Event cancelation insurance

Event cancelation insurance should be considered, especially for events that are dependent on the presence of certain persons, art works or musical intruments. If the soloist of a dance performance becomes sick, for example, and the planned tour cannot take place, the organizer may be faced with substantial costs and financial losses. Even if the events are canceled in time and there are no recourse claims, significant costs may have already been incurred for advertising and preparation.  

Example: 
A sculptor from Kaliningrad transports her works to an exhibition in Germany by car. The works are detained by customs and the organizing gallery must therefore delay the start of the exhibition. Who pays for the financial damages caused by the delay (e.g., equipment lease, catering)? 
 

In this case, the gallery's event cancelation insurance would cover the damages incurred, but only if the delay at customs could neither have been foreseen by the gallery nor by the artist.

Example: 
The exhibition venue has become unusable due to a burst pipe and the exhibition must be closed for one week. In addition, some works of art are damaged by the water.

The gallery's event cancelation policy covers the financial losses incurred as a result of the temporary closure of the exhibition.

However, the event cancelation insurance does not cover the damaged works of art, as they themselves are not included in the insurance policy. An all risks insurance policy taken out by the organizer or an art insurance policy taken out by the owner of the art works would cover the damage. 

An event cancelation policy protects against financial losses resulting from cancelation, termination, or change of date of an event. In this regard, it is important that the events occurred through no fault of the insured party. Costs insured include local expenditures for rent, catering, possible artists' fees, as well as advertising, and possibly the loss of profits, including sponsorship. There are different types of coverage and possible additions to the insurance coverage
Further possible coverage components include, for example, costs incurred as a result of cancelation, termination, or change of date of the event due to the illness, accident, or death of an artist or creative. 
Another possible addition is the “adverse weather clause”, which provides coverage if an event must be canceled due to weather conditions that represent a danger to life and limb of visitors and other participants. 

Notes:

  • Although event cancelation insurance policies are usually taken out by the organizer, event cancelations can also be insured against by individual artists and creatives. This rarely occurs in practice, however, since the costs are usually too high for an individual.
  • The events covered by an event cancelation insurance policy should be documented clearly in order to avoid disputes in the case of any claims. A specialized broker should be consulted as he/she will be liable for the damages if he/she offers incorrect advice.
  • The cancelation of events abroad is only covered if these were included at the time the application was submitted. The insurance premium is dependent on the existing risk.

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EVENT CANCELATION DUE TO NON-APPEARANCE

Example: 
An organizer arranges for a European tour for an independent dance company during which the dancers are paid per show. Several performances have to be canceled because one of the dancers has fallen seriously ill. 

The event cancelation insurance covers the financial damages incurred in relation to advertising and the loss of entrance fees – but only if the non-appearance of persons listed in the insurance policy was included as an additional risk. 
If, in addition, the artists' fees were also included in advance, these will be reimbursed as well. Depending on the insurance company, a deductible (usually 20% of the insured risk) applies, which must be paid by the artists themselves.

Variation:
The dancer is unable to appear in time for her performance because of a pilot strike.

The event cancelation insurance will cover the related costs if the insurance coverage has been supplemented by an “extended non-appearance” provision.

Variation:
The dancer cannot appear for the performance as she did not receive a visa.


The event cancelation insurance will also cover this case, provided that the insurance coverage has been supplemented by an “extended non-appearance” clause. However, this is only the case if the denial of the visa was unforeseeable (e.g., if the dancer has already obtained a visa for the same country without difficulty in the past).

Tip:

  • Artists, creatives and ensembles would do well to urge the organizer to take out event cancelation insurance – including coverage for the loss of artists' fees.

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EVENT CANCELATION DUE TO BAD/EXTREME WEATHER

Example: 
An open-air concert by an orchestra must be canceled due to a storm warning.

Since the weather poses a danger to life and limb of visitors and participants, the event cancelation insurance covers the damages incurred – but only if the contract includes the “adverse weather” clause.

Variation:
The open-air concert cannot take place because thick fog has arisen and is blocking the view of the stage.

This does not pose a danger to life and limb of visitors and participants. An event cancelation insurance policy would therefore only cover the costs incurred if weather risks such as fog, snow, and rain are included in the policy.

Tip:

  • Organizers can circumvent the need to conclude an event cancelation insurance policy including the “adverse weather” clause by offering an alternative date for the performance or concert. However, it should be noted that even a postponement of the date can lead to financial losses. If an alternative date is not feasible, an event cancelation insurance policy including an “adverse weather” clause is recommended. 
  • The days or weeks before the event should be included in the period of validity of the event cancelation insurance policy, because even if the weather is good on the day of the event, an event may have to be canceled because the venue cannot be used due to extreme weather beforehand. This eventuality is not covered unless an “adverse weather” clause has been included!

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