is of foremost importance, and is a service often provided by the local authority licensing officers. Due to the complexity of the risk, organisers should allow at least 14 days to obtain a quotation.

While public liability is the major concern when setting up an event, organisers of any type of event should be reminded that additional cover may also be required. For example, all staff, whether volunteers, casual or fully employed, are legally deemed to be employees and, therefore, employers’ liability cover must be arranged.

In addition, organisers should be aware that there are optional forms of cover, such as equipment, cancellation/abandonment and pluvious over - a class of insurance that compensates the organiser in the event of adverse weather. Obviously the organiser must always weigh up the operating costs against the premiums required, but should a mishap or even a catastrophe occur, the costs of the claim could be devastating if adequate insurance has not been purchased.

Words of advice:

• To soften the blow of premiums, even for public liability insurance, think about offering sponsorships. Asking several local businesses, including the insurance broker, to pay for advertising in the show program or a simple advertising notice, could contribute significantly to covering the premium costs. Approaching potential sponsors is made even easier if the event is a fundraiser or charitable event.

• Organisers must be careful that they, and all those involved, avoid making defamatory statements when promoting goods or services at the event. For example, at a fête, a cake stall claiming that Brenda’s scones are better than another local company’s could be considered grounds for a lawsuit.

• Costs will be lower if you purchase an annual policy rather than a specific one for an individual event. For example, a policy covering up to 10 small low risk events with fewer than 500 attendees may only cost double the price of a single similar event. Social groups and clubs should also consider annual liability, as any venue used will undoubtedly require cover again in the future, and event cover can be incorporated.

• Be aware that all contractors, including minor ones, must prove that that they have their own cover before they are allowed to commence work. Failing to do so will result in the organiser being liable for any incident that the contractor causes. Moreover, if the contractor provides a service that falls into a higher risk category than the policy held by the organiser, without written proof of their cover the main policy could be deemed void.

It is clear that while public events should be encouraged and remain fun for all concerned, the consequences of inadequate insurance can be dire. The British Insurance Brokers’ Association’s members offer expertise in a full range of insurance products. BIBA can provide advice about which broker to approach if an organiser is in any doubt as to whom to speak to. To speak with one of our members, please contact our customer service team on 020 7623 9043 or visit ‘Find a Broker’ area.