Coronavirus insurance

The coronavirus outbreak is not yielding and in addition to the problems it poses for the general public, it is strongly affecting the meetings industry. Event planners are facing a large dilemma regarding how to deal with the crisis, whether to go through with the event or to cancel or postpone it. Sometimes the decision is out of our hands as authorities make the call and prohibit any events taking place. So, what happens when you have to cancel an event due to an epidemic, or more specifically COVID-19?

The number of reported coronavirus cases is growing rapidly, and event planners may have even more cause for concern than the general public. The Mobile World Congress in Barcelona has been cancelled, along with other global events, which can make event planners feel uneasy regarding the fulfilment of their contractual obligations for upcoming events. When it comes to considering event cancellation, attendee safety is the priority, but cancelling an event can result in massive losses for event planners and their partners.

WHAT DO YOU NEED TO KNOW?

If you cancel your event, will you be liable for compensation claims?

What will your insurance cover?

A standard insurance policy will not cover the loss of revenue of a cancelled event due to coronavirus. Some policies may have a “Notifiable or Communicable Disease” extension which covers the instances of notifiable human infectious or contagious disease. Coronavirus is as of yet not classified as a notifiable disease in all countries, so any business losses caused by the virus will not be covered in insurance policies unless your country decides otherwise.

There are specialist policies, born out of the SARS virus outbreak 17 years ago, which are mainly available in China. They are very expensive and would normally not be in the budget of an event planner. With these policies, you buy a limit, such as €25,000 or €50,000 so if the event is cancelled due to a notifiable disease, the insurance would pay out a set amount once. As a result of the steep price tag, many organizations and event planners refrain from purchasing such coverage for their conferences and events.

Events, which already have epidemic cover will be able to claim for cancellation due to the coronavirus, provided the event was due to take place in a country subject to travel bans or limits on public gatherings. However, if “disinclination to travel” was not part of the policy, delegates or exhibitors who cancel their conference appearance outside a directly affected region are not insured.

In case you are looking to protect a future event from possible losses caused by COVID-19, insurance at this point might get tricky. As a result of recent events, insurers excluded coronavirus from their policies, meaning anyone looking to buy cancellation insurance for events from now on will not be able to get cover for the current outbreak.

HOW TO INSURE YOUR EVENT?

The impact of COVID-19 is a legitimate cause for concern for event planners, even just from the effects of fear alone. A thoroughly considered contract is the best protection you can have against liability. In this time of high alert, a greater level of scrutiny is especially critical for new contracts.

An important section of your contract that can protect you is called the “force majeure” clause. Force majeure, French for superior force, means what the contract says it means. That is, it’s up to the parties the contract concerns to define the specific conditions for a force majeure claim. Even though the term is open to interpretation, it refers to unforeseeable circumstances beyond the control of the parties that prevent the fulfilment of their contractual obligations. In order to claim force majeure, an event must be unforeseeable, external and irresistible, meaning it is impossible to overcome.

Despite it seems like a great solution to all your problems, it can still be difficult to prove that the challenges you are facing are unsurpassable obstacles that truly make it impossible for you to meet your obligations. For example, if your event has been affected by the coronavirus crisis, you may not receive any aid from your insurance policy, unless it explicitly states epidemics and communicable diseases as a qualifying force majeure circumstance.

How to ensure a force majeure clause in your contract

• Define what constitutes a “commercially impracticable” event.

A 40% to 50% drop in registration numbers would typically qualify as compromising your event’s viability.

• Define what the purpose of your event is.

If part of your purpose includes securing a certain percentage of exhibitors, a high proportion of cancellations within this specific group could disrupt the purpose of your event to the point where you are forced to cancel.

• Provide specific rates of relief for specific rates of cancellation.

• Clarify a minimum period of notice for cancellation and the limits for how many times your liability can be reassessed.

WHERE TO INSURE YOUR EVENT?

As already mentioned, standard liability insurance does not offer adequate protection against the risks of a mass public event. Large events involve a lot of partners, exhibitors, participants, and costs. Just as it is a large financial burden for the organizers to insure such an event, it is a possible large obligation for the insurance company, if the insurance policy is enforced. Not every insurance agency offers such services, in fact, only specific agencies are willing to insure conferences exhibitions and events. Look out for insurance companies that have experience in providing specialist insurance for events, such as Zurich Insurance, Hiscox, Lloyd’s and Romero, which can help protect you from the unexpected.

Sara Tiefengraber