The Effect of Deductibles on Special Event Liability
When shopping online for Special Event Liability Insurance,you’ll find no shortage of websites run by automated systems, offering youmillions of dollars’ worth of coverage for you event, for premiums so low thatyou can’t help but get suspicious.
Well as we all know, when something SOUNDS too good to betrue – it often, IS too good to be true.
Now, that’s not to say that those companies aren’tlegitimate. On the contrary, the vast majority of professionals in theinsurance industry are entirely ethical – but when you’re operating online and dealingwith consumers that aren’t well-versed in any particular type of nichecoverage, an automated system isn’t always the best interface to serve theirneeds while providing the assurance that buying insurance has traditionallyprovided.
Accessibility to actual human oversight throughout the applicationprocess and being able to ask questions about the quote prior to bindingcoverage, is a significant value because when the average consumer is facedwith an unfamiliar task such as obtaining Special Event Liability insurance foran upcoming event, it is important that they are able to fully understand everyaspect of their coverage, including why the cheapest policy isn’t always thebest.
With so many expenditures associated with event planning, it’s easily understandable that many who are seeking special event liability insurance coverage can be easily lured into a binding situation, because of an enticingly low premium – completely unaware of the potential pitfalls associated with the coverage.
While you may find policies online with premiums of $100 orless, those will more often than not, come with deductibles ranging from $1000to $2500. Deductibles are traditionally a great way of managing premium levelsby means of sharing the risk but when you’re dealing with premiums that areonly a couple of hundred dollars, a $1,000 deductible can seem more like a trapthan a useful tool.
With those policies, you would pay your premium amount andthen, if there is a General Liability claim you would also have to pay thatdeductible amount in order for your claim to be honored. However, in manycases, the damages are less than the deductible amount and so the Insured hasto pay them out of pocket.
Consider for instance, a scenario wherein you are requiredto obtain Special Event Liability coverage with industry-standard limits of$1m/$2m, for an upcoming event: You quickly find that this coverage can beacquired from an online website, for under $100. Sounds great, right?
Upon completion of your due diligence, you realize that thiscoverage comes with a $1,000 deductible. You decide to bind this coverage anywaybecause most of the other quotes you got all seem to have this same deductible,and the one that doesn’t have a deductible is almost twice as expensive, at$200.
After the event, the venue manager notifies you of damagesto the facility that amount to $850.
You are now faced with the hard reality that you will now haveto pay this cost out of your own pocket because of your policy’s $1,000deductible – since it wouldn’t make any sense at all, for you to pay $1,000just so the Carrier will cover your $850 loss!
You will have learned the hard way, that it would have beenmuch wiser and more cost-effective to have paid the additional $100 to bind the$200 policy, and avoided that $1,000 deductible altogether.