If you own or run a business, sponsoring and participating in special events are great ways to support your local community. Good intentions won’t protect you from liability, however, if someone gets hurt or suffers property damage during a street festival, art show, outdoor concert or other event you or your employees may be involved with.
You don’t need to shy away from these events, but be mindful of the risks beforehand so you can take the necessary steps to prepare. The right insurance coverage is essential.
Standard commercial liability
In general, a standard commercial liability policy will cover most injuries sustained by someone on your premises during an event related to your business. This includes sponsorship of a community or charity function to promote your company. Be sure to check with your insurance professional about any coverage limitations on your policy.
If your company and/or employees decide to participate in an event sponsored by another organization, you may be asked to provide proof of liability insurance. You should also find out if the event organizer has his own insurance and if that policy will be primary coverage (i.e., respond first) for any claim that arises from a particular hazard.
There are numerous specific hazards to be mindful of when sponsoring or participating in a special event.
- Food hazards are among the most common threats. Preparing and serving food, especially when organized by volunteers, can be risky. Grills, heating elements and deep fryers should be shielded from attendees. Fuel and any electric wiring should be protected to prevent exposure to crowds. Food should be safely prepared and stored to prevent it from spoiling or causing illness.
- Alcoholic beverages offered free of charge at a company function may be covered under your general liability policy, but the sale of alcohol may be excluded. This means you should not volunteer to serve alcoholic beverages unless you or an event sponsor have acquired the necessary liquor liability coverage.
- Injuries incurred during organized athletic activities, races or stunt events are typically excluded under your general liability policy. If you sponsor a sports tournament or team, you may be expected to cover treatment costs for both major and minor injuries.
- Attractions such as zip lines, water sports and skeet shooting can be considered quite hazardous. These fundraising events may be excluded from coverage by name or by virtue of creating a “material” increase in the level of risk.
Property and workers’ compensation
In addition to the hazards mentioned above, there are two other sources of risk that are easy to overlook.
1. The first is risk to the property of others under your care or control. Be aware of two exclusions under your general liability policy that may have an impact on your event.
- General liability exclusion: If you host a fundraising event indoors, you may be taking temporary possession of coats, umbrellas or personal property. If any are stolen or damaged, you may be liable.
- Garage keepers liability exclusion: This exclusion may mean you are on the hook for damages to vehicles while they are under your care, custody, or control; an actual “garage” is not necessary for this exclusion to apply. For example, you may arrange to have cars parked in an open field during your event. If an engine fire creates an explosion that damages all the cars around it, you may be responsible for that damage.
2. The second risk is potential exposure to injury. If you assign an employee to work a special event and they are injured while performing their duties, you may be liable for a workers’ comp claim.
Don’t let fear stop you
Before your company sponsors or participates in a special event:
- Contact Consolidated Insurance + Risk Management to determine what’s covered and what’s not. Ask about risks you should be aware of and how to avoid or manage them.
- Carefully consider sponsoring or participating in athletic competitions and high-risk activities.
- Be alert when assuming responsibility for others’ property.
With a healthy dose of caution and common sense, you and your employees can participate confidently in special events that benefit both your business and your community.