The procrastinator - broker love affair

So, what is a once off event? “Oh, the Springboks beating the All Blacks in Auckland” one of my colleagues replied.

“No, no.” I anxiously steered the conversation, wanting to get back onto the topic at hand. “I meant, what constitutes a once off event in terms of the general liability policy?”

Usually getting too much information is not the problem when people are insuring once off events. In fact, there is often no information simply because people assume that their ordinary liability policy would automatically cover them for these special events.

Anyone reading the policy wording would be forgiven for thinking that these events are not excluded. Unfortunately life and liability insurance in particular is seldom that simple.

The important thing to remember is that much of the policy’s cover revolves around the business description. So when an underwriter sees a business description such as bakery she is thinking about our daily bread. The underwriter would not normally be picturing a bustling carnival where little Jimmy is trying to navigate a quad bike while negotiating dripping custard and other sticky scenarios.

Disaster strikes

So what happens if little Jimmy, momentarily distracted by dripping custard and other stickiness, crashes his quad-bike into some innocent bystanders who, up until the collision, where also distracted by custard and other stickiness?

The bakery would quickly find itself being sued for those injuries; the argument being that the bakery, in its capacity as the event organiser, should have provided better protection against quad-bike collisions. Would such a claim be paid? A problem could arise in terms of non-disclosure. The underwriter might argue that they were lead to believe they were covering muffins and doughnuts; not quad-bikes.

Set clear boundaries

It would be good practice for underwriters to endorse their policy schedules so that clear boundaries are set. Including something like: There is no cover for events hosted by the insured away from the insured’s premises will not solve all the problems, but it would go a long way to avoiding client disappointment. This assumes that clients actually read the policy schedule.

While on the topic of disappointment, it is worth asking: what happens when the event is cancelled for some reason beyond control - such as foul weather? The event organisers may, for example, have contracted the services of rock stars at great expense. As you can imagine, these unsung heroes are going to expect payment regardless of whether the event proceeds or not.

There are specialist underwriters who offer this cover, provided that it is arranged a few weeks before the event. Underwriters are usually loathe to write these risks if the client, having adopted a wait and see approach, decides to hastily arrange cover as the rain clouds are forming.

A special connection

As underwriters we often see a special connection between brokers and their clients.

Clients just love to arrange little surprises for their brokers. These surprises could take many forms such as flowers, thank you cards and leaving their insurance needs for the last minute. Just this week I was asked to prepare an urgent quote. In this case the quote really was urgent because the event had already started.

Finally, no discussion about once off event insurance is complete without touching on premium payment. This is another area where clients are keen to adopt a wait and see approach. We have found that collecting the premium after the event is actually very easy; but only if there has been a loss.

It is all too easy to make assumptions about the scope of cover provided by liability policies. Brokers and clients would do well to discuss these matters with their underwriters and ask them to explain how their policy would respond to a specific loss situation.