Understand when and how you can claim

Originally posted on CMJ Insurance brokers.

Acts of terrorism are sadly regular occurrences in the modern world, and insuring against them is vital for any organisation based, or hosting events, in a major city. The insurance industry saw an interesting case earlier this year when a well known international band accused Lloyd’s of London of ‘despicable’ behaviour in refusing to pay out over cancelled shows, but lost in court.

The band filed a lawsuit in Los Angeles against Lloyd’s, several insurance companies, and the insurance broker responsible for placing the cover.

The first part of the suit came after the lead band member broke his leg during a show in Sweden, and the injury resulted in the cancellation of seven shows, three of which were at issue in the band’s complaint. After his leg was treated, the singer went on to perform fifty three shows from a “throne” he designed. Three of these shows were “make up appearances” for cancelled shows. The insurers paid certain amounts owed under the Cancellation Policy for four of the cancelled performances. The complaint specifically stated that the insurance broker failed to adequately inform the band that, if it decided to add these make up shows to the Tour, the London Market insurers would attempt to reclassify two of the cancelled performances as being rescheduled, which would dramatically reduce the amount those insurers would owe in a claim. The complaint also suggested that the lead band members insistence on carrying on with the tour saved insurers “tens of millions of dollars in claim payments” that would have been owed had they cancelled the entire tour.

The second part of the band’s complaint deals with four shows cancelled in the wake of the terrorist attacks in Paris November 2015 – the first scheduled in Turin, the day after the Paris attack, and the same day the band’s website was hacked with a pro-ISIS message. Shows were also cancelled in Barcelona, Paris and Lyon. The band quite understandably expected that the Terrorism policy would provide them with cover for the four November 2015 performances, which were cancelled as a direct result of terrorism. The insurers had not paid or offered to pay a single penny of the band’s Terrorism coverage claim.

The morale of the story? Make sure you understand what your insurance will and will not pay out for, and under what circumstances. If in doubt, ask your broker for clarity.

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