Based on growing concerns over the spread of COVID-19, large public gatherings, such as conferences and other events, are being cancelled at an increasing rate throughout the United States, and internationally. More than 50,000 people signed an online petition requesting the cancellation of the multi-day South by Southwest event in Austin, Texas. That and other conferences and large events are being cancelled daily. With at least 3,300 world-wide deaths, and approximately 200 confirmed cases in the U.S., large public events will continue to be cancelled for the near future.
Impacting the decision to cancel conferences and other large public events, large corporations are issuing policies (changing almost daily) such as: no nonessential travel; employees can attend conferences only if the conference has a travel ban from certain countries (i.e., you, employee, can attend the conference, but only if the conference bans attendance of people from certain COVID-19 troubled countries); and no attending public events larger than 10 people (last week the policy was 1,000 people or more). Most recently, companies have issued bans on guests being allowed onto their premises, and/or issued a mandatory work from home policy.
What are the legal ramifications of each of these edicts? Or of cancellations of conferences and other large public events? What happens to the contracts for each of these events, such as contracts with the attendees, the site, the vendors, the airlines, consultants, speakers, performers etc. What are the legal ramifications and what will be the financial impact from these cancellations? Will you be able to make an insurance claim to protect you?
Insurance companies are starting to see numerous notifications under Event Cancellation insurance. But will the cancellation be covered by your policy? Are you trying to submit a claim for cancelling an event due to the attendees’ fear, or event organizer’s fear of spreading or catching COVID-19 even though there is no ban on the event going forward? That may not be a covered claim. While you may decide to cancel the event, just know that the cancellation may not be covered because the cancellation was not beyond the control of the event organizer. Additionally, the typical cancellation insurance policy likely contains exclusions that come into play (e.g., the Communicable Disease exclusion – excluding coverage where fear causes a cancellation due to the World Health Organization’s world epidemic determination). Don’t assume your Event Cancellation Insurance will cover your expenses related to canceling.
Other insurance companies are seeing notifications of claims for Business Interruption coverage. Presenting a covered claim under a Business Interruption Insurance policy may be difficult. The first question will be: Does the cause of loss qualify under the policy for coverage? Recently, the UK made COVID-19 a registered notifiable disease to allow insurance claims to be filed. What will happen in the U.S.? And, what is the “loss”? Are there applicable exclusions precluding coverage? Unless you have a specific and unusual insurance policy, recovering under an insurance policy for expenses due to COVID-19 may be very difficult.
These are just some of the legal issued to be sorted out in the coming months. But without recourse to insurance coverage, the contract disputes become even more key.
For more on Force Majeure Contract Clauses and COVID-19, see the March 4, 2020 Duane Morris Alert.