How to insure a non-profit organization's events

Events are how many non-profits raise money and meet their community: a spring gala in a hotel ballroom, a charity run through city streets, a festival in a park, a golf tournament, a holiday market in a church hall. Each one creates liability the organisation does not face on an ordinary day. Hundreds of people attend. Alcohol may be served or sold. Volunteers do physical work. The venue and the city want to be protected by the organisation's insurance, and vendors bring their own risks onto the site.

The organisation's annual general liability policy is the starting point, but it may not respond to all of that, and the venue contract often asks for things the policy does not contain. This guide covers how to prepare the insurance for an event, for non-profits in Arizona, Nevada, Utah and Idaho.

What to gather

Start collecting these when the event is booked, not the week before.

• The venue rental agreement or facility use permit, with its insurance and indemnity clauses marked.
• The city or county special event permit application, which may have its own insurance requirements for street closures or park use.
• A description of every activity: food, alcohol served or sold, amusement rides, inflatables, races, auctions, raffles, fireworks.
• The expected attendance, the number of volunteers and staff, and whether any participants are minors.
• A list of vendors, caterers, entertainers and equipment rental companies.
• The organisation's current general liability, directors and officers, auto, umbrella and any workers compensation declarations pages.

Step one: start with the annual policy

Ask the organisation's carrier or agent whether the annual general liability policy covers the event as described. A non-profit whose policy lists fundraising events as part of its operations may have coverage for a gala or a bake sale already. Some policies exclude or limit specific activities, such as athletic events, amusement devices, fireworks, or events above a certain attendance, and some require notice of each special event. Check the per occurrence and aggregate limits against the venue's requirements.

Where the annual policy does not cover the event, or the organisation has no annual policy, a special event liability policy can be bought for a single event or a short series. It is written for the dates and activities of the event and usually satisfies a venue's certificate request quickly.

Step two: read the venue contract before signing

Venue contracts nearly always ask the organisation to carry general liability at stated limits, to name the venue and often its owner and management company as additional insureds, and to sign an indemnity or hold harmless clause. Some ask for primary and noncontributory wording, a waiver of subrogation, liquor liability, or workers compensation. Compare every requirement against the policy before signing, since additional insured status and waivers must be added by endorsement and some carriers need time to add them.

Read the indemnity clause closely. A broad clause may require the organisation to cover the venue's own negligence, which the general liability policy may only partly insure through its contractual liability coverage. Where a clause is broader than the policy, ask the venue to narrow it, or confirm with the carrier what it will cover before the contract is signed.

Step three: handle alcohol separately

Alcohol changes the liability picture more than any other feature of an event. If the organisation serves alcohol for free, host liquor liability, which is usually included in general liability, may respond to claims from a guest who drinks and injures someone. If the organisation sells alcohol, charges admission that includes drinks, or holds a liquor licence or special event permit, the general liability policy's liquor exclusion generally applies, and separate liquor liability coverage is needed. Dram shop laws, which decide when a server can be liable for an intoxicated guest's actions, differ across Arizona, Nevada, Utah and Idaho, and state liquor authorities set their own rules for non-profit special event permits.

A licensed caterer or bartending service that serves the alcohol under its own licence should carry its own liquor liability and name the organisation and the venue as additional insureds. Ask for the certificate and the endorsement before the event.

Step four: cover volunteers, vendors and the event itself

The remaining gaps sit around the people and property involved.

• Volunteer accident coverage, which pays medical costs for volunteers injured while working, since the organisation's general liability does not cover its own volunteers' injuries and workers compensation may not either.
• Workers compensation for any paid staff working the event, as required in each state.
• Certificates from every vendor, caterer, entertainer and rental company showing their own general liability, with the organisation named as additional insured where the risk warrants it.
• Participant waivers for athletic events, reviewed by counsel, which reduce but do not remove liability.
• Abuse and molestation coverage if the event involves children and volunteers, since it is often excluded from general liability.
• Hired and non-owned auto liability if volunteers run errands in their own cars, and inland marine or equipment coverage for rented tents, sound systems and staging.
• Event cancellation insurance, for deposits and costs lost if weather or a venue problem cancels the event.

Common mistakes

Non-profit events run into these gaps most often.

• Signing a venue contract before checking it against the policy.
• Selling drink tickets under host liquor liability.
• Assuming volunteers' injuries are covered by general liability.
• Letting vendors onto the site without certificates.
• Hosting a children's activity with abuse and molestation excluded.
• Forgetting to notify the carrier of an event the policy requires notice of.

A worked example

Suppose a Tucson food bank plans a charity run and a beer garden in a city park, with 2,000 runners, 150 volunteers and $20 drink tickets. The city permit requires $1,000,000 of general liability and $1,000,000 of liquor liability with the city as additional insured. The food bank's annual policy covers fundraising events but excludes athletic events and selling alcohol. It buys a special event policy covering the run for $900, and the licensed brewery pouring the beer provides its own liquor liability with the city and the food bank as additional insureds. It adds volunteer accident coverage for $300. A volunteer twists a knee setting up barricades and has $4,000 of medical bills, which the volunteer accident policy pays, and no claim arises from the beer garden. The figures are hypothetical; the special event policy and the brewery's certificate are what satisfied the city.

How to use this

When an event is booked, send us the venue contract, permit requirements and a description of the event. We will check them against the organisation's current policies, tell you where gaps are, and arrange special event, liquor liability or volunteer accident coverage with the carriers we represent in Arizona, Nevada, Utah and Idaho. If your annual policy already covers the event as planned, we will confirm that and issue the certificate.