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5 Steps To Easier Insurance Buying
by Joy Jackson
If
you find buying insurance coverage for your event or business difficult and
frustrating, this article is for you.
One of the first things you learn as an event organizer is the need to satisfy
venue owners, regulatory bodies and bankers. The right type, and amount, of
insurance coverage is one detail you cannot avoid. This makes insurance an
essential product that coincidently, also ensures your business’ financial
survival in a world full of opportunity and risk.
While researching my new book “Special Events are Special Risks”, I was struck
by the incredible number of details that event organizers must supervise to
ensure a successful event. To manage such a large number of items truly does
require ‘organizing’. Each detail can become a problem, leading to an insurable
claim, if not handled properly.
There are three basic categories of risk:
1. Risk of injury or property damage to anyone at the event, including
attendees, volunteers and contracted workers,
2. Financial risks include theft of goods or money at the event, while being
taken to a place for safe deposit and loss of sponsors or clients due to
problems, and
3. Damage to your firm’s reputation or that of your sponsor.
Make insurance buying simpler with just 5 easy steps.
When buying insurance, discuss with your insurance representative all 3 risk
types and ask for his/her suggestions for the ‘most correct’ insurance policies
for your operations. If you have been in business for several years, you already
have insurance in place. When was the last time you reviewed the coverage to
decide if it was the ‘best’ for your operations? If it hasn’t been reviewed in 2
years or more – now is the time!
Choosing the right types of insurance policies is similar to choosing the right
jigsaw puzzle pieces. Placing what looks like the right piece in the wrong
location will leave you with gaps. Buying the wrong types, or too few, insurance
policies can leave critical gaps in insurance coverage. Conversely, buying
inappropriate coverage will cost money that could have been better used to
promote and run your event.
Step 1
– Choose the right insurance advisor. This may be an insurance broker or agent.
(A broker deals with many insurers; an agent deals with only one.) Under Ontario
law, an insurance broker represents you, the client – not the insurance company.
You need a broker who understands business insurance. The nice man or woman who
provides your car and house insurance may not have sufficient expertise to
assess the risks inherent in your business. They also may not have business
contacts with commercial insurers to obtain quotations for your business.
Step 2
– Take sufficient time to educate your insurance broker. Be sure that they
understand your business. Explain the type(s) of events you run. Are they held
indoors, in the open air or a combination of both? Do you run sports events just
for fun – or are they serious competitions? Your events may be a combination of
entertainment and education or coaching. Will there be food and (especially
alcoholic) beverages provided? Specific details of the event(s) you run affect
the degree of risk inherent in the activities. Your broker is your
representative to the insurer. The better the broker knows and understands your
business, the better their chance of getting you the most appropriate coverage
and pricing.
Step 3
– Maintain good documentation. Do you have available documents that describe the
length of time you have been running events? When your business is new, be
prepared to explain the previous event experience of yourself and your workers.
If there have been accidental losses (e.g. attendee injuries, damage to
property, thefts) be prepared to provide a record of them.
Even if the losses were not insured, insurers consider them an important record
of that event. In particular, describe what you learned from that incident and
what actions you have taken to prevent it from recurring. Also, financial
records, copies of supplier contracts and venue lease agreements are all
valuable sources of information for insurers and brokers.
Step 4
– Practice “risk management”. There is a huge variety of risks that face event
holders. This is one reason why insurers are so cautious about insuring them.
Virtually every event brings with it different challenges, in part because of
event organizers desire to make their event unique, interesting and attractive
to their target audience. In advance, analyze your event activities and be ready
to identify the most likely things to go wrong and explain how you are treating
these hazards.
Generally speaking, risk management is the process of identifying what can go
wrong, prioritizing those problems and deciding what you can do about them. For
example, establish policies and procedures to prevent incidents and minimize the
consequences of those instances that do occur. Ensure that your broker and
insurer are informed of these risk reduction activities. Using a risk
management process makes you appear more conscientious and a better risk.
Step 5
– Protect your reputation. It takes years to establish a good reputation. It
only takes 1 serious incident to destroy it. Insurance brokers and underwriters
pay attention to news, just as everyone else does. Negative reports on your
event can impact your ability to obtain and keep appropriate insurance coverage
at a reasonable price.
Buying business insurance can be a simple process. However, the complexity and
variety of event operations and the specialized nature of business insurance
means that a buyer can easily make poor choices – especially if price is the
only factor being used. The best value in an insurance purchase is not always
the cheapest. By using these five steps you can obtain (and keep in place)
insurance that brings you, your sponsors, regulatory bodies and bankers the
greatest degree of financial comfort.
Joy Jackson. FCIP, FRMCunnart Associates
First appeared it
"SUCCESS WITH ONTARIO SPRING EDITION 2006"
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