This week, rock band Foo Fighters sued certain Lloyd’s market insurers for failure to pay under two policies – a Cancellation Policy and a Terrorism Policy – for losses arising from the cancellation of several performances last year resulting from lead singer Dave Grohl’s injuries and the ISIS Paris attack.
Under the Cancellation Policy, the band was entitled to coverage for a percentage of its earnings, vendor/promoter costs, and other expenses when performances were cancelled, abandoned or postponed. Seven shows were cancelled after Mr. Grohl fell off the stage during a performance and severely injured his leg and ankle. Despite Mr. Grohl’s injuries, the band went on to perform the remainder of its World Tour, to the expressed appreciation of the London market insurers, which would have been responsible for tens of millions of dollars if the band had cancelled the balance of the tour. The band alleges that, after paying amounts owed for four of the cancelled shows, the London market insurers refused to pay losses related to three other cancelled performances on the grounds that they were “rescheduled” when the band added new performances. In fact, the new performances had been described as “rescheduled” by the Foo Fighters’ broker when seeking to insurance the new events. The band alleges that its broker was working with the London market to avoid coverage under a strained interpretation of the policy.
Under the Terrorism Policy, Foo Fighters was covered for losses caused by any cancelled, postponed, interrupted, curtailed or relocated performance as a direct result of actual, perceived or threatened terrorism, or national mourning resulting therefrom. The Foo Fighters were scheduled to perform in four European cities, including Paris, between November 14 and 19 as the end to the band’s World Tour. On November 13, 2015, a series of coordinated terrorist attacks in Paris killed 130, including 89 at an American rock band performance. The following day, Paris announced a three-day period of national mourning and imposed a state of emergency. The same day, the band learned that its World Tour website had been hacked to display an ISIS flag and threatening the Foo Fighters to “be prepared.” The band elected to cancel their remaining European dates out of concern for their fans and crew. According to the band, the London market insurers have refused payment and simultaneously have withheld any explanation of its coverage position.
Event cancellation policies provide valuable coverage for all organizers and sponsors of events (such as collegiate or professional sports, economic forums, political summits, industry association conferences, etc.) and the local businesses that depend on revenue from such events. To maximize recovery under such event cancellation policies, policyholders should become familiar with the scope of coverage provided by event cancellation policies (which can vary widely), commonly excluded perils, notice, mitigation, claim presentation and other requirements. In addition, the allegations in the Foo Fighters’ complaint should remind policyholders about the importance of involving legal counsel to assist with presenting the insurance claim. Brokers are helpful allies, but may not always have the long-term litigation and coverage consequences in mind. Finally, as Foo Fighters learned, sometimes litigation against an insurer is necessary when a legitimate claim or coverage dispute is denied or ignored.