Liability insurance (known more officially as Commercial General Business Liability) protects a company's assets and pays for obligations like medical expenses that are incurred if someone gets hurt on THEIR property, or perhaps property damage caused by you or your employees. The fact is, if the DJ causes the accident, or is perceived to be negligent, the venue WILL get sued. Yes, you read correctly: The plaintiff’s attorney, by default, will pursue litigation against the DJ (whether that person is a professional, amateur, friend or family member) AND the "event holder,” in this case the venue and the bride and groom. Every DJ needs to know the current trends with event holders and how liability insurance is viewed.
1. More and more venues across the country are demanding a copy of the certificate of insurance prior to being allowed to set up. Sometimes, upon arrival -- sometimes months in advance.
Venues want to verify that coverage is bound, and in force. Some venues include a formal "vetting" process that includes a review of references, current business licenses, auto insurance, workman’s comp and more. Several venues are now verifying coverage to ensure it is in effect, often 30+ days prior to an event. Some now also call the agent listed on the policy to verify current coverage before each event. (In my research, I’ve actually had venues tell me that some knucklehead DJs get a liability policy as required, submit the certificate of insurance in advance so it appears it’s in effect, then immediately cancel the policy to get a refund from the insurance provider, but later only to discover there is no actual liability coverage for the event. Talk about risky!)
According to event insurance leader R.V. Nuccio, "The actual frequency is high for damages with slips and falls because those are very, very common. Claims often quickly get into the millions of dollars. An average bodily injury claim, including pain and suffering is about $300K. Add in typical defense costs of about $250K, and it adds up to over a half million dollars rather quickly. What people don't know, is that their personal assets are on the line (before settlement).”
A good DJ liability policy should cover defense costs.
Both R.V. Nuccio, and Tim Beckett (owner of John C. Beckett Insurance Agency) provided numerous examples of actual incidents:
"It's a bride's special day,” Beckett said. “She's probably already bank-rupted her parents, and expensed a lot of money for her wedding day. The last thing she wants to do is deal with potential damages from an injury to one of her guests, or face a lawsuit.” Furthermore, according to Nuccio, "A DJ properly insured, will have their policy come into place first, not the venue's. This helps the venue protect the cost of their insurance premium since premiums are based on frequency of damages, and extent of damages. Many claims that happen quickly means they can become uninsurable, or face a potentially very high premium. They are seeking to protect their assets and limit their liability. That’s why a good DJ liability policy is a must!"
2. Many people believe that having a friend, family member, or amateur DJ perform will prevent liability claims, because their homeowners insurance will cover them, or a “hold harmless” agreement is enough.
The sad thing is that a lot of clients, friends, family and even many DJs think they have coverage through their homeowners insurance. Even many homeowners insurance agents tell their clients they have coverage, only for the client to find out they don’t have coverage when facing a lawsuit. Coverage through a homeowner's policy is a misnomer because there is more than likely, a "business pursuit exclusion" written into the homeown-ers policy. Translation: It excludes anything that would pertain to a business, or be used for any business purposes, unless the agent specifically adds it to the policy.
What about venues who permit friends, family or amateur DJs, or worse yet, provide them (the client) the gear to DJ their own event? Here’s where it gets messy real quick, so check your own state’s insurance laws.
Here are some basic terms first:
Certificate holder: Shows that person / business has insurance effective on a specific date
Additionally insured: Means that venue has defense coverage under the DJ’s policy.
Let’s say something happens, and a friend, family member or amateur DJ is using their own or rented gear. Even then, venues could easily face a suit under “contribu-tory or comparative negligence.” This means that the venue may also be liable for an incident even if they didn’t perform or provide the equipment, because they didn’t verify the liability insurance coverage of the DJ (or person acting as DJ, band or live musicians) beforehand.
The threat for litigation is greater (and a clear double standard) if a venue is allowing a friend, family member or non-professional DJ to perform who did not meet their own internal required standards of insurance as required from professional DJs. (Note: each state views contributory and comparative negli-gence differently but this is a huge, hot topic right now.)
What happens if the venue provides equipment, or rents it for a fee for the client, a friend, family member or amateur DJ to use and then there’s an incident?
Based on my research, it turns out that the venue faces greater liability because they provided the gear, and in most cases, the venue or employee acting on behalf of the venue, did the set up. Therefore, they have responsibility for “due diligence” to ensure it’s done correctly, including set up and operation, in a safe manner. Beyond an injury, that leads to: Who’s liable for damage to equipment? What about loss of use? (something breaks and now the venue can’t use it).
What about hold harmless agreements? Do they work?
Maybe, maybe not. It depends on what it says, and the extent of damages. How much risk you are willing to take on? The fact is, a hold harmless agreement can say anything, but you must be willing to bear the defense costs (remember that $250K typical defense expense mentioned above?)
There is a reason touring bands and acts have ridiculous "requirements" in their performance contracts. Bands, such as Van Halen, don't really “need” red MM's, but rather, it enforces the notion of the venue paying attention to detail. If they read and act on these details, then hopefully all safety and set up protocols will be followed carefully too. (Remember the tragic fire that happened at a Great White concert in 2003? In one night, 100 people died and 200 were injured because safety protocols were missed.)
3. Education is the key. Clients and venues are much more savvy and aware now.
Even if you are wiling to take on the risk of a $300K settlement and $250K in defense costs, event holders (venues and clients) are not. They are saying “show me the policy” even at initial con-sultations before booking a DJ. They are hearing more and more stories, seeing more cases on court TV shows, and reading online articles about lawsuits after an event. As a result, many venues are starting to insists that their clients only hire a professional DJ (with a current and verified business license; vetted referenc-es and proof of being fully insured) only to mitigate their risk. They are simply saying “No!” to friends, family and amateur DJs -- period!
Becket put in bluntly: “This professionalism shows that they have their s#&t together. That means they can competently take care of the most important day of your life too.”