MAY | FEATURE
A crash course in
event insurance
Claire Freeman, Senior Associate at Clifford Chance,
tells Martin Fullard everything you need to know
about event insurance
T
he Covid-19 pandemic has shone
a spotlight on event contracts
and insurance.
There is no denying that the current
situation is a once-in-a-lifetime event,
and that it may not happen again.
But that is little recompense to event
organisers around the world, as all
events have been cancelled or postponed
and many have not had insurance
coverage for the communicable disease
at the centre of it.
On 26 March, the Event Marketing
Association (EMA) ran an online panel
discussion which I was privileged to
moderate. On the panel was Claire
Freeman, Senior Associate at law firm
Clifford Chance, and an expert on
contractual and insurance matters for
the events industry. I imagine she has
been very busy over the last two months.
On behalf of Clifford Chance, Freeman
shared with Access All Areas what you
should know when it comes to contracts
and insurance for events.
What you need to know about insurance
When faced with the possibility of
cancellation or postponement, there
are two crucial questions you must ask
yourself from the legal perspective: do
you have insurance, and what do your
contracts say?
It is important to identify at the outset
which policies may respond to losses.
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Compliance with policy provisions
around notification and management of
losses is often a prerequisite to cover, so
insureds need to understand fully what
they are required to do by those policies.
These are the three main types of
insurance relevant to cancelled events:
» Event Insurance – the outbreak has
already led to the cancellation of trade,
arts and sporting events, many of
which will be covered under bespoke
event cancellation insurance
» Business Interruption – historically,
business interruption cover is not sold
as a standalone policy, but as an add-
on to property or all-risks insurance.
It commonly insures loss of income
arising from physical damage, but
“There are three
main types of
insurance relevant
to cancelled
events: event
insurance, business
interruption and
credit insurance.”
variants exist providing broader cover
that do not impose this requirement
» Credit insurance – this insures
against the risk of non-payment
by a contractual counterparty, and
usually covers a specific risk or
book of business. To the extent that
supply chains become disrupted
and payments are not made, it may
respond
Common issues
For event and business interruption
insurance, a key question is likely
to be whether the policy trigger has
been met. Businesses have had to take
difficult decisions about how to manage
their responses, and whether the
circumstances require them to cancel
events or stop operations.
Whether insurance responds in such
situations will depend on the precise
wording. Credit insurance requires
that the underlying obliger had a legal
obligation to pay, as it insures credit
rather than legal risk.
Accordingly, where it is excused from
its payment obligations as a result of
the outbreak, for example because of a
force majeure clause, there may well be
no cover for the resulting non-payment.
It is also important to review the policy
exclusions, which may exclude losses
arising in certain situations, or certain
categories of losses.
Where an insured party has suffered
many losses, a key question may be
whether these are treated as one loss,
or several losses, for the purposes of the
insurance. Policies commonly include
‘aggregation’ language setting out
what constitutes one loss: this will be
important as it will impact both when