What Operators of Small Entertainment Venues Need to Know About Insurance

The COVID-19 pandemic led to venue closures and attendance caps. It hit small venues — generally, those with a capacity of up to 2,500 — particularly hard.

Cancellations of performances at music venues continued into 2022 as COVID-19 variations spread.¹ Concertgoers were initially reluctant to return to live events, with only half or less of ticketholders showing up to events at small independent venues. That can have a devastating effect on the business, as venue owners and operators rely on in-house sales of food, beverages and merchandise for a large portion of revenues.²

Small venues need comprehensive insurance and risk management regarding cyber security, venue safety and security, building and equipment protection, crowd management, employment liability, vendor contracts and more. But most insurers have limited enthusiasm in underwriting small entertainment venues and the cost of coverage has risen. For instance, it’s estimated that catastrophic weather events alone have driven up rates on property insurance for venues by 20% or more.³

Demonstrating insurability before getting a quote

Insurers offering coverage want venues to have detailed risk management and loss control policies, including emergency response plans. A comprehensive crisis response plan should outline response protocols for emergencies, including evacuation guidance for fires, active shooters and bomb threats.

Plans need to identify key team members and their responsibilities during emergencies and include communication strategies and safe areas for staff. (Venues can get crisis response templates from their brokers or insurance carriers.) 

Evaluate coverage needs

With limited appetite among insurers to write policies for small venues, owners and operators of these entertainment spaces need to take steps to mitigate exposures and understand their risks to identify the right coverage. Small venue owners should:

Find insurance that covers concert venue risk. Commercial general liability (CGL) policies should be tailored for small entertainment venues to prevent any gaps in coverage. CGL policies for bars or nightclubs may exclude coverage for assault, battery and forcible ejection, but policies provided by insurers with a dedicated venue program can potentially include some of these crucial coverages.

Make cyber coverage a priority. Entertainment-related businesses are a favorite target of cybercriminals. Small venues may think they are less vulnerable to network hacks than larger companies. But concert venues face the same risk of bad actors taking down their network, hacking into their ticketing system or holding information ransom.  

Evaluate insurance policies of vendors, contractors and artists. Venues need to conduct due diligence before every performance, ensuring all vendors, contractors and artists have proper coverage. While checking others’ certificates of insurance may sound simple, many venues may not do so, resulting in undue risk and claims against the venue.

HUB International’s sports and entertainment insurance experts are ready to guide you on all the risk considerations in putting on any type of event.

¹ Live For Live Music, “COVID-19 Concert Cancellation Tracker: Gauging How Long The Event Shutdown Will Last [Updates],” February 16, 2022.
² Digital Music News, “Indie Venues Face a Surging Concert No-Show Rate – 50% of Ticketholders Are Staying Home,” January 20, 2022.
³ Property/Casualty 360, “Insurance Outlook for Entertainment and Live Events in 2022,” December 20, 2021.