To say that the event industry is reeling from Covid-19 is an understatement. At this point, the entire industry is on an indefinite pause. And when you consider how the pandemic is evolving, it is hard to see where we are going.
Some of the world’s biggest business conferences have been canceled and virtually every sports league has been put on ice. Heck, even the summer Olympics, arguably the world’s biggest event of any kind, has been postponed. The expected cost to the events and related industries will be in the billions.
Will event insurance do what it’s supposed to do – cover losses caused by event cancellations?
Normally, we should not be asking this question. But Covid-19 is a risk like we have never seen before. It is unlikely that any insurer or business ever considered they will be dealing with a risk as pervasive as the coronavirus. So for the event industry, the big question is:
Will Event Insurance Policies Cover Coronavirus Enforced Event Cancellations?
Covid-19 presents an unprecedented global health threat. Halting its rapid spread throughout the world is the biggest fight of our time. It is so urgent that businesses have enthusiastically complied with government orders to shut down.
Consumers too have heeded the social distancing call to stay at home.
All this has combined to virtually put the events industry in the ICU. If you have had your event canceled and would like to know if your event insurance policy will cover your losses, the answer is sadly not as straightforward as you may have thought.
Most Event Insurance Policies Exclude Infectious Or Communicable Diseases
Most people that buy event insurance don’t purchase event cancellation insurance for the reason that it is too expensive. To many, the likelihood of an event getting canceled is low, especially over risk as rare as a pandemic.
Event insurance policies, thus, typically cover losses and liability associated with a ‘hosted’ event – like guest injuries due to slip and fall accidents – not a canceled one. Most event organizers don’t buy event insurance beyond what is demanded by venues. Where event cancellation is added, it is usually for risks, like extreme weather conditions, that are unrelated to global pandemics.
What if your event insurance had an ‘all-risk’ clause?
Unless there is something in the fine print that excludes novel coronaviruses, your all-risks event cancellation insurance policy should reimburse you for losses caused by a Covid-19 enforced cancellation.
Some of these all-risk policies may even include coverage for cancellations caused by outbreaks of infectious and communicable diseases. But again, the question is whether that coverage includes previously unknown coronaviruses. The advice here is not to assume that coverage is guaranteed, but to instead consult your insurer.
Some Insurers May Not Treat Epidemics The Same As Pandemics
The SARS epidemic that hit 17 years ago gave us a preview of the kind of disruption a fast-spreading communicable disease can do for business. Some took lessons from that epidemic and do maintain coverages for epidemics in their event insurance policies.
But we all know that Covid-19 is now a pandemic, which places it in a different league to any epidemic we have known. Again, as insurance companies did with SARS, many are moving to exclude Covid-19 from risks covered on event cancellation policies.
Wary of mass exposure, it is also unclear if those insurers that haven’t moved to exclude Covid-19 from insured risks will treat epidemics the same as pandemics. You will have to ask your insurer if your epidemics coverage will apply for event cancellation caused by the Covid-19 pandemic. Clearly, the insurer’s exposure from a global pandemic to the scale of Covid-19 is far greater than an epidemic like SARS.
Generally, though, event cancellation insurance is supposed to cover cancellations caused by factors beyond your control. Some classify those as acts of God. So, even though a policy may only explicitly cover business disruption or event cancellation due to a SARS or epidemic outbreak, it may still cover coronavirus-associated losses.
We should agree that very few people had the foresight to insure their events against cancellation caused by a global pandemic. With that said, and seeing that Covid-19 is an evolving threat that may yet worsen, what are your event insurance options?
Event Insurance Options In The Wake Of Covid-19
Unfortunately, the options aren’t that many. The reality is making the case for coronavirus coverage is hard work.
Regardless of the fact, your policy doesn’t have adequate coverage for event cancellation caused by Covid-19, however, you will still need event cancellation insurance to insulate your events against future cancellation threats.
What is clear, though, is you cannot buy event insurance for Covid-19 cancellations, even for an event that isn’t yet canceled. The reason is such a cancellation is now a foreseeable risk. Insurers cannot backdate policies and will not sell insurance coverage for a risk that is now widely expected.
Again, signs are that insurance companies have placed a moratorium on event cancellation insurance. You will thus struggle to find an insurer willing to sell you an event insurance policy during the current times. They simply don’t know enough about the virus, seeing there is no cure and quite a bit that health professionals still don’t know about Covid-19.
Event Insurance Coverage for Coronavirus Depends On The Terms And Scope Of Each Policy
There is near consensus on the scale of disruption from Covid-19 for the events industry. But about how to treat losses or claims over coronavirus enforced event cancellations, insurers aren’t in agreement. Coverage depends on the specific wording on your event cancellation insurance policy.
It is wise to be proactive and review, with the help of your insurance broker, what limits there are on your event insurance policy. Unfortunately, chances are higher that your policy will either exclude or has no scope to cover the Covid-19 pandemic.
A claim refusal over a wedding or conference you were forced to cancel as a Covid-19 containment measure, however, does not mean you shouldn’t buy event insurance. It means you have to widen the scope of your policy the next time you renew it. You will have to as experts expect there will be more epidemics to come.
Covid-19 took all of us by surprise. At present, insurers are careful not to make decisions that will expose them to what is still a rapidly evolving pandemic. Once the Covid-19 dust settles, the entire insurance industry will have to reflect on how they treat epidemics and pandemics in the future and come up with event cancellation insurance products that can truly protect event planners.
If you have any questions regarding your event insurance policy and whether or not you are covered during this pandemic, contact one of our agents today.