Event cancellation insurance protects stakeholders against the expected unexpected. This summer the number of events that were canceled is unprecedented. Losses run into the millions. The COVID-19 pandemic impact on events is unprecedented. Event cancellation insurance helps investors and event organizers against natural disaster, communicable disease, civil commotion, riots, strikes, national mourning, terrorism, bad weather and other acts that can cancel or undermine a planned event.
How Does Event Cancellation Insurance Work?
Event cancellation insurance protects investment and expected revenue when uncontrolled forces cancel or interrupt an event. Sometimes the coverage protects expenses related to the cancelation or rescheduling of an event. This type of insurance policy is not uniform. Event protection insurance often is customized to the needs of the event organizer and particular risks for an event or series of events.
Severe acute respiratory syndrome (SARS) is a viral respiratory illness caused by a coronavirus, called SARS-associated coronavirus (SARS-CoV). SARS was first reported in Asia in February 2003. Before the first SARS outbreak, event insurance coverage routinely covered losses because of communicable diseases. Since 2006 that blanket coverage usually is not found in event insurance. Most policies either exclude infectious diseases, or communicable disease or government-ordered shutdowns, or limit the dollar amount. The language of your insurance policy will determine the outcome as well as insurance statutes and common laws of the governing jurisdiction. There is no off-the-shelf answer. But the insurance policies terms are the starting point.
Who Purchases Event Cancellation Coverage?
Typically, purchasers of this type of insurance include: concert promoters, festival promoters, charities, event suppliers, vendors at events, educational institutions, hotels, bars, restaurants, bands, conference planners, sporting event sponsors and others.
As an example, a trade show for instance can cost a planner or investor millions if the event is canceled. Anyone who relies on income from a special event can purchase special event insurance to protect their expenses and revenue.
What Types of Events Trigger Coverage?
Specific Causes of Loss Coverage
If I am hosting an event in Miami at the end of summer, I may want to insure my special event against hurricanes or even thunderstorms. The known history of weather events dictates planning. So a special event host may be interested in purchasing hurricane coverage to protect their investment and revenue if a hurricane occurs. Even a local two-day beer festival or food-truck festival promoter thinks about the weather. An afternoon of rain may cause a successful to turn into a financial disaster.
All-Cause Coverage
Another type of coverage is “all-cause” coverage. This type of coverage will trigger in the event of any reason unless it is specifically excluded. Today, all-cause coverage tends to exclude pandemics or government-ordered shutdowns.
If the insurance company can show that an exclusion applies, the insurer need not pay. In some cases, policyholders are blindsided by the insurance company’s interpretation of the policy and shocked when their claim comes back denied.
What Types of Losses are Covered?
A policyholder can protect both investment capital and revenue depending on how much the policyholder is willing to pay in premiums measured against the risks insured. Policy exclusions impact pricing too.
Besides revenue and expenses, a vendor or host may wish to also cover any expenses related to preventing an event from being cancelled. This would typically include legal expenses from suing to prevent the cancellation of an event. Event cancellation policies also cover expenses related to reduced capacity or a substantial reduction in the number of guests. Policyholders have a lot of options when it comes to special event insurance, but as with all insurance products, you get what you pay for.
Talk to an Event Cancellation Attorney Today
If you’ve had an insurance claim denied, call Jonathan M. Feigenbaum or Doyle Trial Lawyers, LLP today to schedule a free consultation and learn more about how we can leverage an insurance company into honoring their policy. Doyle Trial Lawyers, LLP and Jonathan M. Feigenbaum are experienced counsel representing insurance policyholders only and never insurance companies.