Wedding venue insurance cost and types of policies
Congratulations, your customers have selected your wedding venue to celebrate their marriage. But, you need to realize that you need venue rental insurance and have questions of what kind, how much cover, and what you need to budget for it. You have come to the right place for all the answers.
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In this guide, we will cover everything you need to know about why you need venue rental insurance, what are the different kinds of insurance and what is the likely cost of insurance for event venues.
Why is venue insurance necessary?
Start off by considering what are the types of things that could actually go wrong at a celebratory event.
This is just a short list of the kinds of situations you can find yourself in, where something happens that leads to a claim against you as the owner of the venue.
- Guests at celebrations often spill drinks, resulting in wet and slippery floors. On top of that there can be some slightly intoxicated guests. People are on the go, moving between their tables, the bar, the food, the toilets and the dance floor. This gives rise to a scenario that can easily result in slips and falls, followed by claims and lawsuits.
- In a situation where a guest leaves your venue in an intoxicated state and either gets arrested for DUI or crashes the car, they could claim that you didn’t exercise due diligence when it came to the volume of drinks served
- If an argument breaks out in the venue, either between guests or between a guest and one of your employees, others sitting nearby could claim they were hurt by you or other staff going to assist
- If you offer a parking valet service, and the valet allows an intoxicated guest to drive-off, you could be held liable for negligence in the event of an accident.
Your customers have a dream of how the planned event will succeed. The last thing you want to worry about is for it to be ruined by an unexpected mishap.
So while you may think you have taken every possible step to ensure a happy outcome, there is still the possibility that something could go wrong.
Isn’t it better to have taken out insurance cover that will protect you from any potential damages? You are buying yourself peace of mind at a known and reasonable cost.
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When a bunch of people, large or small, young and old, are gathering in a confined area with the intention of moving about freely, and when there are food and drink to be served, then there are several things that could go wrong at any event:
- A guest could trip on a step and fall
- Guests could accidentally damage the venue or contents
- Unforeseen weather could close the roads around your venue and force you to postpone or cancel the event.
What are a wedding venue’s liabilities that need to be covered?
When it comes to insurance needs for all kinds of businesses, liability insurance is a necessity.
The term ‘venue liability’ is a collection of different risks that you have to assume when you are operating as a commercial enterprise offering your facilities for rental.
There are three insurance products that will protect your business against specific kinds of claims.
For venues, liabilities can include injuries that occur due to accidents anywhere on your premises, for example, if someone injures themselves by slipping and hurting themselves on a staircase at your wedding venue.
You may also need to cover injuries that were due to equipment malfunctions if you are providing any devices as part of your operations.
For example, say a coffee or hot drink dispenser that you supplied as part of the venue’s facilities bursts and sprays boiling water over nearby guests.
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General liability insurance covers:
- Personal injuries to a third party.
- Accidents can happen in your venue. Suppose they result in injuries to your clients or their guests. In that case, your business can be held responsible and is liable for any claims resulting.
- If the injured parties file a claim, your general liability policy steps in to take over the defense. It will make a settlement or face up for you in court to cover any claims for damages, medical expenses and without you having to pay anything.
- This kind of insurance is commonly called ‘trips and falls’ cover, because that describes the most basic kind of claim that you may have to face.
- Damage to third-party property.
- Suppose an accident causes damage to a third party’s property (clients and their guests). In that case, your venue business is liable for the value of the damages if the owners decide to file a claim.
- Legal defense.
- General liability insurance places the responsibility onto the insurance company on behalf of your business for defending you against a claim, which will cover legal fees, an agreed settlement or judgment in court, as well as any other legal expenses.
General liability insurance
General liability insurance is the most basic type of business insurance. It protects against claims for unforeseen events that cause injury or damages to third parties.
It is not covering your employees, whether they are full-time, part-time or casual employees. For any employee, you need to have Worker’s Compensation insurance.
Some general liability insurance policies have a ‘Liquor Liability Exclusion’ clause that stipulates a specific exclusion of liability for claims associated with liquor. You should discuss this with a qualified insurance agent or broker, and read your General Liability policy document carefully. If you don’t have liquor liability cover, then you may need to take out a separate policy, which we detail below.
Liquor liability insurance
If your customers have engaged you to serve alcohol at their event then you have additional risks. Facilities like wedding venues can face a liability claim in case of bodily injury, or even of death, caused by intoxication of any patrons.
Your venue if it is serving alcoholic beverages to individuals of legal drinking ages can require broad liability protection.
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Liquor liability insurance can also protect you from legal expenses arising from a fight on your premises, or if an intoxicated guest leaves the venue and gets involved in a car accident while driving back home.
Liquor liability insurance does not cover you against a claim made from serving alcohol to minors. It also does not cover claims in cases where you served alcohol to someone already under the influence of alcohol.”
Liquor liability insurance covers all the risks that are related to serving alcohol at the event. There are also special provisions that cover the bartenders if they are employed by you.
For example, you need cover in case a bartender unknowingly serves alcohol to a minor, or if a guest leaves the venue intoxicated and is picked up by police on the way home from the event.
There may already be a liquor liability endorsement to your General Liability policy, in which case you do not need separate cover, unless this is a specific requirement in your state or city.
For example, in Florida the laws require venues that serve liquor to carry direct liquor liability insurance coverage.
Liquor liability is a complex subject, and the rules and regulations vary from state to state, and even between individual cities in a state. You need to discuss this subject with qualified insurance agents or brokers before you make any choices in this specialized area of insurance.
Hired Auto Liability Insurance
Hired and non-owned auto liability insurance covers any rented or borrowed vehicles you supply to customers for an event that you do not already own.
It also covers injuries to people driving the vehicles, or any property damaged by the vehicle, that are related to the actual rental window period.
You need the protection from third-party liability claims in case of a collision with another vehicle or property damage caused by the driver. The special terms of insurance are for non-owned vehicle liability coverage.
Suppose your venue business rents a car and you let the customer drive it to or from your venue, with you as a passenger. In such an event, any liability insurance coverage provided by the rental company’s policy only covers injuries to other people, not to you.
When you lease or borrow a vehicle for your own business use, you need to make sure that you are covered with specific insurance. The owner will not be held liable under their own policy for any damages or injuries to third parties that may happen while you are using it.
The rental car company provides coverage only for the period of the agreement for any damage done while you are driving. As soon as you return the vehicle, you are no longer covered.
Like any business that owns or rents commercial property and has filled it up with special furniture and equipment, a wedding venue needs to insure the value of the buildings and contents with Commercial Property insurance.
This protects you against any losses and damages to physical assets caused by events like fire, smoke, weather storms, and also by external events like riots or vandalism.
Because of the special nature of wedding venues, you need to check carefully if there are any special exclusions for the particular risks relating to venues we listed above so that your claim doesn’t get rejected.
Equipment insurance is necessary for any wedding venue with a lot of money invested in specialized gear like lights, tables and chairs, music equipment and speakers, cameras and a whole range of other paraphernalia. Kitchens must be fitted out with plates, utensils, and materials.
You may also be renting additional equipment depending on the size of the party that you are welcoming. It can represent a significant liability, so you should insure against all the possible risks, including fire, water damage, malicious damage, theft etc.
Workers Compensation insurance.
In most states, you are obliged to carry worker’s compensation insurance if your business has more than a specified number of employees. The term “employee” is very broad.
It can mean anyone working for you at an event as a full-time, part-time or casual employee, or someone who is providing services as a contractor.
Worker’s compensation insurance covers you against any claims that arise if an employee becomes sick or experiences an injury directly as a result of their work.
Workers’ compensation legislation is different in each state. You can view the relevant rules here. It can also protect you from lawsuits in connection with an unsafe work environment as long as he is following OSHA requirements.
Failure to meet your state’s regulations in this regard can leave you exposed to fines, and penalties that could even include jail time. You could also have to pay the whole of the employee’s claim out of your bank account.
In some states, there are monopolies on worker’s compensation insurance and only some insurance companies are allowed to sell it.
Always talk to your insurance broker or agent to find out the regulations for the state where you are operating.
If you run a multi-state business, you must cover each state’s workers separately per that state’s rules.
Business interruption insurance
When you’re running your own wedding venue business, whether it’s a sideline or you have a registered LLC company, business interruption insurance is something you should consider to provide you with protection against income losses that occur due to unforeseen circumstances.
Business interruption insurance works to protect you against financial losses caused by events that are outside of your control.
There have been more and more such events lately, caused by extreme weather, floods and fires, resulting in many businesses’ forced closure due to external causes.
For example, if one or more events are booked for your venue in the immediate future, and you have already accepted payment and gone on to spend much of it in routine expenses like decoration, engaging outside services and all the other ancillary costs, if there is a flood in your area that ruins your building and you are forced to close for several weeks or months until you can restore the building.
In such a case, having business income insurance will start to cover your fixed business’ unavoidable expenses like rent, interest on your loans or mortgages, or wages due to employees who now cannot work. You could also recover the cost of having to operate on another venue.
Business income insurance can also make up for your lost profits that would otherwise have been earned if your venue had kept open as normal.
Business Owner’s Insurance
Many insurance companies offer a combination of business interruption, commercial property and General Liability cover, all bundled together in a Business Owner’s Policy (BOP). The only restriction on BOP insurance is that it is available only to LLC companies with fewer than 100 employees and annual sales of less than $5 million..
What about short-term insurance?
Temporary insurance could be an option if your venue only has occasional or seasonal demand.
For example, far more weddings take place in spring than in the winter, so it may make sense to close down the venue for a few months rather than sit around and wait for the demand to come back up.
Most insurance companies offer cover on an annual basis with premium charges based on their exposure over 12 months.
In contrast, you need more continuous business activity to justify full insurance cover for a year. However, don’t let that lead you to ignore all of the real risks in order to save a few dollars. The potential damages you face, if things go wrong, can be enough to ruin you.
However, some insurance companies do offer unique cover in policies where you nominate a specific span of time when you need to be covered.
You can take out cover for the specific span of weeks that you are open and you will be covered over that specific timeframe of activity. You will only be paying for the length of protection you need, and you will have lower costs but still have the needed risk cover.
The main feature of short-term insurance is that you pay for cover for a specific and defined period – for example for three months beginning on the specified date when your venue opens again.
How much does wedding venue insurance cost?
The price you pay for venue insurance depends on the size and value of your venue, as well as on the level of liability you will face.
It is advisable to make an estimate based on the largest likely size of the guest list, because the more people you are allowing onto your site, the greater is the possibility that someone, somewhere, could suffer an accident and sue.
Another factor to take into account is the frequency of events. If you are seeing high levels of demand, then there could be times when there are people coming in and going out for different events, and this raises risks.
In general, wedding venue insurance is a specialized subject. You would do best to protect yourself and your business by discussing all your needs with experienced brokers or agents who are familiar with your location and your type of business.
Based on our own experience we can provide very general guidelines:
|Policy||Level of cover||Likely cost per year|
|General liability||$10 million per year, maximum $1 million single claim||$800 – $1300|
|Liquor liability||$100,000 full year, $10,000 single claim, $500 deductible||$650 – $1000|
|Business Owner’s Insurance||$10 million general liability + calculated commercial property cover||$650 – $800 & $0.30 – $0.45 per $100 IV|
|Commercial property||Calculated on insurable value (IV)||$0.35 – $0.50 per $100 IV|
|Equipment||Per $50,000 value||$120 – $250|
|Un-owned auto||Based on time/value||$20 – $30 per day|
Should you get a damage waiver from a customer?
Basically, this helps cover any losses or damage done to any item that the customer may have brought onto the site.
If it is part of the celebration for them to be bringing their own equipment, such as audio gear, religious paraphernalia, fancy dresses and so on, onto the venue, then you could be facing the risk that if there is damage or left, they may hold you responsible.
For example, say the customers come into the venue a few hours before the wedding and store the clothing that the bride and groom are going to change into after the actual wedding ceremony, which is being held elsewhere.
If something happens to spoil the expensive and irreplaceable clothes, or there’s a break-in and it’s stolen, then the customers could sue you both for the value of the items and also for emotional damages because their whole plan for the celebrations has now been ruined.
Taking the chance that you have enough insurance to cover all of this open-ended risk may not be a good idea.
You can get your customers to sign a damages waiver that specifies that you are not liable for any damage or loss arising from anything that the customer brings onto your premises.
How to get a certificate of insurance for your venue?
Many customers will ask for a certificate of insurance before booking their event, so you’ll need a certificate of insurance to prove that your venue is covered.
Insurance companies should supply a certificate of insurance when you receive your policy.