Event Insurance Policies Amidst Fyre Festival Disaster

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Event Insurance Policies Amidst Fyre Festival Disaster

For those on the internet, the Fyre Festival will probably serve as a dire warning for future online deals. With poor food and health conditions as well as attendees losing thousands of dollars upon investment, the event can only be described as an outright disaster. Although the festival organizer Billy McFarland has been arrested based on defrauding investors, this latest calamity has shined a light on insuring the festival industry, a business that already has many potential risks.

Ordinarily, significant events take on several different insurance policies based on what will be present and how risky a potential accident can be. For event insurance, policies include topics such as cancellation, terrorism coverage, general liability, umbrella policies, workers’ compensation, and business auto coverage as general protection. Depending on other details such as the location of the event or the type of activities there, festival owners may also opt for crime coverage, errors, and omissions policies, directors’ and officers’ policies, and film insurance. Unfortunately, while these seem like necessary or cautionary actions to take for a massive gathering under a company name, there are still dozens of factors that come into play.

Not every event ends with a Fyre-like catastrophe, but even the mildest nights can have their costs. On average, regular cancellation insurance can cost up to 1 to 1.5 percent of an event budget, and general liability is often paid based on the number of attendees. Furthermore, some festivals come with a higher number of attendees under intoxication or the influence of drugs, creating a greater possibility for an unfortunate accident. Based on these facts, insurance companies tend to be reluctant to offer policies to event hosts. Following the uproar over the Fyre Festival, that reluctance might only grow.

Despite this impact, however, there are still some methods to improve the process of event insurance for festival owners. One way is to follow up the coverage debate with a risk assessment to quell potential budding lawsuits. When it comes to festivals, insurance companies care more about who manages the event rather than who owns it, so the site manager or security director needs to follow through on all safety precautions to prove a company’s intentions. Still, some things cannot always be predicted such as the weather or natural accidents. The most one can do in these scenarios is to prepare for what can be prepared and handle the liabilities as they come.

The Fyre Festival debacle is most certainly not a regular occurrence, but it can be a warning on how to handle event insurance in the future. Most liability cases in festivals usually emerge from things outside a company’s control, but many, if not all, of the issues from the 2017 event were a result of underprepared efforts. Only by learning from this disaster can event owners ensure that it does not happen again. Hopefully, that can give some purpose to an otherwise disastrous festival.

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Melinda Martin

Account Executive

Melinda began her insurance career in 1985 with Alexander & Alexander where she received her Property & Casualty and Life & Health license. Since then she has worked at various agencies in the New Orleans area and in California as a senior account manager for Employee Benefit Plans.  While in California, she was also the Membership Director for the Burbank Chamber of Commerce. Melinda joined the AWS team in July of 2015.

Michael A. Seeling

Vice President

Graduated from the University of Louisiana at Lafayette with a B.A. in Insurance Risk Management and is a graduate of Archbishop Rummel High School in New Orleans. He joined AWS in October of 2008 and has been awarded the Patient Protection and Affordable Care Act Certification (PPACA). Additionally, he is working towards his Certified Insurance Counselor (CIC), Registered Health Underwriter (RHU), and Registered Employee Benefits Consultant (REBC) designations. He is also a member of the National Association of Health Underwriters (NAHU), National Association of Insurance Financial Advisors (NAIFA), and is an active member of the Fore!Kids foundation.