Insurance issues related to Michael Jackson’s cancelled tour – and your next big event…


In the wake of Michael Jackson’s untimely death at a relatively young age, much is riding on the results of his autopsy and a ruling on the cause of his death. Anschutz Entertainment Group (AEG) is estimated to have about $40 million at stake, depending on the cause of his death. According to Billboard, about three-quarters of a million concert tickets had been sold and AEG plans ticket refunds of about $85 million.
As part of the event planning, AEG sought and secured event cancellation insurance from Lloyd’s of London. This type of insurance is particularly important to protect all parties against unforeseen losses due to any number of problems – sudden unavailability of a venue, catastrophic weather that might force a cancellation, or ill health on the performer’s part, to name a few examples. In the past, Jackson has canceled shows in the latter parts of his tour for ill health or exhaustion. Earlier this year, when AEG was arranging for insurance coverage, Jackson had to pass a four-hour medical exam attesting to his health.
But like any insurance policies, there are exclusions. If Jackson’s death was due to a reason that was excluded in the policy – such as a pre-existing medical condition or a substance abuse problem – the promoters could be left holding the bag. While autopsy results so far have been inconclusive, ongoing investigations into Jackson’s death are occurring. And with the amount of money at stake, it wouldn’t be unusual for an insurer to conduct their own investigation.
Business insurance for large events
Rock concert promoters aren’t the only parties that might need event cancellation insurance. This is a common type of insurance sought by corporations and businesses that sponsor major events, conferences, and trade shows and depend on revenue for those events. Determining whether of not cancellation insurance is needed and how much is generally a matter of scale, based on the number of people involved and the amount of financial and other risk involved in the event.

“Whether planners should invest in cancellation insurance depends upon how important an event is to an association or corporation financially and what kind of risk it is assuming. “If you’re holding a board of directors meeting for 65 people that wouldn’t generate income and was inexpensive to hold, there’s no point,” explains James M. Goldberg, an attorney with Washington-based Goldberg & Associates. “But if it’s a big annual event for 3,000 people that’s a major source of revenue, definitely think about insuring.”

Event insurance can cover unforeseen problems, and “… perils that are beyond the control of a planner, such as inclement weather, a principal speaker dropping out, strikes, outbreaks of disease and so on.” But experts caution that it will not cover poor planning or poor attendance.
Personal events such as weddings may benefit from insurance, too
Beyond businesses, private events can also sometimes benefit by similar types of coverage. As the average cost of a wedding climbs – in the U.S., it is between $20,000 and $30,000 – wedding insurance is increasingly common. Wedding insurance can cover costs for cancellation due to weather, illness, or venue unavailability. It can also cover losses if gifts are stolen, damage or loss of photos, rings, gowns, and the like, and other unforeseen problems. If you are planning a costly reception, you may want to discuss wedding insurance options with your agent. In addition to insurance for cancellation or other problems, your reception venue may require liability insurance. You should also be sure to verify that your wedding venue and your vendors are properly insured, and learn exactly what and how their insurance might extend to cover any problems you might experience.