For UK immersive entertainment operators (such as escape rooms, immersive theatres, virtual reality centres, and interactive installations), the focus is often on launch and delivering a magical customer experience.

But two phases that frequently get less attention are the build-out phase and the closure phase. Both carry key risks, and if not managed proactively, can lead to exposures that standard policies don’t cover.

Building your attraction

When setting up an immersive attraction, you’ll likely go through complicated builds, manage contractors, and integrate software. All of these activities open the business up to a specific range of risks that need consideration, such as…

Planning

The very first thing that needs tackling is the planning. From sound architectural design through to obtaining the appropriate licences and permissions, getting it wrong before the build can kill a venture before it’s started.

Take the time to identify all the necessary steps towards being compliant so that you don’t get tripped up. Getting these things wrong can rarely be solved by insurance.

Construction and installation

Building and fitting out the attraction itself is the simplest area to visualise, but it’s so complex in reality that it’s easy to miss something.

Whether it’s a new physical build, the adaptation or fit-out of an existing premises, or the erection of a temporary structure, there are multiple physical hazards to be aware of – from making sure no one’s injured during the build process to ensuring the installation doesn’t burn down prior to launch.

The same goes for the technical installation. Whether it’s the latest augmented or virtual reality tech, projection technology, lighting or staging, they all have multiple risks that can result in liability for injury or damage.

Insurance needs to be in place to protect the liability of everyone involved in the build and fit-out phase, including the contingent risk for any contractors involved, as you’ll likely be carrying the can should their insurance fail.

Additionally, new installations are not always covered for loss or damage. Often, “contract works” insurance is also required, including cover for things such as transit and storage risks.

Soft launch

Your venue might hold a test run with a select group of individuals to understand what works and what doesn’t. However, despite the limited audience, it is still an open venue. Your liabilities are live even without taking revenue, and the exposure might even be higher as you may not yet have full control of the risks.

You’ll need to make sure that you have insurance for the venue for the test launch phase. This is often the trigger point to take out a policy for the operational venue itself, which leads us nicely to…

Operational

There will be multiple unknowns to consider from the outset, such as hiring new staff, implementing new procedures, and uncertainty about how visitors will move and behave in the real world. If these risks aren’t managed, early claims (e.g., injury, trip hazards, and equipment failure) can hit before you’ve even turned a profit – and that may compromise your full launch.

Be sure to protect your venue risk from the start with a comprehensive insurance package.

Closing (or adapting) your attraction

Less considered but potentially very costly: what happens when you close, relocate or pivot your immersive experience? For example, what if you lease a site, fit out an immersive environment, trade for a period, and then decide to exit or move?

Risks here include…

Lease obligations

What have you agreed to in relation to dilapidations, reinstatement of premises, and residual liabilities for damage or alteration?

Equipment write-down or asset disposal

What happens if you have to walk away from your venture? Do you need to cut your losses and leave assets behind, or can you sell them (and if so, at what level of loss?)?

These are often items that have been expensive to purchase in the first place. It’s okay when they’re easy to sell, such as standard technical equipment, but what if they’re bespoke sets that only really suit your venue? Can they be uninstalled and moved to a new location, or are they a total sunk cost?

Again, these are not things that can generally be insured.

Trading pause

If you pause operations and move to a new site or adjust your offering, what happens to ongoing fixed costs? If the move is due to an insurable incident at the previous premises, such as a fire or a flood, then Business Interruption insurance might step in.

However, if the decision to move was just due to poor sales, then the downtime is not recoverable under any insurance policy.

Brand and reputation

This is another area where insurance can’t really help.

Shutting down quickly, or relocating, can lead to an adverse customer reaction – especially when combined with a failure to fulfil bookings. You’ll need to find other ways to manage this potentially damaging area, possibly engaging the use of experienced PR agencies.

Insurance issues to consider

So, which areas can insurance help with during both of these phases? And what policies should you consider?

Public Liability and Employers’ Liability insurance

This insurance is always required, but you need to ensure your policy covers the site works phase through to once the venue is launched.

Normal venue policies don’t cover the fit-out, and contract works policies don’t insure the completed project.

Construction or Installation insurance

Depending on the size and scope of your build, you’ll likely need Contractors All Risks cover.

For smaller alterations to existing venues, it’s sometimes possible to get an agreement from your current insurers to cover the property before, during and after installation.

Business Interruption insurance

This cover is often overlooked at the build-out phase. If your launch is delayed due to an incident at the venue location, such as an escape of water, you’ll likely lose income despite still being obligated to pay overheads. This is often harder to insure for a new venue, though not impossible.

Asset or Equipment cover

Make sure your sums insured reflect the high value of immersive tech (like virtual reality rigs, augmented reality servers and projection systems). Check that the property being installed is also covered before the fit-out, as this isn’t always automatic.

Vacated Premises Liability insurance

Find out when you’re considered “the occupier of the property” under your lease. You may be responsible for insuring the property occupancy risk well before the project starts. When closing the venue, or vacating the premises, it’s common to still be considered the property occupier.  Whatever the case, be sure to have the correct liability cover in place for any time you’re required to hold it.

Contractors and Third-Party Providers insurance

Ensure any contractors you use have sufficient insurance for the work they’re carrying out. What’s more, check your own Liability insurance to see if there are specific obligations for the level of cover those contractors are expected to hold, and any explicit requirements for you to check the validity of such insurance.

Basic tips for UK immersive operators when building or adapting a venue

To stay ahead of your evolving risks and make sure that you’re always holding the right cover at the right level, there are a few tips to bear in mind…

Risk assessments

Carry out formal risk assessments for the fit-out phase. When launching, make sure operational ones are in place too. These should always be produced prior to the attraction going live, and they should be in place even for a test or soft launch.

These will include the prerequisite fire assessments of course, but they also need to cover the operational aspects beyond that. And, when launching, things such as appropriate evacuation plans need to be produced. This is even more important than ever now Martyn’s Law is being implemented.

Contract management

Vet, record and keep all supplier contracts – whether they’re installing fittings on site, providing equipment to be used in the experience, or integrating the software that runs the show. Whatever the service, make sure the supplier has appropriate insurance in place.

Be sure they’re taking responsibility for their actions, too, and not trying to contract themselves out of their liability.

Lease management

Review your lease agreements carefully. What happens if your venue is unsuccessful and needs to be closed early, or potentially relocated? What obligations remain under the lease? Do you have a break clause, or would you be liable for the entire lease period regardless?

Use experts

Work with your broker to check that your insurance, and in particular your Public Liability, will cover you from the beginning of the fit-out through to launch and while fully operational.

When operating between venues, be sure that all locations are covered and that you’ve considered the transit and storage risks during these periods.

Check values

Reassess the value of your assets regularly. As you build an engaging immersive attraction, budgets can change – with additional items being purchased to give that wow factor.

Whilst some immersive tech might depreciate as things advance, it’s always better to err on the side of caution to prevent issues in the event of a claim. Don’t underinsure.

Beyond insurance

Don’t just rely on your Business Interruption insurance to step in should something lead to a loss of revenue. Not every eventuality is insurable, so it’s wise to plan for the worst as if you didn’t have any insurance at all.

This is why having a robust business continuity plan is vital. If your venue is closed, or you need to pause operations for fit-out, consider what you’d need to do. If your suppliers go bust, who could you turn to as an alternative provider? If a supplier delivers tech equipment that doesn’t perform as expected, could the venue adapt while you get a replacement?

Communicate

And finally, whatever you do, remember that the value of clear and effective communication never changes.

Communicate with all stakeholders (landlord, contractors, insurers, etc.) throughout the process. This is especially important once you intend to exit or change site – early engagement helps manage expectations and potential claim exposure.

Keep covered for the business’ entire life cycle

Whether you’re about to open a bold immersive attraction in the UK or you’re planning a relocation or pivot in the future, there are exposures that many operators underestimate. Covering the visitor experience when open is only part of the story. Often overlooked are the launch phase and the exit phase.

A proactive risk and insurance approach ensures you’re not exposed when the lights go up, and you’re not blindsided when the lights go down. Get in touch to see what that could look like for your particular organisation.