Event Contract Risk Transfer Clauses

Indemnification Provisions

Indemnification clauses are the primary contractual mechanism for transferring financial responsibility. In an event contract, the indemnification clause typically requires the event organizer to indemnify, defend, and hold harmless the venue from claims arising out of the event. The scope of this obligation varies significantly based on the form of indemnification used:

• Broad Form — The organizer indemnifies the venue for all claims, including those caused by the venue's own negligence. This is the most aggressive form of risk transfer and is unenforceable in many states under anti-indemnity statutes.
• Intermediate Form — The organizer indemnifies the venue for claims arising from the organizer's negligence and for claims involving shared negligence (joint fault), but not for claims caused solely by the venue's negligence. This is the most common form in commercial event contracts.
• Limited Form — The organizer indemnifies the venue only for claims caused solely by the organizer's negligence. This provides the narrowest risk transfer and is least favorable to the venue.

The duty to "defend" within the indemnification clause is particularly significant. A defense obligation requires the organizer to pay for the venue's legal defense costs from the outset of a claim, regardless of whether the claim is ultimately determined to be covered. This obligation typically exceeds the scope of the Additional Insured endorsement on the organizer's policy, which only provides a defense for claims arising from the named insured's operations.

Insurance Procurement Obligations

Separate from indemnification, event contracts contain insurance procurement clauses that obligate the organizer to obtain and maintain specific types and amounts of insurance. These clauses serve as the financial backstop for the indemnification obligation—ensuring the organizer has the resources to fulfill its indemnity promise.

A typical insurance procurement clause specifies:

• Minimum per-occurrence and aggregate liability limits
• Required coverage types (CGL, liquor liability, auto liability, workers' compensation)
• Additional Insured endorsement requirements with specific form numbers
• Primary and non-contributory designation
• Waiver of subrogation
• Certificate of Insurance delivery requirements and deadlines
• Minimum carrier financial strength rating (typically A.M. Best A- VII or better)

Aligning Insurance with Contractual Obligations

The most common risk transfer gap occurs when the indemnification obligation exceeds the scope of the insurance coverage. For example, a broad-form indemnification clause may require the organizer to cover claims caused by the venue's negligence, but the Additional Insured endorsement on the organizer's CGL policy only covers the venue for claims arising from the organizer's operations. This gap leaves the organizer personally liable for the venue's defense costs in claims caused by the venue's own negligence.

Organizers should work with their insurance broker and legal counsel to map each contractual obligation to a specific insurance coverage or endorsement. Where gaps exist, the organizer can either negotiate narrower contract language or procure additional coverage—such as contractual liability coverage or an owners and contractors protective (OCP) policy—to close the gap.