Today on the merch is a dirt podcast episode number 44. Did you hear the 1 about the race director that needed to get insurance? He went to an insurance agent's office and asked, I need an insurance policy for my race. And the agent of course, by the name of Mister Murphy then replied, when do you need it? And the race director stared blankly at Mister Murphy for a moment, then he hung his head and sadly said yesterday at which Mister Murphy just laughed and laughed and laughed.
Mister Murphy loves that joke. Thank you for joining me for the Merchant Center podcast. I am Kyle Bondo, your recreational engineer, your merchant of dirt, and your coach helping you learn how to build live outdoor events from start to finish. And if you're new to the Merchant Center podcast, welcome aboard. Alongside me with always is my cohost, Mister Murphy, who hopefully is not your insurance agent. He's more like an insurance adjuster. The guy who shows up after the damage is done. Anyway,
Together, we are here to help you learn and do the do's and don'ts of outdoor events. And today, of course, if you got from the intro, we're gonna talk about insurance. What it's for, why do you need it, and how it impacts your event. We're gonna start off by defining what insurance is. I mean, why do you need this? Why do you need insurance to do events? And, realistically,
all insurance is is a contract, and it's represented by something called a policy. So there's a lot of special words in the insurance world. Policy being 1 of them. And this is a policy or contract, which an individual or an entity, which I e, a company, receives financial protection or reimbursement against the losses, and usually it's paid by the insurance company itself. And how does insurance company do that? Well,
they take the money you give them, and the money 9 other people give them. And they pool those, and they pool them based upon the risks that they expect to not happen to you. So case in point, you have a business, you insure it, so it doesn't burn down. And 9 other companies all insure their businesses, they don't burn down.
He insurance agent is hoping, you know, he's and, of course, hoping based upon bath and a lot of the actuary kind of kind of ideal algorithms that no one's business will ever burn down. But in case it does, he'll pay you. But the amount he's getting from you and 9 other people is way more than the cost of replacing your business. And so he's betting that the pool of money
will just keep on growing and growing and growing. And the time he has to actually pay out, he'll already have amassed a large sum of wealth. That's how the insurance industry works. So insurance policies are used to hedge against the risk of financial loss, you know, both big and small, ultimately that result from the damage of the insured
or her property or the liability damage of an injury caused by a third party. That's what really insurance for. And there's a multiple of different types of insurance policies out there. And this this show is not about doing that. We're we're gonna talk about the insurance involved in events. And those usually are involved some very specific insurance policies they need to consider. And they they kinda set around 3
main aspects. That's really protection of you, your staff, and your business. That's kind of 1 chunk of insurance. The next is protection to the property or the property owner in which the event takes place. The grounds, the trees, the trail, you know, whatever buildings are there, those kind of things. And then thirdly is the protection of your customers' actual racers.
And how they are protected. Those are kind of the 3 spheres of insurance that you need to worry about as as you put on outdoor vents. And it may sound complicated, but you will be surprised to find that all the insurance that you already have in your life is not that dissimilar to the insurance you're gonna need in running an events business. So let's let's talk a little bit about those. The ones you probably already have. Well, the first 1 is probably health. Your personal health.
Usually, the first insurance policy you have. You have some sort of health insurance. Insurance policy that if you fall down or you get sick, you can go to the doctor. Or you can get medicine. Or if you go to the hospital, they'll pay for the surgery. This is usually a policy that everyone has. It's pretty self explanatory. Right? You pay a premium sometimes through your employer. You can pay for it by yourself too. You pay for premium. And the insurance companies hoping you don't get sick.
And if you do get sick, the cost of treating you will probably be much less than the amount of money you dumped into being health insurance before you got sick. Or a bunch of other people get on there who aren't sick too, and they help, you know, alleviate the cost. That's really how it works. Just like we explained before. What's the second kind? Well, the second kind's liability. You probably have this with your car.
It's probably insurance that your state requires you to have. You can't drive a car. Without some sort of liability insurance. And either to protect you or protect the other driver or maybe when you hit something, that's a kind of liability insurance. A lot of cars, you know, lot of states require you to have this in order to drive, the proof that you're driving. You're home too liability insurance. Well, what if someone slips and falls and it on your driveway,
or there's a construction guy, and he gets hurt. He sticks in your window. Home insurance like that too, and where it protects the property as well, where the policies really are are covering accidents. This is the slip and fall type stuff. So that liability for property and for your car, like I mean, is protecting you from you damage it or someone damages you, that kind of thing. The third 1 is property.
Again, this is your car. For damage to someone, you know, that that happens to your car, like, someone slams a shopping cart into your into your car. If you have property coverage on that car, you can get your insurance company depending on your premiums and your, you know, your deductibles to pay to fix the damage to your car. Same with your home. This is we go back to the the the the the the the the thinking of
of the fire or flood or something that happens in the home, you have an insurance coverage that takes care of that, rebuilds the home, fixes the home. Same with your life. This is the, you know, the property. Life is kind of a property. Right? This can can fall kind of into that realm too, where these policies that you personally own to protect you or your family from really bad days. That's usually where where property insurance comes into play.
There's, of course, different variations of different kinds of policies, coverages, and there's term, and there's all these kinds of different phrases in there. Those are irrelevant to what we're talking about today. Just understand that in your own life, you probably have health liability and property coverage. Right? Okay. Let's assume let's assume that's a reality in your life. So most of these were insurance coverages that
require usually required by law or just kinda make sense to own. You know, if you're if you're in a high risk job, maybe you're just not a high risk job, maybe you just you just want life coverage in case you are the main breadwinner and you die, you want your family to be taken care of and the house payment to go on so they don't left on the street. They just make sense.
Okay? It's just these coverages that make sense. In your life if you can afford to pay them. Okay? But what about those policies that you need to have when you produce an event? Now some might call this insurance that you need. It's kind of the insurance you need to run a business.
And it's really no different than health liability property in your own life. This is the health of your business, the liability of your business because your business hurts somebody or the property of your business in case your business gets damaged in some way, you can protect it. This is kind of the same concepts.
And 1 of those include, well, when you start a business, this becomes really your first insurance policy to consider outside yourself and your family because you need to think about some sort of insurance for that business itself. And what is that? It's usually general liability insurance. That's the kind of insurance that covers all sorts of, you know, vague things that can happen that your insurance, that your your company can be covered from. So, realistically,
if an employee gets hurt on the job or the volunteer gets hurt or you get hurt, a lot of times, these kind of insurance policies will cover that. The next is your event insurance. Because in in event insurance, protects for specific things or specific things. That's a really matter. That's a word that doesn't work in my mouth very well. Specific. There you go.
For something that happens, I got a time frame, a beginning in an end. Happens on a certain day. This is Usually, the insurance that covers a particular event. Not your business. Your business insurance is covering you through the whole year. Event insurance is covering you for a special occasion for something that's gonna take place only once on that day. Now can you have multiple event insurance policies? Absolutely.
Because you want additional coverage for each time you have 1 of these events. You may need additional coverage for each 1 of those. These events may carry on for more than 1 day. You know, there's also different types of those things going. It might be different kinds of events or running event, might be different in the mountain bike event, might be different in an event or racing event. So you have those kind of policies to think about. And they also they're protecting
your volunteers, your sponsors, and, of course, the property owner, in case something happens to the property as well. Because sometimes it's not just parks, sometimes just private property, and they require you to have these kind of things.
The third is additional insurance. You know what I mean by additional insurances. This is the the assurance that you're not focused on your business or the event as far as protecting those working event. This is covers the racers. This is the actually, you know, injury above and beyond the coverage that is is just found normally, and we'll get into that a little bit later. So your racing business requires special types of insurance policies, ensuring specific types of risk.
And that's really all insurance is. Is you're you're gambling that something's going to happen, and you need financial protection if that indeed that event actually happens. And the insurance company is gambling on it not happening, but was willing to pay you if it does. So you think about the 2 sides of this. I mean, for example, your racing business needs a policy that covers damage or injury that occurs is the result of being outside.
Maybe you have volunteers required to hike to an area and they fall off the cliff or tree falls and hit somebody. Those are kind of things. You may also need some kind of professional liability insurance. This is known as you've probably heard this before. It's known as errors and emission insurance.
And it's really kind of weird in the event world because finding the example of of errors and emissions, I was thinking, you know, does it relate to waivers? Well, it depends on the states. Does it relate to cancellation policies, and refund policies, absolutely.
Especially if if you are in league with, like, any kind of business associations or sponsors that you have a, you know, fiduciary responsibility to put on an event based upon some sort of, you know, the contract you have, and you don't have anything for writing that says that if the event doesn't happen, you're not responsible for it. They can sue you, and they sue you for breach of contract. And if they do that, sometimes
depending on how this works. Again, I'm not a lawyer, so this legal advice is completely this this is Kyle's opinion, not legal advice. But that goes into the errors and emission insurance. We'll cover some of those kind of things. So as a business owner, which is what you should be if you were running a racing business of any kind. That's kind of an important point. And then I'm talking about hobbies. If you're running you're doing a race, you should be running a business.
You need to consider a policy that covers both your business and your event. But I know for a fact that most re race directors are not their own business. They haven't set up any kind of entity they don't have any kind of LLC loan corporation. They're themselves. So because of that, let's cover event only insurance first.
Let's say you're you're you're holding a 1 day event, and you expect to have a 100 races show up. And you and your team of 5 volunteers will need to be covered for just this event. Usually, a premium for 1 day type event. It's it's somewhere in the neighborhood of 500 to $600. And what's included in that premium usually is the day of the event, so you get coverage for that event. So you have some sort of liability coverage based upon,
you know, how many usually 1,000,000 of dollars. So $1,000,000 coming coverage kind of thing. And you get volunteer medical premiums per volunteer. And you can add any additional amount of coverage. You can add like a $1,000,000 of excess liability if you want, and that will probably cost you another 700 to a $1000 in addition to what I what I said there before. So you complete coverage for 1 day event. It's somewhere between $1200 is the industry average.
But to get this rate, your insurance company will require that you show them some documentation. And what is that documentation? Well, first is gonna be What does your liability waiver look like? Do you even have 1? What are the words in those in that liability waiver? They're gonna wanna see that. They're also gonna see your risk management plan or what's better known as your emergency response plan.
These are 2 essential documents that tell the insurance agent that you care about protecting the customers that are gonna be in your race. That you have thought out, not only now we're talking care as in the you you care in the legal sense that you want to protect the investor, which is the insurance agent, his his money is gonna be protected
by ensuring your race. That you're not just gonna he's not putting money after you to protect your race, and you're gonna throw this crazy unicycle chainsaw juggling event. You didn't tell him about. No 1 signs any paperwork. And your emergency response plan is, oh, you know, well, everybody knows it's risky. He just doesn't want to put good money after bad. So he just wanna make sure that you've done your due diligence, that you're professional.
That you have thought through the in informing your clients or your customers or your guests of their responsibility that they know this is inherently dangerous to do these kind of things. And that you have a plan for in case the eventuality, if someone does get hurt, that you are prepared to make sure that that injury is as minimal as possible.
That's what the insurance agent's gonna wanna know in order to make this happen. Now each 1 is different. Each 1 requires different levels of rigor for this. But just know, when you when you're dealing with the policy between $502,000, these are the kind of things that insurance agent's gonna wanna know. And if you you're kind of, like, you're kind of, like, well, I don't have a waiver. I I don't know what to do with the waiver. We'll then go back and see emergency deter episode 28.
This is the 1 titled, Mister Murphy loves your cut and paste waiver. And this is what I told you why waivers your first line of defense against personal injury lawsuits. And that link will be in the show notes. But I go through kind of like why a waiver is important, what's the the aspect of a waiver that you need to have in order to make yourself, you know, protect yourself
even if the waiver doesn't you know, people can't sign the way their rights and those kind of things depending on the state, some waivers hold more value than others. And I go through all that. But go check that 1 out and understand what you need for your waiver. The second 1 is, in addition to that, is episode 14. Way back, episode 14. I talked about Mister Murphy just took out a racer.
And in that 1, I told you why you need to take an emergency response planning very seriously. When? Remember when? Not if you need to save a racer's life. I'll have a link to that 1 as well. But in episode 14, really got into how do you prepare for the inevitable for something has hurt. Well, the insurance gesture, just like the property owner, for the permit, for the property. Needs to know these things. So it understands that you are taking this seriously.
That you aren't just asking for insurance and expecting to cash in this policy, you know, as your that's your emergency plan. Well, I have insurance. I don't need to do anything because I have insurance. No. The insurance agent is not interested in funding your emergency plan with his money or her money. So you have to be very wary that that there are people who are interested in you being a professional. And your insurance company is not gonna be any different.
They are going to demand to know how well you've planned out your event, how serious you are about protecting what amounts to their investment in your event. If they don't like what they see, they're not gonna cover you. So you need to go back and listen to those 2 episodes and get yourself prepared before you walk into the insurance agent's office.
Have all all the questions that they're already gonna ask or already ready to ask. And if you have your waiver emergency plans ready, then you're ready to start shopping for a policy. And the more prepared you look, the better your chances for a policy are going to be, and especially at a good rate, really, this preparation impact price doesn't really have an impact on all insurance companies, but not all insurance companies are created equal. Some are individual people, small businesses
that will will go and fund your company. Some are Some are, you know, the big insurance companies for sure are gonna wanna see this stuff, but it does keep the additional costs based on the risk assessment of you and your event from being added to the policy. The more risky they think you are, the higher the price is gonna be. So as you shop around, the more prepared you look, the more professionally you look, the more confident they are going to be
in giving you a policy with the expectation that you're not going to ever cash in on it because you're professional, you're gonna do your due diligence. And you're gonna take all the risks that you can control out of the equation so that their confidence in you is justified. That's really how that kind of works. So you see,
they're hoping based on what they know about the kind of event, and nothing will happen. They are really the anti Mister Murphy's. They would like to make sure nothing happens to you, your volunteers, and your property that you're using. Most insurance companies that cover races expect nothing to happen. In fact, They are betting on that chance that nothing will happen.
Why? Well, like I said before, that's how they make their money. If they ensure you and nothing happens, they keep all the money. That's the deal. They then play those odds
of nothing happening with all the other people in companies that also have events. Once all said and done, the insurance company will make money even if they have to pay out. So they're hoping that nothing happens, and they wanna see that. So if you want a good rate on a policy, that you know will cover you in the eventuality that something does happen, then be prepared. Show them that their investment is justified. Next is business insurance coverage.
Now, if you're gonna put on any kind of event, you should be a business, especially for running and racing business. The reason is very simple. If someone sues you for something that happens at your event, and they win, you're personally liable. This means your own money and assets, does it include investments like your, you know, maybe your kid's college fund, your car or cars, even your home, could be forfeited in an attempt to pay for damages.
Let's sink in for a minute. If you're putting on a race and it's just, you know, the Joe Blow racing, and you are doing it as a sole proprietor or as the tax people would like to call a a pass through, then you are putting yourself and your personal finances at personal risk because if you have someone get hurt and they sue you and they win, For whatever reason, doesn't mean it's fair or not, just if they win, then you have to pay damages. They can come after your own your budget job.
Do you have a second job? You're doing this on the side? You're home? You're car I mean, that's that's scary. That's very scary. So protect yourself. And to do that, to protect your your own family, your livelihood, you need to form a business so that the business takes the burden of any legal action.
In the United States, forming a business is like forming a fictitional person is the way the law works out, the company becomes the entity that's doing the action and is doing the action of the people that work in it. So you're no longer you know, it's not you're older than it was like Kyle, you know, Kyle Bondo is himself. And if I'm putting on a race by myself and something bad happens, then I get my personal stuff. But if I put on Kyle Bondo Inc. And now Kyle Bondo is its own thing.
So now Cobon Inc. Is putting on that there. Whether or not I'm involved, doesn't matter. I could be in running the company. I could not be running the company. Any kind of problems that happen with Cobon O, Inc. Is usually,
pointed to the people running Kyle Bono Inc. And the company itself. It's kind of how the legal system works when it comes to the the, you know, paying out any kind of lawsuits that go to a company. That's why usually when you're doing a lawsuit, you're looking for the the the corporations with the deep pockets. Because the little companies, you know, you know, you'd snap a finger on their toast with any kind of lawsuit,
which is why you need to form a company, so that in case you do get and you got a legal action, the burden can be put on the company itself. We're not talking about right or wrong or whether or not, you know, nonprofit, profit. It doesn't matter. Any the organization putting on the event is the legal entity that if case if any kind of insurance or any kind of any kind of action is taking place, that's where they first look
to go after when it comes to a lawsuit. That's why you need that. You need that extra level of protection with that. So when your business assumed, assuming you didn't do anything personally, only the assets that business can be used to pay damages. This is what's usually referred to as general liability insurance comes into play.
And every business, even a home based business, needs to have liability insurance. And, really, though, this is the policy that provides both for defense because you're gonna have to go to court court cost money. Lawyers cost money. You know, discovery and evidence costs money, and damages. That's if you lose, then you have to pay out. So this policy provides for both the defense and damages if you, your employees
or your events, which could be called product or service, if you really wanna get into the definition of this, cause or are alleged to have caused bodily injury or property damage to a third party. That's the legal definition of what general library insurance is for. So this insurance is that covers what most business owners refer to as like the slip and fall lawsuits.
Events you think about is when it comes to really endurance sports and outdoor events slip and fall is kind of part of doing business. We're in the business of putting people into positions, I. E. Running a course where This kind of stuff kinda happens as the cost of doing business. So, of course, not everyone sues.
Because if they did, if they ever really hurt themselves and they sued it, there'd be no racing. No 1 would ever do racing. And in the last sense, that's the why a lot of race directors get out of racing. Is a lawsuit that happens. But you often find that racers are more hearty bunch, especially endurance racers dirt, you know, people who are really in the emergence of dirt kind of business.
You're out there in the woods, and you're running around, you scrape your knee, you fall over, you bang yourself, you break your bike. They're, like, a hearty bunch. They tend to think of injuries as a badge of honor. In fact, the bloodier, nastier they look, the more proud they are, unless they're, like, seriously injured. You're not talking, like, I'm talking about I'm talking about bumps and scrapes and boo boo, those kind of things.
They see it as a badge honor. But you never know when you're going to get that 1 person, and you know that 1 person, you know that 1 person. You every race you've been at, you know who that person is. And as the joke goes, if you don't know who that person is, then it's Probably you. I hope not. Anyway, that 1 person that thinks suing everyone for their own mistake is perfectly acceptable behavior. 0 personal responsibility. 0 accountability.
They think that, you know, because a tree was placed there on this course that you should have, you know, known that the tree would have hurt them, etcetera, etcetera. You know what that is? Because in the United States, we're a very litigious society. It just makes sense to have general liability insurance is part of any kind of business expense because you never know that 1 person is gonna be angry enough or think that you're responsible enough to sue you. Right or wrong, it just happens.
You could be completely right. All the way this is in the world, you could still get sued, still have to go to court, still have to defend yourself, and still lose, right or wrong. That's just the way this this bizarre world works. Right? Because
Judges are people, and lawyers are people, and racers are people. And you never know. When it comes to people, you never know. Here's the downside to general liability insurance. Often, you'll find that in the insurance companies that will cover your business with general liability insurance. May not always be the ones that'll cover an event.
So think about that is you may have to to play this with multiple insurance companies, and it's perfectly acceptable to have multiple insurance companies for different parts of your business. Some insurance companies are gonna cover your business based upon the way it operates, but may not cover your events because they don't bet it's too risky for them. So it'd be better if you shopped around a found insurance company that covered everything,
and they call that the the umbrella policy. That's the 1 policy, you know, 1 policy to rule them all. That's the the kind of the thing that you're looking for. It's something that will cover your events and cover your business. And maybe even some other things. Maybe you can wrap up all sorts of things. Maybe your home insurance get laughed in there too. I mean, these all sorts of policies are weird. You can match them, blend them, and build them. So if you have 1 policy to rule them all, you could be both convenient and cheaper, than multiple policies, but you're gonna have to find 1 that works best with your business.
So what does it cost? Well, depends on insurance company, of course. And, of course, it depends on what's being covered. The bigger your operation the more expensive it's gonna be for you. So if it's just you, if you're just a 1 person shop, you might pay $500 a year for your liability insurance. And really, you think about it. $500 a year divided over 12 and what I think is not a whole lot. It's less than a $100 a year. Right? A $100 a month. Okay? So
so that's the the the understanding of it's just you. However, if you hire a few employees and you have a good collection of property and gear, likely gonna have to start paying somewhere in the room like $3000 per year and up. Again, depends on how much coverage you need. Depends on the, you know, the your gear. You know, how much the you know, your equipment actually costs. There's all sorts of variables. But the cost of not having it,
it could really mean the end of your business. So just to understand that general liability insurance is the kind of that that catch all that you use as you protect yourself. Think of the levels of protection right now. So you've been vent insurance, the protection that protects you on that day,
then you have your general liability insurance that protects your business throughout the year. So for whatever happens, including on that day, then you have your personal insurance, things that protect you yourself.
Those are your layer levels of insurance. And then you've also you've also separated yourself out by having a business as another layer of protection based upon what entity actually gets sued when someone comes to sue you. So think about those kind of those separations of how you protect yourself by building layers of protection. You know? It's like shifting your deflectors to double front. You're trying to build as much protection from financial lawsuit
in which they win. And if you think about these lawsuits that happen, they're not I'm suing you for a $1000. Are they? No. It's I want you know you know, I'm because of your race and I got hurt, I can no longer work because I can't prolong your work or function in life and plus my pain and suffering of all the doctor visits I had to go to, I want $5,000,000. Is your business ready to take a $5,000,000 hit? I'll bet it's not. I bet your business hasn't even made $5,000,000.
So this is what insurance coverage is usually for, and a lot of times you're gonna have an insurance company, your insurance coverage, especially general liability insurance, and insurance. It's gonna cover for, like, maybe 2,000,000. Here comes a $5,000,000 lawsuit. Well, now you're gonna need a lawyer, and you're gonna need to whittle that down, and hopefully they'll take less. They'll settle. They'll be arbitration. But you have to be prepared for that.
You'd be prepared for the eventuality that you would hit with a lawsuit that overwhelms your coverage. But if you have no coverage, then what happens? So that's the that's the thinking you have in by having separations and multi separations of of entities and multiple layers of protection with insurance. You give yourself a buffer that you can work through to help mitigate those kind of eventualities. Another way to get insurance for your event is through the process of sanctioning
Now what is sanctioning? You might have heard something called a consumption event. And usually what this has to do is with national organizations, national bodies that have members. This is like USA Cycling or USA Triathlon. These are big events or dumb big events. These are big organizations that have members. And because they're big and they have money, they can broker a relationship between an insurance company and get a good rate that a smaller company couldn't ever get or even individual.
So they then leverage their membership ability to provide insurance for race directors for an event that they deem as suitable for their sanctioning. And what's that mean? Well, this is the kind of assurance that comes with something that a lot of race directors don't like, and that's called strings. If you wanted to be an official event for a national organization, then you have to follow the rules and regulations that govern this national organization.
And by that, that means that whatever they say goes. This means that any official permit and any of their requirements to use their general liability insurance to cover some event have to be followed. If you don't follow it, They can shut you down or not sanction you at all. They can pull it out. So if you're looking for an insurance policy that covers your event, sanctioning might be the path to take if you can deal with all that that comes with it.
And then usually, they're not super expensive. However, it does require again, you have to abide by not to but you think about the rules. It's course design, it's officiating, the way you organize yourself, the way you do administration, all that comes with this. And if you don't fill out the paperwork in time, or your courses and up to standards, or you wanna you you wanna use your own timekeepers. I mean, the national organization is gonna push back on you.
So with great sanctioning come to great headaches, and some race directors don't put on a race without sanctioning. The AC sanctioning is a fantastic tool for race promotion, especially when you get your event placed in the national organization's calendar. I mean, when they have a couple 100,000 members,
you get to have all those they may get to have points by coming to your race because it's sanctioned. So those are people going to that, and they wanna go to the national championships, so they're looking for points. And if they find a sanctioned event and you are the sanctioned event in your state, This can greatly improve the demand. Not only that, but then you can outsource your timing needs because the officials come and help you do timing. So you get you get free So you get free publicity
that might make get some more racers that you would never really have before. You can outsource your timing because they bring officials, they come do the timing. And all you have to do is abide by their rules and pay their fees. These advantages, you know, to to at least to some of these race records, outweigh all this rigor and extra work needed to gain the nationalizations approval. The key is to understand what you want for your event. Do you need national sanctioning?
This has a lot to do with how much money you have to build your event, realistically. If you're not you don't if you're not desiring to put on a national, you know, sanctioned event. That's not your goal in life, but your broke national sanctioning can be a blessing in disguise. For less than 300 bucks, they can provide you with an upfront permit which includes ready to go insurance policy and even the scheduling of officials for your event. These
what you would might even call the golden tickets. It's the paperwork that most venues wanna see before they give you a permit to use the venue. Well, sanctioning, can you give that stuff up front for very little money down? That's a huge advantage. You're not putting any money out of pocket to do this, you know, except for the the actual permitting fee.
But a lot of times, Sometimes they even wait for those. Sometimes they wanna plan on events in certain areas so bad. You can get event permits for free. So you never know depending on, you know, what your discipline is, what kind of advantages you can get. Even if you're a small or your first time, you can even get some other advantages. For being small and first time. So the national organization wants events to take place because that's where they get people to come and become members.
They want more members. They're membership driven. So they want you to put on events. So sometimes, they'll help you put the event on. They'll give you resources you can never get by yourself. That is a huge benefit
and an attractive feature that some race directors take them up on. Regardless of the rules, regardless of the chain, regardless of, you know, who's actually in control. So take this to put this into your your thinking when you're when you're planning your insurance strategy, your business strategy, that sanctioning could be something
that benefits you. Because 1 of the advantages of having your venue permit already taken care of is you can now kick off advertising and start bringing in preregistration dollars. Now while all sanctioning is different from organization, of course, not saying they're all like because they're not, most don't require you to pay for the final insurance policy or the officials till after the event.
So it's not like you get them completely for free. It's just they they front you, all that all that sanctioning gets gets you everything up front and you pay in the rheres. But it does come at a price. The sanction ratios require each racer to either be a member of the nationalization, so they have to have paid a membership fee. So there's a a barrier to entry. So they have to be if a licensed member of that call of that organization. But if they're not, they have to buy a membership.
So this means that they're gonna pay their race entry fee, and then you're gonna go and bill them another 10 bucks and say, hey. You can either join a member and become a member of the organization, or you have to buy this 1 day license. Before you're allowed to compete. Some racers avoid sanctioned events just due to this. I know it's another another 10 bucks, but a lot of times it's the perception of it.
It is the nickel and dime of it at all. And it's really not the cause. It could also be they are avoiding the nationalization due to their policies or their political positions. You'd be surprised why people don't like certain organizations. There's a ton of different reasons. And some of these organizations deserve the ridicule they get. They make really bad decisions.
Especially when it comes to the actual discipline themselves, they make rule choices and rule decisions that a lot of members don't like. Some people leave organizations because of that. They make bad decisions or they they take a political position because they think is either trendy or their leanings lean a certain way. And people who are part of the organization are like, forget it. I'm done with you.
So be wary of the climate, the political climate, or even the policy climate within each 1 of these organizations, because it can greatly enhance the number of people ship your event, or it could hinder it. It's surprising. What happens when you say, It's a sanctioned event, but you gotta have a license. You don't have a license. You gotta pay the extra fee. To the other hand, if you don't want a sanctioned, then, of course, you have to pay for all your your costs of your of insurance upfront.
Require you to pay for your policy long before you can get final approval for your your venue permit, and sometimes it takes a while to do a policy. A national organization can have a policy done for you within a week, maybe even sooner depending on the time the timeline of your event. They can really turn them fast, where the policy done by a local agent might take longer than a week or even a national organization like a like a GEICO or a nationwide, or USAA.
These kind of organizations might take you 2 or 3 weeks. You might have to put it put in for a permit for for a event insurance policy 2 or 3 months in advance. So an advantage to having the national body helping you policies is, of course, turnaround speed, the availability of insurance, even the cost of insurance can be can be a little bit cheaper. Also, the amount of general liability coverage can also vary as well.
Now each venue is national you know, if you think about national parks and state parks, they require you to carry a minimum requirement. Kinda like the same way with car insurance. It's like you can't buy a new car unless you're carrying, like, $15,000, minimal liability insurance for your car. You can't drive it off the lot unless you have a minimum amount, or you can't get a car loan based upon the minimal amount insurance. Right?
Same thing with venues. There are certain parks, state and national parks, You can't walk on to the to that property unless you've got like a $1,000,000 or $5,000,000 in liability coverage. And because of that, national organizations that know that can help you work with that. But if you don't know that, walk you're walking in the door,
or you have to or you didn't tell your agent because you didn't know. Now you have to go back and redo your policy. If you have to redo a policy with a local agent, sometimes it might take more time, a couple more weeks. With the national little organization, it'll turn that around in a matter of days. Sometimes hours,
they have approval to do things at certain levels that you may not have to, you know, may do at the local level. So just know that. Your local insurance agent may not quote you the right price because you didn't answer the right coverage, and now you're too low for that venue, and now you can't, you don't have to go back in order to get the permit. So there are advantages to sanctioning.
I mean, regardless how you have it set up, Having control of your own event insurance policies has everything to do with your overall business strategy. You need to do what's right for your business. You either do your own thing or you only do sanctioning things or you do some kind of combination or you do self supported maybe for a couple of events, or you do national supported events throughout the season.
So, like, take, for instance, obstacle racing or ex Terra. Maybe you throw 1 of those in the middle of your your race season, or you decide to do a USA, you know, Olympic triathlon, in the middle of your event, where you do much of a trail running and some racing, then you do an Olympic level triathlon supported by USAT, and then you do some other racing on the end. All perfectly acceptable, where you only do 1 sanctioned event and everything else is local.
That way, you can experience both, or maybe you start with the sanctioning 1, and then you work yourself into being unsanctioned much later in your business career, the maturity of your business. It can be cheaper to be unsanctioned at certain times. And keep your your overall insurance cost down based on the size of your events and where you're having them, but membership
does have its privileges. So know that there are advantages and disadvantage to this, is this is again another strategy for how you ensure your race. Now that you've protected yourself and protected your business and you've protected your staff and your volunteers and the property, How do you protect your racers?
1 of the biggest points of confusion that race directors have with insurance is how their racers will will be protected during the race. Most race directors think that their general liability protection is designed to also help racers. It's not. Designed to help them, their staff, their volunteers, and their business, from the racers. When the racers race, they're kind of they're racing what's called at your own risk. And most
races are are this kind of thing. This means you as the racer, there's a kind of thing. But your racer hat on, understand that what you're about to do is dangerous, hopefully detailed in the waiver you had been signed, and that you, again, the racer, are responsible for yourself if you get hurt. So each participant is then expected to have their own insurance coverage that kicks in if they hurt themselves during the race. Now a large number of racers
expect this, and they take care of themselves. They have personal responsibility. They have their own health coverage. They have an understanding that what they're doing is dangerous. There's no there's no blaming the race director because you crashed your bike or tripped over a rock because they put themselves in that in that position. They got hurt. They have their own means of taking care of themselves. But there's always that 1. That 1 racer that either doesn't have coverage
or does not have enough coverage for their injury. Head injuries are usually a perfect example of this kind of catastrophic event. This is where you as a race director can provide additional insurance that covers racers if they are injured, usually above and beyond their own coverage. So this is this is always an elective thing. Where the razor has to ask for it and pay for it in addition to their race entry. And it can be part of your own insurance or the insurance provided through sanctioning.
Some sanctioning of bodies will provide this additional insurance as well. Many national organizations provide general liability coverage for accidental medical coverage as part of their sanctioning package. It's all included. That's the whole that's the the privilege of being a member
or being a member for a day is you get this extra little bit that if you get hurt and your your personal insurance doesn't help you, there might be a little bit that can then above and beyond and help you out. So many national organizations provide this as part of their sanctioning another advantage. Which also means you as a race director might have to pay for it too. Usually, after the event. For example, USA cycling charges you $3.50
per racer that you have at the start line of the day of the event. These totals are, of course, reported to USA cycling by the governing officials that are there at your race, and the final bill is calculated based on that total. So if you have a 100 racers, the start line that day, the USA cycling will send you a bill for $350
in addition to the permits and your race official fees and all the other stuff. That's the additional insurance that they provide as a requirement for your racing that they give to people who show up who are either a license members or b, buy a 1 day license or an annual membership at on race day. You have to pay the additional part of that as part of protecting them. And then it's not bad.
You know, it's it's just a a cost maybe you didn't weren't aware of when you do these kind of things. So just know that this coverage that is offered isn't if brand new members of an official club or nationalization required by all participants via the 1 day license might be charged to you when you sanction yourself
after the fact. And sometimes what they do is, especially if you use their registration software, They'll just keep the money until the race is over and then deduct what they want from that amount. So either you get a smaller bill or you get a couple bucks back after they've taken their cut. And this way, everyone that participates in an officially sanctioned event
is covered under the national organization's general liability insurance. And, of course, the reasons are obvious. And first, enforces the race organizer to cover all participants. This is a problem in racing because when you especially have unsanctioned events, is you don't know if there's a shady operation going on and there's skimping on insurance. You do know that if it's sanctioned,
that they're not. This is an advantage to having sanctioned event. This is an advantage of saying that you're permitted by USA Cycling or USA triathlon, is you can you know by being with your razor hat back on, you know A sanctioned event is gonna have insurance because they don't get a permit without it. A sanctioned event, however, you don't know. You could ask. They could tell you. Could they be telling the truth? You'll never know. Until you get hurt and you need that insurance,
or you need to to be covered, or you do your your insurance doesn't cover you, that's when you'll find out. You'll find out the shady operation happens that way. 2nd, it keeps participants for coming back to the authorization and suing them for something that happened during the event. So they do this as part of a benefit to membership, but it also is their own layer of protection.
Because they can say, we provide it to you. You turned it down. You could do it like that, or you did a 1 day thing. You didn't want the membership abilities. You had to be an annual member in order to get that coverage. There's also some fine print. And of course, 3rd, it provides some sort of medical care for those that just don't have proper coverage.
That's just a good way of doing business because the last thing you wanna do is attract members, and then tell them to, you know, to pack sand when they get hurt. You want the ability to to help them in some way. And this is how some of the nationalizations can give back to their members they get hurt. If they go above and beyond their coverage, they can provide them this this kind of extra level. It might not be a lot. It might be just a tiny little bit,
but providing a tiny little bit definitely stops a lot of people from pursuing a lawsuit. That's kind of the point. It's a strategy. And again, you may only need a little bit more in order to cover. Maybe you got your teeth knocked out, and the dental insurance didn't pay for it. And then, you know, USA cycling is like, their race insurance you have through membership paid for your new front teeth. That could be possible.
So think about that. Think about those kind of things. So as a race director, you keep all these costs out in the open and let racers know what they're paying for.
They get an idea on why it costs so much. Why they're race registration so much? Because the other way you could do this too is rather than them paying 1 fee and then paying an insurance fee, paying that, is you just roll it all on the same price. You just say the price is x. And if they wanna know, you tell them what the price breakdown is, but you make the decision what your racers are paying for and what you're paying for. Sometimes it's just good business.
If you need to make the price a certain price point to eat the cost of some insurance, you just take that out of your profit margin and you just say, okay. Well, for this event, I'm gonna take less for a profit because I'm going to pay for this extra level insurance.
So that if someone gets hurt or that, you know, I wanna provide this extra level as a benefit to racing. You can say if you race at my events, I also provide general liability coverage for racers. In the event they do get hurt, I have some extra coverage, so I'm extra safe. That might be a selling point. So think about those kind of things in your strategy. Because many race wreckers elect
to do the latter. They they they come up with a final price based on their expenses, and their value, they believe, is is presented in their event, and they wrap it all into the price.
And they give the rates or the final price. That way, you're not paying a whole bunch of different fees. You're just built it into the price. That's probably a better way of doing business. And you you could do this too. Members or the nonmembers as well is where you do have to you you know, if you you're a member, you pay this price, you're non member, you pay this price on a sanctioned event, or a non sanctioned event, you can break it up that way too. So think about that in your overall pricing strategy,
that you could provide additional insurance. It's really up to you. When you decide to host live events, You invite risk. Mister Murphy is the master of catching you without any kind of financial protection and always at the worst time too. Be aware of the different levels of insurance that you will need to navigate before you can safely produce an event. Go talk to insurance agents.
Go talk to 6 insurance agents. Get a ton of quotes, shop around, find a policy that works for you. Additionally, do it as a company, not as yourself. Protect your family in your livelihood by investing in a formation of an LLC or a corporation and give yourself another level of protection. Just make sense. And finally, I don't have the belief that sanctioning can help you bootstrap your event When it's all said and done, sanctioning is a means to an end. It doesn't have to be a requirement,
but it can help you with obtaining a healthy amount of insurance when you're first starting out. And that's really kind of the key. When you're trying to get yourself off the ground, sanctioning can be a huge help. And sure it will require you to give up some control, but it can give you a great start. They can help you move into a nonsanctioning events later on. So 1 day, You'll have the resources to pay for your own insurance and staff, especially if it's the backyard style events
that only involves your community racers or community clubs. You really don't need national organizations to help you do those kind of events. However, obtaining a reasonable amount of insurance, no matter how you get it, should always be a part of your business strategy. With that being said, I leave you with this last thought. Never, never, never direct an event without insurance. Ever. And now you know.
Thank you so much for listening to the merchandiser podcast. I'd love to hear from you. Please reach out to me via either email, [email protected] or Twitter at merchandiserdirt or go to the website, merchandiserdirt.com,
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while you're out figuring out what kind of insurance you need and what kind of protection you do have and forming a company, hopefully. I'll see you on the next episode at the merchandiser podcast. Until then, I hope what you'll learn today helps you be outside. Take care. Yesterday, I wish I had insurance yesterday. I would be covered for another day. Oh, I wish I had gotten insurance yesterday.