In today’s unpredictable world, the need for event cancellation insurance has never been more evident. Whether it’s a high-profile concert by a global superstar like Taylor Swift, an international sporting event like the Olympics, or the start of a much-anticipated football season, the potential for disruption looms large. Terrorism threats and extreme weather events due to the broad impacts of climate change contribute to the growing risks faced by event organizers, artists, and venues. Event cancellation insurance offers a critical safety net in the face of some of these uncertainties.

The Growing Necessity for Event Cancellation Insurance

Event cancellation insurance is a specialized type of coverage designed to protect against financial losses when an event is canceled, postponed, relocated, or rescheduled due to unforeseen circumstances beyond the control of the policyholder.

It can cover a wide array of risks depending on the type of policy. Some policies are written on an “all-risk” basis, meaning they cover any cause not specifically excluded by the policy. Others cover a more limited set of causes that are specified in the policy. But one thing is evident—as global events become more complex and fraught with potential disruptions, the importance of having this coverage has become increasingly clear.

Terrorist Acts and Threats

The recent cancellation of Taylor Swift’s concerts in Austria due to terrorist threats highlights the very real dangers that high-profile events face. Event cancellation policies do not usually provide coverage for militant attacks. But apparently Taylor Swift knew there could be trouble and chose to purchase additional coverage to protect her performances from acts or threats of terrorism. Similarly, major international events that attract large crowds like the Olympics are also vulnerable to terrorism-related disruptions. With increased political tension and unrest around the world, there is an increased need for insurance that will protect policyholders from cancelling events due to these risks.

Climate Change and Weather-Related Disruptions

Climate change has significantly altered the risk landscape for event organizers, particularly for outdoor events. The start of football season, for instance, often coincides with hurricane season, creating the potential for weather-related game cancellations or relocations. Over the years, football games have been affected by severe weather, ranging from hurricanes and snowstorms to extreme heat and flooding.

The role event cancellation coverage plays due to the devastating impact of hurricanes has been a recurring issue, one that we have written on before following the wake of Hurricane Dorian in 2019 and on other occasions.

As weather patterns become more unpredictable and severe due to climate change, the likelihood of event disruptions may increase. Event cancellation insurance offers vital protection against these risks, covering financial losses that arise from weather-induced cancellations, postponements, and relocations.

Who Can Benefit From Event Cancellation Insurance

The benefits of event cancellation insurance extend to a wide range of stakeholders, from venues and organizers to the artists and performers themselves.

Entertainment and sports venues, like stadiums, are the physical hubs of events, and they can benefit from such insurance when there are event cancellations. Event organizers, too, face risk as they are responsible for planning and executing events. Artists and performers, particularly those involved in large-scale tours, stand to lose significant income if an event is canceled. 195,000 concertgoers were expected to attend the three cancelled Taylor Swift concerts in Austria alone. Artists can add their own policies to ensure they are paid even if the event in question is cancelled.

Depending on the policy, event cancellation insurance can cover an array of losses. There are often substantial costs associated with cancelling, rescheduling or relocating an event. Costs can range from rent for the original venue and non-refundable deposits to production costs and contractual obligations to vendors and sponsors. With the big spectacles that concerts have become these days, there are substantial costs associated with travel, accommodations, and the logistics of staging a performance. On the flip side, there may also be coverage for lost revenue, including from ticket sales, concessions, and other income streams tied to the event. Event cancellation insurance may provide coverage for any of these losses depending on the policy.

Policyholder Considerations

Different events face different levels of risk. Understanding these risks is crucial for determining the appropriate scope of coverage. For example, outdoor events in regions prone to severe weather may require specific coverage for natural disasters, whereas high-profile concerts and international events may need additional coverage for terrorism-related risks. Additional event cancellation coverage with a terrorism coverage extension or even standalone coverage may be needed depending on the particular risks.

Event cancellation policies can vary widely in terms of what they cover and exclude. Policyholders should carefully review their policies to ensure they are adequately covered, including for those risks that may be less obvious but equally disruptive. Given the complexities of this insurance, working with experienced insurance coverage counsel can be invaluable. Counsel can help navigate the intricacies of policy language, identify gaps, and ensure that the coverage is comprehensive and aligned with the specific needs of the event.

When an event is cancelled or delayed, policyholders must take steps to secure coverage under their policies. Policyholders should review their policies’ terms for potential coverage, provide immediate notice to their insurer, and maintain detailed accounting records for all losses and costs, including lost revenue and profits, along with extra expenses.

Conclusion

In today’s uncertain world, event organizers, venues, and performers are increasingly exposed to risks that could lead to the cancellation or postponement of events. These risks, ranging from terrorism threats to extreme weather events, are becoming more pronounced, making the need for comprehensive event cancellation insurance ever more critical. In the world of event planning, don’t “Shake It Off” but instead make sure you are adequately protected so you can weather the storm, both literally and figuratively.