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By Isabella K. Stankowski-Booker
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While many Event Cancellation/Non-appearance policies offer effective coverage for financial losses and additional costs when the insured performer dies from natural causes or an accident, they reach their limits if the insured artist commits suicide. Similarly, as recent examples show, coverage issues arise when the suicide of a person other than the insured performer, such as the artist’s next of kin, causes the cancellation of the event.

This article examines some of the issues that have preoccupied the entertainment insurance industry following an insured artist’s — or named person’s — suicide. Specifically, this article analyzes particular policy language that causes coverage disputes; assesses how courts in the United States might resolve those disputes; and offers possible solutions to prevent similar controversies from happening again.

The Insurance Product

The insuring clause of a standard Event Cancellation policy may read as follows:

[...] Insurers will indemnify the Assured for its ascertained net loss arising from any insured event [...] being necessarily canceled, abandoned, postponed, interrupted or relocated.

Provided that:

1. the necessary cancellation, abandonment, postponement, interruption or relocation is the sole and direct result of one or more of the perils; ...

2. such peril is beyond the control of:

a) the Assured; and
b) each and every insured person; ...

3. the peril [...] occurs during the period of insurance.

Accordingly, coverage exists for financial losses and additional costs that the assured — frequently the event promoter or the artist’s production company — incurs because of the cancellation of the insured event. The insured peril must be the direct and sole cause of the cancellation and must be beyond the control of the assured and every insured person. Although the performing artist is usually named as an insured person, the artist’s next of kin may be included as “named persons” via endorsement.

The perils insured against normally include (1) the death of an insured, (2) an accident to or illness of an insured, (3) unavoidable travel delay and (4) damage to or destruction of the event venue. Other perils such as national mourning may be added. Moreover, many Event Cancellation policies contain a catch-all provision that insures against any other peril that is not explicitly excluded by the policy. Unfortunately, many policies fail to define the perils of death or accident.

As to exclusionary provisions, the following were at the center of controversy in some recent well-publicized insurance coverage disputes:

This insurance does not cover any loss directly or indirectly arising out of, contributed by or resulting from:

1. death, accident, illness of any individual person other than any insured person;

                                                         ***

2. non-appearance at an Insured Performance or Event of any insured person due to ... any known pre-existing, physical, psychological or medical condition unless otherwise agreed in writing by the Underwriters;

Suicide Of The Insured Artist

The cancellation of an insured event due to the suicide of the insured artist opens a Pandora’s Box of legal arguments regarding coverage. On the one hand, proponents of coverage might argue that an insured event occurred — i.e., the death of an insured person — an insured peril — directly caused the cancellation of the insured performance. Proponents of coverage may furthermore assert that where suicide is not explicitly excluded, it must be covered, if not under the peril “death,” then under the policy’s catch-all provision. Opponents of coverage, in contrast, may stress that the insuring clause explicitly requires that the death be beyond the control of the insured. Suicide, by definition, is death by one’s own hand, and is, therefore, within the control of the insured artist.[1] Consequently, no explicit exclusionary language is required.

Virtually no court decision has addressed these arguments in the context of event cancellation insurance. However, courts would likely revert to well-established rules of policy construction to resolve these legal issues. To this end, courts generally enforce an insurance policy according to the plain meaning of its words “as expressed in the clear language of the contract.” [2] Moreover, most courts construe contested policy provisions in the context of the entire policy and attempt to interpret the language as consistently as possible. Where a provision remains susceptible to more than one reasonable interpretation, some courts permit the introduction of extrinsic evidence. However, if extrinsic evidence does not resolve the ambiguity, courts generally construe it in favor of the insured and against the insurer.

As noted, most Event Cancellation policies fail to define “death.” But, courts have held that undefined terms in insurance contracts are not inherently ambiguous and that such terms must be given their plain and ordinary meaning. The plain and ordinary meaning of “death” is the “[...] ending of life [and] the cessation of all vital functions and signs [of a person].” [3] The cause of death is irrelevant. Therefore, considering the term “death” in isolation supports the argument that event cancellation policies cover any type of death, whether caused by natural causes, foul play or suicide.

However, this construction of the term “death” in isolation ignores the policy as a whole, including its insuring clause and, in particular, its “beyond the control of the insured” requirement. While no decision has interpreted this phrase as used in an Event Cancellation policy, several cases interpreting the language in marine policies offer guidance.

In Lumber & Wood Products Inc. v. New Hampshire Insurance Co.,[4] a hurricane damaged the insured’s lumber that was stored on the dock of the insured’s consignee, an assured under the same marine cargo policy. The insured argued that the consignee’s facility was stocked to the point that no more lumber could be stored, which created “circumstances beyond the control of the assured.”[5] The Eleventh Circuit Court of Appeals disagreed and reasoned that the circumstances were not beyond the control of the assured, where the assured “chose to process the lumber on the dock.”[6]

In St. Paul Fire & Marine Insurance Co v. Novus International Inc.,[7] goods of the insured at a warehouse were damaged by flooding. The insured claimed that the accumulation of goods was beyond its control. The Second Circuit Court of Appeals, applying New York law, disagreed and reasoned that the accumulation was within the control of the insured’s risk manager, who was in charge of devising and implementing effective risk monitoring procedures.[8]

These decisions suggest that circumstances are “within the control of the insured” if the insured had some influence, power or choice over them. Thus, when considering the “beyond the control of the insured” language in event cancellation policies, a convincing argument against coverage exists in the case of an insured’s suicide, since the death is arguably within the artist’s influence, power or choice.

Additionally, courts have established that “[e]xclusion clauses limit the scope of coverage granted, but they do not [...] grant coverage,” suggesting that “failure to exclude an act from coverage does not automatically mean that the act is covered ... ” [9] Thus, the fact that many Event Cancellation policies do not expressly exclude suicide should not automatically afford coverage for the act.

Suicide Of A Named Person

For their 14 On Fire tour of Asia and Australia, The Rolling Stones purchased event cancellation coverage which listed L’Wren Scott, Mick Jagger’s girlfriend, as a person whose death could cause the cancellation of the band’s shows.[10] Following Scott’s suicide, the band canceled several performances in Australia and New Zealand and subsequently submitted a $12.7 million claim for lost earnings with its insurers.

The insurers initially denied coverage, arguing that Scott’s suicide was not sudden and unforeseen. Rather, “[it] arose from, was traceable to, or accelerated by, a condition for which she had received or been recommended medical attention”[11] and which allegedly had not been disclosed to the insurers. In response, The Rolling Stones sued their insurers in the High Court in London, arguing that Scott’s death had been sudden and unforeseen to them, and was, therefore, an insured event. [12]

The arguments of both sides are easier to follow when considering the standard Named Person Extension that may be added to an Event Cancellation policy to amend the policy exclusion for loss resulting from the death, accident or illness of any person other than the insured. The Endorsement provides:

[This insurance does not cover any loss directly or indirectly arising out of, contributed by, or resulting from:]

Death, Accident, Illness of any individual person other than an insured person, unless the non-appearance of the Insured Person is the sole and direct result of the sudden and unforeseen

1. death of

2. life threatening accident to

3. manifestation of life threatening illness in

any of the Named Person(s) specified below. Such Named Person(s) are subject to the terms, conditions and exclusions of this insurance as if they were an Insured Person.

However, no loss shall be payable hereunder consequent upon death, accident or illness arising from, traceable to or accelerated by any condition for which the Named Person(s) has received or been recommended medical attention.

Named Person(s):…

This Endorsement reinstates coverage for the cancellation of an insured event due to, inter alia, the death of a named person. However, coverage is limited to death that does not result from a condition for which the named person has received medical attention or for which medical attention has been recommended.

Nevertheless, the Endorsement’s language will likely be subject to disagreement in case of a loss arising out of a suicide. First, the Endorsement neither defines the term “death” nor excludes suicide. Second, it is unclear what the phrase “sudden and unforeseen” modifies. For one thing, the language plausibly pertains to the effect of the named person’s death on the insured artist. As long as the named person’s death was a sudden and unforeseen event for the insured artist, the losses arising from the event cancellation must be covered. Accordingly, under this analysis, a named person’s suicide may be covered.

In contrast, the language of the Endorsement of the named person also allows for the argument that the policy affords coverage for a canceled event only if the death was sudden and unforeseen by the named person. This is supported by the explicit language that subjects named persons to the same terms, conditions and exclusions of the policy that apply to insured persons. Thus, a named person’s death would also have to be beyond the named person’s control. Consequently, under this interpretation, a named person’s death would not be covered where the named person decided to end his or her life.

Conclusion

Arguably, the disputed coverage issues discussed in this article can be avoided by using clearer policy language. For instance, greater contractual certainty can be achieved by adding an exclusion providing that “the insurance does not cover any loss directly or indirectly arising out of, contributed by, or resulting from the suicide of an insured or named person.” Another option to consider is clarifying that the policy does not insure the cancellation of an insured event due to an insured suffering from any physical or psychological medical condition as a result of the suicide of another person.

—By Isabella K. Stankowski-Booker, Zelle Hofmann Voelbel & Mason LLP

Isabella Stankowski-Booker is an attorney in our New York office.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Fister ex rel. Estate of Fister v. Allstate Life Insurance Co., 366 Md. 201, 213, 783 A.2d 194, 201 (2001); Solorzano v. Bristow, 2004-NMCA-136, 136 N.M. 658, 662, 103 P.3d 582, 586.

[2] Jakobson Shipyard Inc. v. Aetna Casualty and Surety Co., 961 F.2d 387 (2d Cir. 1992).

[3] Black’s Law Dictionary (10th ed. 2014)

[4] Lumber & Wood Products Inc. v. New Hampshire Insurance Co., 870 F.2d 916 (11th Cir. 1987).

[5] Id. at 920.

[6] Id.

[7] St. Paul Fire & Marine Insurance Co v. Novus International Inc., 504 Fed.App’x. 57 (2d Cir. 2012).

[8] Id. at 59.

[9] Mullaney v. Aetna U.S. Healthcare, 103 F.Supp.2d 486, 494 (D.R.I. 2000).

[10] Rolling Stones In Insurance Battle Over Canceled Asia Tour Dates, Thomson Reuters; Martha Neil, Rolling Stones Settle $12.7M Insurance Claim Over Shows Canceled Due To Jagger’s Girlfriend’s Death, ABA Journal.

[11] Rolling Stones In Insurance Battle Over Canceled Asia Tour Dates, supra note 10.

[12] Charles Gordon, Could ADR Have Protected Lloyd’s In The Battle Against The Rolling Stones, Insurance Edge; Why The Rolling Stones’ Insurance Battle Matters To Mere Mortals, The Guardian