Do I Need Insurance To Host a Video Game Tournament?

Esports businesses may be required by law to maintain workers’ compensation and commercial auto insurance depending on their circumstances and some venue owners may require video game tournament organizers to provide a certificate of insurance (COI) in order to host an event on their property.

Keep reading to learn more about esports insurance including what coverage types it can include and what risks competitive gaming professionals may face without coverage.

Key Takeaways Few American insurance companies offer specialized esports coverage but you should be able to obtain all of the coverage types you need for your business from a general commercial insurance carrier. Coverage types like workers’ compensation and commercial auto insurance are required by law for most businesses, while coverage types like general liability and commercial umbrella insurance may also be mandatory depending on your situation. Esports professionals may need to consider additional coverage types like event cancellation, cyber liability and media liability insurance, among others. Small business insurance may cost around $1,000 per year but premiums can vary significantly depending on your esports business’ size, claims history and policy details.

What Is Esports Insurance?

Esports insurance broadly refers to a collection of commercial insurance coverages that can address the unique risks faced by professionals in the competitive video gaming industry. You should note that very few insurance companies in the United States offer insurance packages specifically designed for pro gamers and other esports business owners.

As a result, you will likely have to create your own esports insurance policy by identifying the coverage types that your business needs and buying them individually from a commercial insurance carrier.

Aaron Whited, an insurance agent for Rapid Rates Insurance Services, notes that there are multiple business models that can work in the esports industry. As a result, there likely won’t be a one-size-fits-all policy that works for every competitive gaming business and you may need to consider bespoke coverage that is customized to best protect your company.

“Diverse revenue sources such as clothing lines, Twitch streaming and tournament earnings characterize esports businesses,” Whited said in an email to SmartFinancial. “Underwriters delve into these sources to craft coverage that addresses the specific risks tied to the industry’s multifaceted income streams.”

Who Needs Esports Insurance?

There are multiple kinds of companies and workers in the competitive gaming world who may benefit from purchasing commercial insurance including the following:

• Owners of arcades, gaming lounges and other venues that regularly host esports events
• Streamers and influencers looking to organize one-off tournaments
• Broadcast and production companies that livestream esports leagues
• Esports team owners who send professional players to participate in competitions
• Full-time players, coaches and content creators who aren’t part of an esports organization or team
• Video game developers and publishers that oversee the competitive circuits for their games
• Freelancers and contractors such as commentators, photographers, video editors and social media managers who do work for any of the above organizations or individuals

Is Esports Insurance Required?

Some commercial insurance coverage types are legally required for all businesses that meet certain criteria. Specifically, workers’ compensation insurance is mandatory for most companies with multiple employees, while commercial auto insurance is compulsory for businesses that use vehicles to conduct commercial activities in most states.^[1][2]

In addition, other coverage types may be required depending on the type of work you are doing in the esports space. For example, if you want to host a tournament at the Los Angeles Convention Center, you must carry at least $1 million per occurrence in general liability insurance, $1 million per occurrence in commercial auto insurance and $4 million per occurrence in commercial umbrella or excess liability insurance.^[3]

What Types of Insurance Do I Need for My Esports Business?

While the exact right amount of coverage will vary from business to business, there are several major commercial insurance coverage types that esports professionals ought to consider. See below for an overview of these insurance products and examples of scenarios they may cover.

General Liability

General liability insurance is a fundamental commercial coverage type that takes care of bodily injury, property damage and personal and advertising injury claims that your business is held liable for. For example, if an attendee at your tournament trips over an extension cord and fractures their wrist, your general liability insurance could cover their medical costs.

Similarly, if tournament entrants bring their own gaming consoles, this coverage type could pay to repair or replace an entrant’s console after one of the volunteers drops and damages it in the process of setting up for the tournament. In addition, general liability insurance covers legal expenses if a bodily injury or property damage claim escalates into a lawsuit.

Finally, this coverage type can also cover attorney fees, judgments and settlements if your business is accused of defamation or copyright infringement. For example, your insurer might fund your legal defense if a video game company sues you for livestreaming its game without first obtaining a license.

BOP

A business owners policy (BOP) is a popular coverage package among small business owners because it combines general liability coverage with commercial property insurance and often business interruption insurance.

Commercial property coverage can insure any buildings your business operates out of and the items stored inside of those buildings against perils covered by your policy. For example, your commercial property insurance could help you pay to replace electronics and furniture after an electrical fire breaks out in your organization’s esports training facility.

Meanwhile, business interruption insurance can cover revenue you lose and expenses that arise after a covered peril prevents your business from operating as usual. In the above example, your business interruption insurance could help you purchase gaming peripherals for your players to take home so they can continue to practice remotely while you work on replacing the items damaged by the fire.

Workers’ Compensation

If one of your employees becomes seriously ill or gets injured on the job, your workers’ compensation insurance can cover their hospital stays, rehab costs, lost wages, disability payouts and death benefits if necessary. Keep in mind that this coverage type is generally required for businesses with multiple employees in every state except for Texas, where the requirement only applies to companies contracting with a government entity.^[1]

Commercial Auto

Since private passenger car insurance policies generally exclude coverage for commercial activities, you will need commercial car insurance to cover vehicles you use for business purposes. States usually set the same requirements for commercial auto coverage as they do for personal car insurance, meaning you will need liability coverage in almost every state and potentially other coverage types like uninsured and underinsured motorist coverage.^[2]

Special Event

Short-term event insurance is crucial if you plan on organizing a one-off event, hosting tournaments at irregular intervals or putting together a major tournament only once per year. Event insurance policies typically provide limited-time event liability insurance and may also include event cancellation coverage.

This coverage type can alleviate your financial losses if you must cancel or postpone your event due to unforeseen circumstances like a sudden storm making it unsafe for players to travel to the tournament venue. However, you should note that event cancellation policies largely exclude coverage for communicable diseases, which means you likely won’t be covered if you cancel your tournament because of a COVID-19 outbreak in your area.^[4]

In addition, event cancellation insurance can mitigate losses due to event disruptions such as a power outage that puts you so far behind schedule that you can’t finish your tournament before the venue you have rented closes.

It can also cover issues related to the non-appearance of a key person. For example, your special event insurance might help you recoup lost revenue if your stream gets significantly fewer viewers than expected because a popular top player had to drop out of your tournament after developing carpal tunnel syndrome.

Cyber Liability

Cyber insurance can cover third-party liability claims that arise as a result of a data breach or some other cybercrime. For example, if players sign up for and pay an entry fee for your event online, cyber liability insurance could cover your legal costs if players sue you after their contact and payment information leaks on social media.

Professional Liability

Professional liability insurance, also known as errors and omissions (E&O) insurance, covers legal expenses and other losses related to accusations of negligence, misrepresentation, breach of contract or some other failure to perform your professional duties adequately. For example, if you are hired to emcee a high-profile gaming event but fail to arrive on time after missing your flight, your professional liability insurance may provide coverage in case the event organizers sue you.

Additional Policies To Consider

Meanwhile, coverage types like these could further enhance your esports insurance coverage depending on your circumstances:

• Media liability insurance: While general liability insurance already covers advertising claims related to the promotion of your business, you may need media liability insurance to cover claims involving the promotion of a client’s business.^[5] For example, if you are hired to make an announcement trailer advertising someone else’s tournament, media liability coverage could take care of your legal fees if you are sued for using copyrighted video game characters in the trailer.
• D&O liability insurance: Directors and officers (D&O) liability insurance shields individual business executives from lawsuits related to claims of neglect, misuse of funds and other issues with their corporate management. For example, it could cover an executive at a game development company who schedules an unannounced maintenance period when the game’s servers will go down to take place in the middle of a large online tournament organized by the company’s own esports division.
• Commercial umbrella insurance: Commercial umbrella insurance provides extra coverage in case a costly claim causes you to exhaust the coverage limit on one of your liability policies. As the “umbrella” name suggests, this coverage type can provide excess coverage for multiple types of liability insurance at once.
• EPLI: Employment practices liability insurance (EPLI) covers you in case your employees accuse you of discrimination, harassment, breach of employment contract or a similar issue. For example, if a tournament you host runs late and your employees have to stay longer than expected to clean up afterward, your EPLI could cover a legal settlement if your employees accuse you of failing to pay them overtime.
• Sexual misconduct liability insurance: General liability insurance often excludes coverage for sexual misconduct claims, so you should consider buying sexual misconduct liability insurance in case someone claims that they were sexually abused at an event you hosted or harassed by an employee of your company.^[6]
• Commercial crime insurance: Commercial crime coverage insures your business against losses caused by employee dishonesty, forgery, embezzlement and other crimes. For example, if one of your employees steals money that was designated for the prize pool of a tournament, your commercial crime insurance may help you pay the highest-placing players at the tournament without cutting into your profits.
• Inland marine insurance: While commercial property insurance covers your business’ equipment when it is inside of your primary workspace, you will need inland marine insurance to cover it elsewhere. For example, inland marine coverage can insure your commercial property against covered perils while it is on the way to or inside of a venue you have rented.
• Equipment breakdown insurance: Meanwhile, equipment breakdown coverage can insure your consoles, monitors and other electronic equipment against perils that aren’t covered by commercial property insurance such as power surges.^[7]

How Much Does Esports Insurance Cost?

Esports insurance prices will generally depend on the size and scope of your business or event, your claims history and the details of your policy such as the coverage types and coverage limits it includes. While there is little publicly available data about esports business insurance premiums, the following examples may be able to illustrate how much you could have to pay for certain kinds of gaming and esports coverage.

The Hartford’s small business customers pay around $1,019 per year on average for BOPs.^[8] Meanwhile, Thimble Insurance charges $115 to $340 per day for event insurance that includes general liability and commercial property coverage, with exact prices depending on factors like the location of the event and the number of attendees.^[9]

Finally, Sadler Sports & Recreation Insurance offers coverage for amateur sports leagues and teams starting at $300 per year depending on the number of participating players, their ages and the level of risk associated with the sport.^[10] Of course, esports pose unique risks compared to traditional sports, so this may not accurately reflect the cost of insuring an esports league or team, especially a professional one.

How To Get Competitive Gaming Insurance

To find the right insurance policy for your budding esports business, you should compare quotes from around three to five different insurance companies. You’ll need to provide these companies with information like your location, yearly revenue and number of employees. However, it can undoubtedly be tedious trying to individually contact insurers to give them your information.

As a result, you should try using an insurance marketplace like SmartFinancial. We quickly collect information about your budget and coverage needs through a simple questionnaire and then match you up with insurance agents in your area who can help you compare quotes. If you’d like a free commercial insurance quote today, click here to enter your zip code and start our questionnaire.