Event Insurance: Why a Beloved Halloween Tradition Faces Shutdown Over Liability Concerns

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A cherished community tradition in Bay City, Michigan, is on the verge of being cancelled, not because of a lack of Halloween spirit, but due to a common yet often overlooked hurdle: special event insurance and permits. A spectacular Halloween light display, spanning 10 homes and attracting nearly 900 children last year, has been flagged by the city for encroaching on public property, bringing the critical issue of public liability insurance to the forefront.

This situation serves as a perfect real-world example of why insurance is a non-negotiable aspect of planning any public gathering, no matter how community-focused it may be.

Halloween tradition

The Heart of the Issue: Public Space and Potential Risk

For five years, Matt Aikens and his neighbors have delighted families with an elaborate display featuring over 50,000 lights, projections, and fog machines. However, their decorations, which extend over sidewalks and onto the city’s right-of-way, were done without an Encroachment Permit.

The city’s concern isn't about discouraging the celebration. As Bay City Manager Dana Muscott stated, „This isn’t about discouraging Halloween celebrations; it’s simply about following the standard process when using public space.“

That „standard process“ involves two key components:

Permitting: Gaining official permission to use public property for a private purpose.
Insurance: Providing proof of liability coverage to protect the city and the public from financial loss in case of an accident.

Why is Special Event Liability Insurance Required?

When an event or structure is placed on public property, like a sidewalk or the strip of grass by the road, the legal responsibility for any accidents becomes complicated. This is where public liability insurance comes in.

Protecting the Public: Imagine if a child tripped on a power cord for a hologram projector and was injured. Or, what if a temporary wooden structure collapsed? Without insurance, the injured party might have to sue the homeowners directly, leading to devastating financial consequences.

Protecting the City (and Taxpayers): If an accident occurs on city property, the city itself could be named in a lawsuit. By requiring event organizers to hold their own insurance policy, the city ensures that its (and therefore, the taxpayers‘) funds are not at risk for incidents related to a third-party event.

Risk Management: The core function of insurance is risk management. An insurance policy is a financial backstop for the „what-ifs.“ For the Bay City display, these risks include trip-and-fall hazards, electrical issues, or property damage.

Homeowners Insurance vs. Special Event Insurance

A common misconception is that a standard homeowners insurance policy would cover such an event. However, this is rarely the case.

Homeowners Insurance: This policy typically covers accidents that occur on your private property (e.g., someone slips on your front steps). It is not designed to cover a large-scale, quasi-public event that intentionally uses public land and invites hundreds of visitors.

Special Event Insurance: This is a short-term policy designed specifically to cover a specific event for a set period. It provides broader liability coverage for bodily injury and property damage to third parties during the event.

As 7th Ward Commissioner Chris Runberg noted, the main „hiccup“ for the Bay City display is finding an insurer. „That’s the tricky part now is finding somebody that will insure it, you know?“ This can be challenging for non-traditional events with custom-built structures, but it is a necessary step for ensuring safety and compliance.

Key Takeaways for Community Event Planners

The Bay City Halloween dilemma is a valuable lesson for anyone planning a neighborhood block party, holiday display, or community gathering:

Check Local Ordinances Early: Before you build or set up anything on property that isn't yours—including the sidewalk—contact your city to understand the rules for permits.
Prioritize Insurance: Do not treat insurance as an afterthought. Obtaining special event liability insurance is a crucial step to protect yourself, your neighbors, your guests, and the municipality.
Understand Your Coverage: Don't assume your homeowners policy is sufficient. Speak to an insurance agent to find the right coverage for your specific event.

While the fate of the Chilson Avenue display remains uncertain, its struggle highlights that the most important element for a successful community event isn't just enthusiasm—it’s preparation, safety, and the essential protection that only proper insurance can provide.