Inside, Outside:

A look at a little-known aspect of event insurance that can make a huge difference

Byline: by Scott Carroll, EVP & Program Director, Take 1 Insurance

There is a memorable moment in the classic film The Graduate, when, at a party, one of his father’s friends leans close to Dustin Hoffman’s character, the hapless Benjamin Braddock, and sums up a possible way forward for him in a single, almost whispered word: “Plastics.”

I can’t offer anything so comprehensive in as a short a space, but I can mention two words that can make a huge difference in how insurance coverage performs in the very, very fluid landscape of live events: “inside and outside defense.”

It’s not a football strategy, but it is a concept that’s been placed front and center on the table as a result of any number of recent and highly visible catastrophic incidents at live events, like music concerts and festivals. Simply put, “outside defense” means that the costs of litigating liability claims are separate and apart from the cost of court-awarded damages, and generally borne by the insurance carrier. “Inside defense” means that those litigation costs will be applied against the overall limits of the policy, thereby reducing the amount available to pay settlements.

Outside defense has been the norm in the industry, but that may change as the number and magnitude of claims arising from live-event situations continues to increase. Take the Route 91 Harvest Festival in Las Vegas last year, which left 58 people dead and 851 injured and has generated hundreds of lawsuits, including class-action suits that involve the promoter, the hotel and its ownership group. The sheer cost of litigating these claims will be massive, even before we reach the point at which settlements need to be paid out.

Things Are Changing

This could prove to be an inflection point in the live-event insurance industry, and insurance carriers may start looking closely at how they structure these policies, or, at least, where legally they may be able to change to defense outside.  So, their insureds — promoters, vendors, and everyone else involved in producing the event — as well as their insurance agents may need to consider this too, when deciding which insurance carrier to go with for their coverage.  It also underscores the fact that even the smallest vendors in the production will need to make sure their insurance is as comprehensive as possible, and address where their defense costs will be coming from. 

The world is changing quickly. Event-production professionals need to understand that while their focus may be on technology or logistics, they all share the same need to not only secure liability protection for themselves, but to understand the nature — and the limits — of that protection.


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