Sporting events provide a significant amount of revenue for colleges and universities. Many institutions buy event cancellation insurance to protect the revenue they generate from their home football games, basketball games and other high revenue sporting events.
While it is extremely unlikely that a game would be completely cancelled, a catastrophic event (wildfire, power outage, earthquake, act of terrorism, storm etc.) could cause a game to be postponed or relocated. For a relatively low cost premium, event cancellation insurance can protect lost revenue and/or additional expenses incurred to the postponement or relocation of a game.
In recent years there have been examples of specific events covered such as the dome collapse at the Minnesota Vikings game, a hurricane prior to LSU home game, and wildfires for a home San Diego Chargers game. As recently as two months ago, the University of Florida had to cancel a game due to serious thunderstorms.
With this type of coverage an institution will receive benefits up to the Limit of Insurance, for a loss that is a direct result of cancellation, abandonment, curtailment, postponement, or relocation of the insured event to which this insurance applies. The loss must be the direct result of an unexpected cause beyond your control, the control of the organizers of the insured event, the control of the attendees or exhibitors at the insured event, and the control of your financial supporters. The following are the claims that are most likely causes for a game to be cancelled or postponed.
Adverse Weather
Insurance carriers acknowledge that, in fact, “adverse weather” is the main cause for the cancellation of a sporting event and causes the most loss frequency. It very much depends on the time of year, the location and the type of sport being played at the institution.
Power Failure
While it is unlikely that a game would be completely cancelled due to a power outage, postponements do occur in stadiums and arenas that are newly constructed as well as those that have been around for a long time.
Venue Damage
Sporting event venues are prone to many of the perils associated with a home. Fires, building collapses and floods are some examples of potential hazards that can have an impact on the effectiveness of a venue.
In addition to the most likely reasons for a claim, causes for a loss to occur may also include:
- Damage to leased or rented venues
- Damage to surrounding venues or infrastructure resulting in lack of access
- Failure of public transport facilities or denial of access
- Natural catastrophe such as earthquake or flood
- Nonappearance of key individuals (teams, referees, or game officials)
- Inability to erect facilities at venue
- Disease outbreak (certain exclusions may apply)
- Strike risks
- Failure of TV broadcast
Event cancellation coverage can be structured in various ways. There are plans that are available where losses can be covered from the first dollar lost. In addition, there are different types of deductible options if you would like the lowest premium possible.
An institution should pay very close attention to their policies requirements regarding the submission of an event cancellation claim. Typically, a college or university is required to provide prompt notice upon the discovery of an event. The time frame to provide notice can be as short as 30 days. These types of events can obtain national media attention, but the institution should still provide a formal notification of the cancellation or postponement.
Timing is critical to the structure of the program and policies may include other timing requirements. In our experience, insurance carriers will also require that an institution provide a signed, sworn proof of loss within 30 days of the request by the insurer.