’Tis the season to examine insurance coverage for seasonal businesses
The holiday season comes with wide range of short-term business opportunities, from pumpkin patches to pop-up Christmas decoration stores to Santas for hire. But if you’ve set up a seasonal business for the holidays, do you have the right insurance coverage to help you stay merry no matter what the season brings?
“Short-term businesses have the same liability exposure as permanent businesses,” says Bob O’Brien, an insurance broker at Noyes Hall & Allen Insurance in Maine.
According to O’Brien, those risks are:
- Premises liability (bodily injury and property damage to others). If you’re playing Santa at a party, what would you do if the homeowner accuses your rented reindeer of ruining her lawn?
- Products and completed operations liability (if someone gets sick or injured from the product). If you’re offering a seasonal sleigh ride, are you protected if a child is injured by a fall off the sleigh and the family decides to sue?
Here are three popular seasonal businesses, and the coverage you’ll need to have to make sure that you’re protected from any liability risk.
1. Santa Claus and other seasonal entertainers.
If you can rock a red suit and a white beard, you’re likely to be in demand as a Santa. You’re likely to find opportunities to show off your booming laugh at local malls, community events and holiday parties. Many holiday performers work through booking agencies; in that case, the agency generally is responsible for providing insurance coverage, although you should ask to be sure.
However, if you’re flying solo, you’re responsible for your own liability coverage. This coverage should include:
- Property damage.
- Personal injury.
- Legal liability.
You can buy entertainers and performers general liability insurance from a number of specialized brokers. Sadler Sports Insurance sells this policy for $200 a year if you generate less than $30,000 a year as a performer. You also can get specialized policies through industry organizations. The World Clown Association, which is open to all kinds of entertainers, offers up to $2 million in liability coverage to its members for $139 a year, plus membership dues, says Andrew Moler, the association’s business manager.
2. Pop-up shops.
If you’re hosting a seasonal business, such as a Christmas decoration shop, in an otherwise vacant building — what’s often known as a “pop-up shop” — it’s your job to make sure you have the right liability coverage for your business. Often, the building owner won’t let you use the space unless you can prove you’re properly insured, O’Brien says.
If you’re hosting a holiday fair, concert or other special event, you’ll need to buy a “special events” insurance policy. O’Brien says such policies typically cost between $500 and $600 for $1 million in liability coverage. These policies restrict the number of consecutive days covered: Some are limited to three days, while others, such as the one sold by Nationwide, offer coverage for a maximum of 10 days.
If the shop will operate for longer than the term of your “special events” policy, or if it’s open on non-consecutive days, you’ll need to buy a separate short-term liability policy. “Depending on the activities, the cost could be $750 to $1,500,” O’Brien says.
Talk with an independent broker to assess your coverage needs and timeframe.
3. Seasonal operations at established businesses.
Other seasonal businesses – such as hayrides, Christmas tree farms, pumpkin patches and haunted houses – may be based at existing farms or other businesses that likely already have business liability insurance.
However, these seasonal activities are generally more risky than day-to-day business activities, so it’s important to talk with your insurance agent before inflating that bouncy castle.
For example, if your seasonal business is focused on children, and your general operation does not allow children on the premises, you’ll need to pay for supplemental liability coverage for these additional visitors and the risks involved.
Other insurance considerations
Regardless of the type of seasonal business you’re operating, unless you have outside coverage through another job, you should consider buying health insurance and disability insurance for yourself. If you have employees, you at least should buy, worker’s compensation coverage for each of them.