Many fear that the economic effects of the COVID-19 pandemic will be deep and lasting. Social distancing efforts have increased, and President Donald J. Trump has decided to prolong coronavirus social-distancing guidelines and recommendations until April 30, 2020. Such social-distancing efforts to prevent the spread of the virus have brought the customary operation of businesses where people gather to a halt. As a result, stores are scarce of customers, and bars and restaurants are operating on a limited capacity.
Given the ongoing social-distancing efforts, gatherings of large groups at entertainment performances, sporting events, business meetings, and professional conferences are not allowed to commence during this pandemic. Around the world, there have been suspensions, postponements, and cancellations of numerous events in the entertainment industry. By way of example, the National Basketball Association suspended its season shortly after a player from the team known as the Utah Jazz tested positive for the coronavirus. Similarly, NASCAR suspended all racing through May 3, 2020, and the Indianapolis 500, which is held annually over the Memorial Day weekend and was originally scheduled for May 24, 2020 has been rescheduled for Sunday, August 23, 2020. Similarly, Madonna cancelled the last two dates of her Madame X Tour on March 10 and 11. These are just a few of the many examples of entertainment events cancelled or suspended.
These actions understandably leave players in the entertainment industry with questions such as: Who will bear the financial loss resulting from such suspensions and cancellations? Will the directives from national and local governments result in additional and automatic suspensions and cancellations? Will purchasers of tickets for such events be refunded their money? Did the promoter of the event acquire applicable insurance for pandemics like COVID-19?
“Event insurance” refers to the package of insurance coverage for the sponsor of public or private events, such as concerts, festivals, conferences, trade shows, sporting events, and celebrations. The promoter or host of all these types of events should secure a form of “event insurance” as part of their ordinary business expense. For those that purchased such insurance and had to suspend or cancel an event, it should be noted that while some provisions within an “event insurance” policy may protect the promotor or host from liability in the event someone is injured during the event, such policies sometimes also include provisions providing coverage for a suspension or cancellation of the event. “Event cancellation insurance” indemnifies the policyholder in the event of cancellation, postponement, rescheduling, or abandonment of the insured event. These “event cancellation” policies typically insure against perils that are outside of control of the event planner. Specific language requiring coverage for communicable disease outbreaks, such as the coronavirus, is typically not included in a standard “event cancellation” insurance policy. However, this does not necessarily mean that there is no coverage for the postponement or cancellation of events in response to the coronavirus. Each event cancellation claim will require careful, prompt attention to the parties’ rights and obligations despite the language of the event cancellation policy, the particular coverage included, and circumstances of the loss. Claims for event cancellation during the COVID-19 outbreak will present numerous challenges. As always, the insurers and the insured should look to the terms of their initial agreement and provisions of their policies and should further review such provisions and polices with an attorney.
If you own or operate a business that promotes or hosts events and you have “event insurance” that may cover any cancellations or postponements of events and have any questions about how the COVID-19 pandemic may affect your business, please contact any member of the Firm at (585) 730-4773.
This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. ©2020 Law Offices of Pullano & Farrow PLLC
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