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Insurance Coverage Notes and Developments

Headline: "SXSW Disaster: Event Admits It Has No Insurance for Coronavirus Cancellation"

Headline: "SXSW Disaster: Event Admits It Has No Insurance for Coronavirus Cancellation"

That headline appeared Saturday in Music Business Worldwide, a trade paper, as well as in numerous other journals ranging from Variety to the Austin Chronicle. If you dug a little deeper, you would see that there was cancellation insurance for the ten-day event. But that coverage was excluded for bacterial infections, communicable diseases, viruses and pandemics. 

Why is this important? Because the name is new but the risk isn’t. Do you remember the Ebola outbreak in 2014? The H1N1flu pandemic in 2009? Even Legionnaires’ Disease at the Bellevue-Stratford Hotel in 1976? Or at a hot tub display at the North Carolina State Fair in 2019, resulting in four deaths 141 people infected? (The CDC says that there were 9,333 cases of Legionnaires in 2018.)  And so on.

For businesses that operate public spaces—festivals, malls, accommodations, hospitals, schools, medical and dental offices, nursing homes, office buildings and a host of other facilities where the public may gather, and businesses catering to the public—obtaining cancellation, business interruption, and liability coverage should be included in the insurance coverage that they purchase every year. Many “baseline” policy forms include exclusions for this kind of risk, so to get coverage, the policyholder must ask for it. Even then, read carefully. Some exclusions address only bacteria. Others go farther and refer to viral infection. You and your insurance professional must ask. 

Some environmental impairment policies provide coverage for both bacterial and viral contamination. The question is not whether the coverage is available. It can be. The question is whether the policyholder thinks to ask for it. Use this event as a reminder that there will be other such outbreaks—in fact, they happen all the time—and the time to insure against them is now.

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