Edgy religious meeting planners who are looking to hedge their bets might think about cancellation insurance. But they should think twice if they expect it to cover some of the current challenges to meetings.
“The biggest misunderstanding about cancellation insurance is that it only covers cancellations due to causes beyond the parties' control,” says Tyra Hilliard, CMP, a Washington, D.C.-based lawyer. “If you have to cancel because of low pickup or because your executive director wants to hold a meeting somewhere else, you're not covered. If there's a tornado or the airlines are grounded, you're probably covered.”
Before September 11, 2001, policies didn't even mention acts of terror as causes for a claim. But the huge losses related to that day resulted in many carriers excluding the effect of terrorism on an event's viability. However, federal legislation signed in late 2002 requires property and casualty providers to offer full terrorism coverage.
That coverage comes with a hefty price tag. Eileen Hoffman, program manager for AON Association Services in Washington, D.C., says that the carrier she represents offers three types of terrorist coverage for meetings: the option to decline terrorist coverage completely; reimbursement for 50 percent of losses with a limit of $250,000; and full coverage.
For an event to qualify, the terrorist attack must have occurred within 25 miles of the venue no more than a month before the event.
Full coverage “is expensive,” Hoffman acknowledges. Most planners opt for a less-comprehensive policy.
Planners shouldn't expect a bailout simply because of a war or the outbreak of a virus such as SARS. War is excluded across the board, unless it causes a disruption in airline service, for instance, and attendees can't reach the destination. In mid-April, insurers started specifically excluding SARS coverage because they don't know enough about the disease and its risks. “Fear of travel is not covered,” Hoffman says. Neither isbecause of lack of interest in a program.
Pricing a policy doesn't follow any simple rule of thumb. Hoffman says carriers evaluate factors such as location, time of year, and budget or revenue projection for the event.
Expected losses are probably the most important consideration in deciding if a policy makes sense.
“A $5,000 premium is too much if the organization stands to lose only $1,500 if the event isn't held,” Hilliard says. “On the other hand, if an organization counts on the event's revenue, a $5,000 premium might not seem so high.”
Event Cancellation Insurance
Aon Association Services
(800) 424-8830 ext. 333
Contact: Eileen Hoffman
Seabury & Smith
(800) 323-2106, ext. 34271
Contact: Paulette Norman
Rust Insurance Agency Inc.
Contact: Michelle Holmes or Laura Johnson