While the US grapples with wildfires in Southern California, which have already caused an estimated $20 billion in insured losses, Canada is no stranger to devastating weather events and faces similar challenges within its own borders. Last summer, British Columbia and Alberta endured significant wildfire destruction, while storms wreaked havoc.
In June, day three of the sold-out Escapade Music Festival at Lansdowne Park in Ottawa was cancelled due to safety concerns following a heavy downpour. Later that summer, Edmonton's Heritage Festival was forced to cancel its final day of festivities after heavy rain significantly damaged pavilion tents. Additionally, the Critics' Choice Awards, originally slated to take place last weekend in Santa Monica, has been postponed until later this month due to the ongoing wildfires.
With nat cat events becoming more devastating, it’s increasingly important for brokers to stress the value of event cancellation insurance to sports and entertainment clients. As Mike McDermott, (pictured), head of sports, entertainment and contingency at HDI Global Specialty SE – Canada, noted, this coverage acts as a crucial safety net that can help mitigate substantial financial losses.
As McDermott explained, event cancellation insurance is typically written on a broad-form basis, meaning it “covers any circumstance except those specifically excluded.”
Typical exclusions may include riots, civil commotion, or losses related to uninsured vendors. However, policies generally provide coverage for venue damage or inaccessibility, non-performing key personnel, and adverse weather events like storms, hurricanes, and lightning.
Still, it’s crucial for brokers to note that certain weather-related events, such as floods or wildfires, may not be automatically covered and could require additional endorsements or separate coverage. Brokers should ensure they are fully aware of their clients' policies and advise them on the need for further coverage if these specific risks are a concern.
“Event insurance is not purchased as much as it should be. We’ve seen several outdoor events that were cancelled without insurance in the past, and unfortunately, they’re not returning this year,” McDermott explained.
“All events and festivals are required to buy liability insurance, which covers slip-and-fall accidents, bodily injury, and property damage. However, they’re not required to purchase event cancellation insurance,” McDermott said. “But the problem is, if an event doesn't go ahead, these organizers have sunk, hundreds of thousands, if not millions, of dollars into these events.”
Accordingly, having the right coverage for unexpected weather events is essential for fostering community resilience, ensuring that local sports and entertainment businesses can continue to operate and thrive.
McDermott shared valuable tips that brokers can pass along to clients to ensure events proceed smoothly. In addition to securing comprehensive cancellation coverage, clients can take several proactive measures to minimize disruptions in the event of adverse weather:
Learn from peer experiences: By sharing experiences and strategies, organizers can gain valuable insights into effective risk management and contingency planning. As McDermott emphasized, “What have your respective peers learned from past cancellations or past challenges that they've had, both from an insurance perspective, as well as from a non-insurance perspective?"