Just because it is unexpected doesn’t mean it can’t be planned for. Attorney Barbara Dunn O’Neal and Lance Ewing, executive vice president Global Risk Management & Client Services at Cotton Holdings Inc., walked attendees through contracts and insurance for emerging threats during a session at the Professional Convention Management Association’s Convening Leaders 2017.
Dunn O’Neal asks, “When was the last time you looked at the insurance contract for your association or organization?” You might be surprised at what is covered and what isn’t. Sit down with your legal team and insurance procurer to make sure your insurance is appropriate for your organization’s current activities and not just a boilerplate policy carried over from year to year.
Service and Supplier Insurance
If you are expecting other entities to have enough insurance to cover your losses, consider this hypothetical example: A donor gives you a diamond bracelet to raffle at your event in Mexico and FedEx loses it. Without additional insurance, outside the U.S., FedEx is liable for between $100 and $200 based on the weight of the package—meaning the reimbursement could potentially be more more if it lost a bag of flour.
Start by looking at your own insurance certificate and then ask all your vendors for certificates of insurance, and the policy if they will provide it. Get the legal name of your organization on the policy for your event so their insurance will cover you, and get the paperwork beforehand. It’s a lot harder to get if the vendor goes out of business.
Make sure that your vendor has sufficient insurance to cover every entity involved in the business. If your supplier is using subcontractor, will they indemnify you? Whose insurance are they using? Do they have insurance? Get paperwork for every step of the chain and have your legal team approve it.
When you are signing contracts for your event, here are some words that you and your legal department need to pay attention to.
Indemnification. This is when you transfer the risk to another party. E.g., you hire a bus company to transport your attendees and have them sign a contract that indemnifies you (holds you harmless) from a financial standpoint in the event of a bus crash. It is possible the bus company might ask for mutuality; they may want to be held harmless if, for example, one of your attendees gets drunk and attacks a driver. Consider the odds before agreeing.
Ewing says, “Every single vendor you touch; the convention center, decorator, whoever, needs to have [an indemnification] clause in. You may have to negotiate with them but it is always worth it.”
Defend. Don’t assume your supplier will defend you. You want the bus company to defend you in any lawsuit resulting from their crash, and you want this to be an affirmative duty from day one. The company may go bankrupt after a lawsuit making it impossible to claim back money your organization spent defending itself.
Sole. This is a tricky word when inserted in a contract. In the bus crash scenario, it might make it harder to prove the ground transportation company was solely responsible if other drivers were involved.
Updating Your Contracts and Insurance
Bus crashes and lost packages are not the only things you need to insure against, there are new threats to consider. What if you contract with a tech company for registration and hackers get all your attendees’ credit card numbers? Ewing says the average cost to notify each person whose information was exposed is $32. If you have, say, 4,000 attendees, that is a lot of money.
You can now get terrorism insurance in case there is an attack in your host city and you want to cancel, and you can also get coverage for health risks like Zika and Legionella, although there is currently no insurance for avian flu. Ewing suggests weighing the risk of these threats according to your destination. Des Moines, Iowa, might not be worth buying the extra coverage, but a large city like San Francisco might be.
To cancel for other reasons, you will need very specific language in your contracts, for instance, if your host destination passes legislation that you feel your organization cannot support, e.g., the controversial North Carolina transgender bathroom legislation. Check your employment practices liability insurance (EPLI) in case any of your employees are discriminated against in a host destination.
Note that some of your attendees may use organizations like Airbnb and Uber who contract out to individual suppliers whose insurance information can be almost impossible to track. While you might think you are doing your attendees a favor by including information on these companies in your official communications, this could look as though you are advocating for their use and make you liable in the event of a lawsuit.
The Drone Horror Story
Dunn O’Neal and Ewing left their audience with what they called a horror story for everyone except lawyers.
An attendee at an event in one hotel flew a drone to the hotel next door where a wedding was taking place. The father of the bride at the wedding threw a towel over the intrusive drone and in the process cut his fingers on the rotors. He was a surgeon at Johns Hopkins. Who got sued? Everyone. The exhibitor, the organization holding the event, both hotels, and even the injured surgeon because he destroyed personal property.
Dunn O’Neal suggests you keep in mind that, “The answer to the question ‘Can I get sued?’ is always: yes.”