Insurance 101

Guest Feature: Taylor Shomaker

Do you get frustrated with Insurance and believe it is a necessary evil? Me too, that’s why I dove in head first to pull back the curtain and see what it really looks like without the clouds of confusion and misconceptions. Let me share a little bit about why a festival director moved to risk management and what I learned.

Insurance can be a pain in the ass - why do we need it?

You have worked so hard to create your dream company, and now comes the discussion about protecting your dream. Insurance can certainly seem daunting and overwhelming, but that can be overcome by finding an agent that knows your business because they have been in your shoes before. Before jumping to risk management I was a concert and festival promoter for more than 12 years, and the experience I gained in that role gives me the boots-on-the-ground knowledge to make your insurance program easy, efficient, and comprehensive. My goal is to be a true risk advisor partner you can trust and rely on to take the headache of insurance away.

• Have you ever been staring at a weather report for your festival or event and been stressed about incoming storms? When I was a festival director, I used to spend hours looking at weather reports and talking to meteorologists. In the festivals I managed we had evacuations, cancellations, near misses, and everything in between. How you react and knowing that your insurance policies in place are strong and comprehensive allows you to make decisions more freely and with less stress.

• We had to cancel a festival in the Southeast the 3rd day of load-in because a hurricane was working its way inland and there was no way to build the site and have the show. I immediately knew we were going to be okay because I had worked so hard on the front end to put a good cancellation policy in place.

• We have had evacuations at a moments notice and again because I had worked hard before the festival ever took place to get good policies in place, I was able to make quick decisions and move fast to make sure everyone was safe and not be concerned with the financial impact of the evacuation

• I know it is not the fun or the sexy part of the job but it is imperative for the financial strength and longevity of your festival or company. I always found it to be a frustrating experience so I moved into my current role to make it easier, more efficient, and have a little fun with it.

How is insurance generally priced? (by event size, location, history, etc.)

The insurance rating basis is dependent on the type of company. For instance, a site operations company is based on gross sales per year, a festival is based on total attendance and genre of music, festival cancellation insurance can be based on time of year, geographic location, and other factors. History is always a consistent factor with all types of companies.

What are the different types of insurance available to events and briefly what do they cover: General Liability, Cancellation, Inland Marine, etc.

You should discuss all policy options with your risk advisor to determine what it looks like to provide full and comprehensive coverage for your company’s risk profile. It is imperative that each company thinks of their insurance program as an asset for your company and not an annoyance or nuisance. Trusting your risk advisor to understand what your company does, how you do it, and help you look around the corner and into the future to make sure you are fully protected.

• General Liability - These policies cover your liability to others. For festivals it would cover things like fan injury, property damage., etc. If you’ve ever had a crowd surfer get injured, this is an example of where your policy could respond.

• Cancellation - These policies are put in place to cover festival expenses and/or profit in the event of a cancellation due to things such as weather, civil unrest, and before COVID there was an option to include pandemic coverage. Pandemic coverage is extremely hard to find now and there is no coverage for COVID related cancellations

• Example: Each policy is unique and has different triggers for coverage, but things such as tornadoes, wind storms, heavy rains, and lighting can be covered claims under the right policy.

• Non-Appearance - These policies cover the non-appearance of an artist or performer due to things such as weather, travel delays, and numerous other reasons

• Business Auto - These policies provide coverage for your company owned autos as well as your Hired and Non-Owned Autos.

• Inland Marine - This provides coverage for the equipment that you own. For instance, for a sound and light company we would implement this policy to cover all of their audio and light equipment.

• Workers Comp - This is to protect you and your employees against workplace injuries.

• Crime - This provides protection for any employee theft.

• Professional Liability - This will provide coverage for any errors or omissions in the course of your work responsibilities. If you were to make a mistake on something and it caused damage or personal injury then this is when your Professional Liability coverage could react and provide coverage

• Directors & Officers - This provides coverages for a board of directors operating a company and protects them against any errors or omissions during their management process

• Employment Practices Liability - This provides coverage for your company regarding the employment process and protects against things such as wrongful termination, discrimination, sexual harassment, etc...

• Umbrella - An umbrella policy layers over your policies to increase your limits of liability. This can be in any amount that you want them to be, and you should discuss the limit you need with your risk advisor.

When are policies typically put in place? What is required to do that?

You should always be talking to your trusted risk advisor at least 6 to 9 months before your event or renewal date. Cancellation policies can not be put in place less than 14 days from the start of the event. Now, with that said we all know that not every company or festival is the same so timelines might have to be altered in specific scenarios. In order to put your program in place your risk advisor will need to get a full understanding of what you do and how you do it. You will need to provide basic company information as well as a full description of your roles and responsibilities. Depending on which other policies you are interested in putting in place for your company there will be other information and applications to fill out to give the underwriters a well-rounded understanding of your company.

What is the most common type of claim (separate from COVID-related)? How are claims submitted and evaluated?

No two claims are the same but some of the most common claims are property damage, personal injury, and cancellation. The most important thing to remember when dealing with a claim is to complete an incident report as soon as the claim happens. All companies should work with their agent to have an incident reporting procedure in place to ensure that all necessary information is collected for a timely submission and resolution of the claim. One step that I execute with all my clients is a full risk profile to include implementing plans and procedures for something just like this.

How can we mitigate risk? What are actionable items that contractors / producers can do, like golf cart policies, etc. What effect does risk mitigation have on policies?

While I was a concert and festival producer and promoter I worked hard to create and implement many different risk mitigation procedures. Things such as employee safety manuals, golf cart policies, heavy equipment policies, emergency response plans, severe weather matrices, severe weather action plans, incident reporting procedures, and emergency checklists are all very important to help mitigate each company’s risk. Having the proper procedures in place will help make your company more appealing to carriers. These documents are crucial to making sure your festival or event is presented as a safe and well-run festival. If you don’t have these in place or don’t know where to start then talk with your insurance broker and risk advisor to help you create these for your specific event.

When something happens that warrants a claim, what should be done right away, what info should be collected? Is there anything that most people don't do, but should?

This is where it is imperative to have an incident report template and an incident report procedure. Having both of these in place will make sure you collect all the important and necessary information for an efficient and quick submission and resolution to your claim. Unfortunately, most people do not have these templates and procedures in place so the incident occurs and they do not collect all the information needed.

It seems that most policies now specifically have COVID exclusions. Are there other changes to policies as a result of COVID?

We are still unraveling all the effects of COVID to the insurance industry. Currently what we know is that COVID will be excluded from all policies for the foreseeable future. I would say that the most important thing that will result from COVID losses is the insurance industry is going to move to a “Hard Market”, which means that it will be more challenging and more expensive to get the needed policies that protect you the right way. Because of this it is even more important to partner with a risk advisor that truly understands your business and start the process further in advance. When you partner with an agent that understands they have the ability to get you to the right markets to get the necessary coverage(s) and do it for the best premium possible.

What is the biggest misconception about insurance?

I think the biggest misconception about insurance is that it is frustrating and only needed to meet contractual requirements. Working with someone you trust and who understands your industry is the most important element of finding your risk advisor. When you find that risk advisor then your insurance becomes an asset to help you be more efficient, safer, and protects you and your company through the good times and the bad times.

Action items for folks that want to learn more?

If you are interested in learning more please reach out to me via email at tshomaker@martinzerfoss.com. I would be happy to share my experience and discuss your needs.

Taylor's Outlook of 2021 Festival Season:

In my opinion when festivals and live events start to play again it is going to be a fast and furious run to the finish line for each one. There will be more festivals in a small window of time than we have ever seen before. What I hope for in this time is that each festival takes an intentional view as to the team they put in place to execute their event. In my eyes now more than ever is the time to do it the right way and ensure the safety of all fans, artists, and staff at each festival. The press will not tell stories about all the well-run and amazing festivals, it will highlight the one tragic or poorly-run festival, and that will in turn drag our industry down. Put your teams in place now and make sure you are talking to your Insurance Agent every step of the way. We’re all in this together and our industry will come back bigger and better on the other side.