Whether you should purchase meeting cancellation insurance really depends upon how financially important the event is to your company.
“If you're holding a board of directors meeting for 20 people that won't generate income and is inexpensive to hold, there's no point,” says James M. Goldberg, an attorney with Washington, D.C. — based Goldberg & Associates. “But if it's a big annual event for 3,000 people that's a major source of revenue for the company, definitely think about insuring.”
The cost of a policy depends on variables such as where the meeting is being held, the budget, and the time of year. The minimum cost is $500, and that could spiral upward to $140,000, according to Eileen Hoffman, program manager of AON Insurance Services, Washington, D.C. The standard range of cost is generally 45 cents per $100 of exposure.
Meeting industry attorney John Foster of Foster, Jensen & Gulley, LLC, Atlanta, recommends doing a risk benefit analysis, looking at what you could lose versus the cost of the insurance. “If you have $100,000 in potential revenue/loss, and the insurance is $1,000, it's worth it.”
Because it is a smaller, more specialized market, cancellation insurance isn't standardized, as term life insurance is, for example, and it is written on a policy-by-policy basis. For instance, policies can cover multiple meetings or just one event.
The earlier in your planning you purchase cancellation insurance, the sooner it can start working for you. Hoffman says coverage begins as soon as premiums are paid and extends to five days after the event.The insurance can be purchased as close to one month prior to an event or as far out as three years in advance.
Insurance is also usually less expensive if it is purchased far in advance, adds Foster, because even though there's an infinite number of policies to be written, insurers take advantage of the theory of supply and demand — the closer the event is, the more desperate a group must be for coverage.