Music Festival Insurance for the summer of 2021, what you need to know!
Is it realistic to put 50,000 people in a field for 2021 or are promoters just being naive?
The organizers of the Boomtown Fair music festival have announced that this summer’s event will not be going ahead, after much thought and effort to make this year's event a reality!
The festival was due to take place in August 2021, at which point it is hoped that all coronavirus restrictions will be lifted, providing the lockdown roadmap goes according to plan with the UK Government and Scientific advisors!
Music festivals at best are very complex businesses with many potential pitfalls and liabilities, it is important that your insurance broker understands the scope and types of risks, appreciates what kind of insurance would cover those risks, and is familiar with the insurance marketplace and the policies available for your event.
How likely is it that other festivals and events will be able to take place this summer?
A trickle of music festival cancellations is poised to “become a flood”, with more than 9 out of 10 independent events indicating they may not go ahead.
Boomtown’s announcement on Tuesday morning (20th April) came days after the arts festival Shambala and the indie rock festival Barn on the Farm announced that they would not go ahead as well.
So, here’s what you need to know.
Have any other festivals been canceled?
Several other festivals that were due to take place this summer have also been canceled amid the ongoing uncertainty with the summer festival music calendar.
These include, Download, Glastonbury and British Summer Time in Hyde Park ALL canceled.
When will large events be allowed?
Under the government’s current lockdown roadmap, it is hoped that from the 17th of May large performances and sporting events in indoor venues will be able to take place with a capacity of 1,000 people, or half-full — whichever is the lower.
While in outdoor venues, a capacity of 4,000 people, or half-full, will be allowed at the moment under the current guidelines.
For example, according to the Association of Independent Festivals (AIF) The average cost of staging an independent music festival is £6m, with around 40% of payments, including non-refundable deposits, are due a month in advance.
I would argue the cost of £6m to stage an “independent music” festival, in my experience would be around £1m for year 1, which would grow from there.
For a NEW festival, you will need a minimum of £500K in a bank account from day 1 just to wash the event's face!
Even at that level, you will really think twice about it, and without the level of solid insurance cover, it is a huge risk — unless you have really deep pockets!
Deposit’s for a festival also apply and this activity happens all year round!
So, what insurance structure do you need for your music festival and why?
First of all work with an experienced insurance broker that understands your business and possible liabilities, that could occur.
Most insurance policies are purchased through insurance brokers that negotiate coverage and rates with the insurers on behalf of their insureds.
The insurance broker’s task is to canvas the marketplace and then provide the insured with information regarding which insurers provide the requested coverage, the premium rates that the insurers charge for the requested coverage, how the terms and exclusions of the insurers’ policies compare with one another, whether they could procure the requested coverage and, if so, whether there are any gaps in the policy/document.
Brokers also often provide their recommendations regarding which policy is best for you.
Although music festivals are very complex businesses with so, many potential liabilities and risks, it is important that your broker understands the scope and types of risks, appreciate what kind of insurance would cover those risks, and is familiar with the current insurance marketplace.
Next: Know who is an ‘insured’ under your insurance policies.
An “insured” is a person or entity that the insurer agrees to indemnify (and in liability policies, defend or pay the costs of defense against claims and/or suits) pursuant to the terms of the insurer’s policy.
Commonly, two types of insureds are identified in the policies.
1- A named insured is entitled to 100% of the benefits and coverage provided by the policy.
2- An additional insured is someone who is not the owner of the policy but who, under certain circumstances, may be entitled to some of the benefits and a certain amount of coverage under the policy
When a corporate entity is named insured, the policy may not clearly state whether subsidiaries and other affiliated corporate entities, as well as their employers, are insureds within the policy document.
Insureds and their brokers should be careful during the underwriting process to ensure that the identity of all covered entities is unambiguous and readily ascertainable from the insurance policies.
This is especially important in the “music festival business” were alter egos, portfolio companies, and subsidiary/parent corporate entities are involved in different aspects of the funding and management of the “music festival” but often aren’t recognized as insureds — so proceed with caution and have all your ducks in place!
Then: Understand the terms of your policy and know what is exactly excluded.
Pretty much all policies contain certain basic parts:
- Insuring agreement;
- The conditions;
- Exclusions; and
- The endorsements of the policy.
Before there is an insurance claim to make, an insured should read and understand these parts so that the insured knows what is and is not covered under the policy they have purchased.
As noted above, insureds in the music festival business purchase a variety of insurance policies that cover different risks for that event!
However, almost all corporate insureds will purchase a commercial general liability (CGL) policy.
A CGL policy is designed to provide the broadest coverage available to insureds for bodily injury, property damage, personal injury.
These policies also exclude certain risks that are especially important to those in the music festival business.
These exclusions include the following: the assault and battery exclusion; the liquor liability exclusion; expected or intended exclusion; and the participants in athletic or entertainment events exclusion.
An insured in the music festival business should review these exclusions and understand their potential limitations on coverage going forward, this is crucial.
Non-Appearance Insurance for KEY people.
Non-appearance insurance offers you and your client protection if a supplier, speaker, entertainer, or other essential staff member causes the event itself to be postponed, canceled, or abandoned.
Non-appearance insurance protects those with a financial interest in the appearance of any key person or persons.
These include entertainers, dignitaries, performers, artists, and public speakers at many types of events. It also includes them within any industry including commercial, sports, and entertainment.
Event organizers, promoters, managers, venues, and ticket agencies can also be covered.
Cover can include protection for your costs and expenses incurred or loss of profit or gross revenue following the non-appearance of the key personnel due to unforeseen circumstances such as:
- Unavoidable travel delays
- Death, Injury, Illness or Incapacity of the individual or group
- Venue unavailability due to damage
- Failure of television transmission and or video signal
Take time to Examine all policies for potential coverage.
Coverage for claims and suits may be found in more than one insurance policy or even within the coverages of a single policy.
When making a claim for coverage, insureds should carefully review all policy terms and conditions to maximize potential coverage and insureds should never make any assumptions about what is covered under their policies.
It is important that insureds in the music festival business examine all possible avenues of coverage and consult an insurance specialist or attorney if coverage is unclear.
Making a coverage claim.
Following a loss, an insured should pay close attention to all timing-related policy terms.
Typically, insureds have a stated amount of time to perform certain tasks under policies, such as providing notice, filing a proof of loss, or filing suit against the insurer.
For example, many policies require the insured to submit a notice of a loss as soon as practicable or within a specific number of days.
Failure to comply with these notice requirements can negatively impact coverage. Thus, insureds should make every effort to provide formal notice within the stated time.
First-party policies, such as event cancellation policies, will likely also require insurers to provide detailed proof of loss within a specific time frame.
The proof of loss is the documentation and description of the nature of the loss and the extent of losses suffered.
Insurers should gather copies of all canceled checks, relevant contracts, and invoices, and receipts pertaining to amounts paid in connection with the planning and organizing of the canceled or postponed event.
From my own experience it is paramount to have the right level of insurance cover for your event, this goes hand in hand with legal, accountant, and bank manager — but at this moment in time, the risk may be just too great to move forward with your event due to the global pandemic, until there is a more solid structure for insurance cover in place!
By Peter Moore