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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 you millions of dollars’ worth of coverage for you event, for premiums so low that you can’t help but get suspicious.

Well as we all know, when something SOUNDS too good to be true – it often, IS too good to be true.

Now, that’s not to say that those companies aren’t legitimate. On the contrary, the vast majority of professionals in the insurance industry are entirely ethical – but when you’re operating online and dealing with consumers that aren’t well-versed in any particular type of niche coverage, an automated system isn’t always the best interface to serve their needs while providing the assurance that buying insurance has traditionally provided.

Accessibility to actual human oversight throughout the application process and being able to ask questions about the quote prior to binding coverage, is a significant value because when the average consumer is faced with an unfamiliar task such as obtaining Special Event Liability insurance for an upcoming event, it is important that they are able to fully understand every aspect of their coverage, including why the cheapest policy isn’t always the best.

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 or less, those will more often than not, come with deductibles ranging from $1000 to $2500. Deductibles are traditionally a great way of managing premium levels by means of sharing the risk but when you’re dealing with premiums that are only a couple of hundred dollars, a $1,000 deductible can seem more like a trap than a useful tool.

With those policies, you would pay your premium amount and then, if there is a General Liability claim you would also have to pay that deductible amount in order for your claim to be honored. However, in many cases, the damages are less than the deductible amount and so the Insured has to pay them out of pocket.

Consider for instance, a scenario wherein you are required to obtain Special Event Liability coverage with industry-standard limits of $1m/$2m, for an upcoming event: You quickly find that this coverage can be acquired from an online website, for under $100. Sounds great, right?

Upon completion of your due diligence, you realize that this coverage comes with a $1,000 deductible. You decide to bind this coverage anyway because 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 damages to the facility that amount to $850.

You are now faced with the hard reality that you will now have to pay this cost out of your own pocket because of your policy’s $1,000 deductible – since it wouldn’t make any sense at all, for you to pay $1,000 just so the Carrier will cover your $850 loss!

You will have learned the hard way, that it would have been much wiser and more cost-effective to have paid the additional $100 to bind the $200 policy, and avoided that $1,000 deductible altogether.

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