Recent Indiana Stage Collapse Highlights Importance of Insurance

Sadly, it was announced yesterday that the recent stage collapse has claimed its 7th victim.  Tragedies like this bring to light the unfortunate aspect of the insurance business.  I recently came across an article from Insurance News that highlighted the importance for adequate insurance.
The recent stage collapse at the Indiana State Fair is the latest in a number of weather-related incidents at outdoor festivals that highlight the need for insurance and risk management, the president of Doodson U.S. said.
"I deal with this day in and day out on a theoretical basis, but to actually see one happen -- it really brings home how real the risk is," said Paul Bassman, president of Doodson U.S., a broker that specializes in entertainment insurance.

An approaching storm brought strong wind gusts that knocked down a stage at the Indiana State Fair on Aug. 13, just before the group Sugarland was to perform, killing five people and injuring dozens. In July, a sudden burst of strong wind caused a stage at the Ottawa Bluesfest to collapse, just as the rock band Cheap Trick was finishing their show. Three people were injured. On Aug. 6, a lighting rig was blown over by strong wind at an outdoor music festival in Tulsa, Okla., damaging the equipment of the band Flaming Lips.
While Bassman couldn't speak to the Indiana State Fair incident directly, he said music festivals have a cancellation policy, which would come into play in an event like this. After the stage collapsed, the fair cancelled performances by Sugarland, Janet Jackson and Lady Antebellum.

"If artists are ready and willing to perform, they are typically owed their full guarantee under the contract," Bassman said.

State fairs typically pay more than clubs, arenas or theaters, so cancelling a show could "mean a significant loss" for the fair, Bassman said.

It is typical for a state fair to hire a production company to set up the concert. That production company acts as a general contractor hiring subcontractors, who provide, lights, sound and even security.

"Each one of the subcontractors should be required to sign a 'hold harmless' agreement, and also provide an additional insured certificate to protect [the organizers] from negligence," Bassman said.

General liability polices for staging companies typically offer up to $1 million per occurrence and $2 million in aggregate in cover, although an umbrella liability policy might offer additional coverage beyond that. The premium is generally based on the annual revenue of the staging company, and the policies are typically written on an annual basis.

The stage itself, which could be in the ballpark of $1 million or more, should be covered by an inland marine policy. Inland marine policies, if in place, would also cover the lighting and sound equipment. If a band used its equipment policy to replace damaged equipment, that insurer could possibly go after the production or stage company's insurer to be reimbursed, Bassman said.

In the case of a 2009 stage collapse at the Big Valley Jamboree in Alberta, Canada, governmental officials filed civil charges against three companies for providing an unsafe work environment for employees.
The incident killed a woman in the audience and injured dozens, including country singer Billy Currington, and a member of his band. The Alberta government cited three companies with a total of 33 alleged violations in connection with that incident. Premier Global Production Co. Inc., 1073732 Alberta Ltd., and Panhandle Productions Ltd. face charges, Alberta officials said. Premier Global Production Co. Inc. and Panhandle Productions Ltd. each face six counts of failing to ensure the health and safety of their workers on site, and six additional counts of failing to ensure the health and safety of other workers present. 1073732 Alberta Ltd., being a contractor directing the activities of Premier Global Production Co. Ltd., faces six counts of failing to ensure that the employer complied with the OHS Act.

In addition, Premier Global was accused of failing to ensure that equipment was able to withstand stresses imposed on it during its operation and to perform the function for which it is intended or designed; and failure to ensure rigging was strong enough.

"People say it was an unfortunate gust of wind, but it goes beyond a freak of nature," Barrie Harrison, a spokesman for Alberta Employment and Immigration Department said. "From our investigation, we have come to the conclusion that it was more than that."

Under Canadian law, the companies can fight the charges in court, and are expected to appear in court to answer the charges on Sept. 28. The maximum penalty for a first offense is $500,000 and six months in prison for each charge, according to the Alberta Employment and Immigration Department.
Harrison said no one has ever been jailed for this type of violation before.

(By Meg Green, senior associate editor)

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Source:	A.M. Best Company, Inc.