By: Johannes du Plessis, legal advisor at RBS (Risk Benefit Solutions Pty Ltd)
The cancellation of the 2017 Cape Town Cycle Tour due to the unforeseen strong winds serves as an important reminder to all local businesses about the importance of insuring events.
According to Johannes du Plessis, legal advisor at RBS (Risk Benefit Solutions Pty Ltd), an authorised financial services provider, organisers of an event cannot be held liable for loss, damages and injuries resulting from a natural cause such as wind, in most cases. “However, organisers of an event have the duty to take reasonable steps to prevent foreseeable damage, loss or injury to participants. If it is determined that the organisers failed to take preventative measures, the organisers may be held liable to the participants for their loss, damage or injuries.”
By cancelling an event due to foreseeable loss, damage or injury to participants, the organisers fulfil their responsibility to take reasonable preventative steps, and they cannot be held liable, he says. “As a result, they may also not be held liable for the event participants’ travel and accommodation expenses, such as plane tickets, hotel costs, or annual leave taken, etc.”
With the cost of road bicycles varying from R1000 to R70 000 or even more, coupled with the medical bills associated with loss of limbs and head injuries, the total cost of loss could be worth millions of rand for organisers of large cycling events with multiple participants, he says. “Multiple liability claims by events participants against an organiser may cause critical or catastrophic financial damage to said organiser and may leave them in financial distress or even liquidation.”
In order for organisers to protect against such liability and financial distress, they should take cognisance of possible natural causes of damages, loss or injuries to participants of the event, and take reasonable steps to prevent these and ensure that they are properly insured for their liability in the case that they fail to take reasonable steps to prevent such damages, loss or injuries, he says.
The same legal duty to prevent reasonable foreseeable damage to participants of the event occurs in many other situations. Cruise ships at risk of getting caught in a hurricane, bus tour operators learning about significant damages to the road, 4×4 trip organisers becoming aware of excessive heats and slippery terrains, or sports events hosted on open fields during a lightning storm, all need to take the same types of precautions as event organisers in order to avoid liability, says Du Plessis.
Gillian Wolman, Head of Litigation risk at RBS, says it is the responsibility of each company involved in an event to not only take out event liability but to also consider event cancellation cover. Event cancellation is usually broken down into three categories which are all optional. “The fist is cancellation, the second none appearance and the third weather, however there are strict terms and conditions, and one should always consult your broker well ahead of an event to ensure that all circumstance for example wind are taken into consideration. When determining the amount of cover required, many factors are taken into consideration, such as the number of people expected at the event, the type of structures that will be used, and the nature of the event. Only after completing these questions is a limit calculated according to what the client can afford or what is required in terms of the contract.”
According to Wolman, research is key and a sound event liability insurance policy is crucial – many countries will not permit the hosting of an event without it. “Certain municipalities in South Africa dictate that if an event is held in the city, the event organiser must provide proof of event liability insurance, which is usually around a minimum limit of R5million.”