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Insurance and Legal Guidance for the Coronavirus Outbreak

The American Society of Association Executives hosted an online briefing with expert advice from event insurance and legal experts.

The American Society of Association Executives recently hosted a webcast looking at the impact of the coronavirus on the meetings and events industry, drilling down on some of the key issues around event insurance and contracts.

Seth J. Fleischer, business development professional with Aon Affinity Nonprofits, gave the briefing on insurance. He explained that COVID-19 has been exempted by all insurance companies since mid-January, so it is no longer possible for meeting hosts to take out insurance for it. Jeffrey Tenenbaum, managing partner of Tenenbaum Law Group PLLC who held the event’s legal briefing, clarified that groups that purchased a policy covering cancelation or loss in the event of a communicable disease outbreak before the exemption was introduced should still expect to be covered. But any insurance sold recently will only cover other infections, not COVID-19.

For insurance and legal reasons, it’s important for planners know that “coronavirus” has various other names, such as nCoV-2019, SARs-CoV-2, and 2019-nCoV, said Thomas File Jr. M.D., MSC, president of Infectious Diseases Society of America. The World Health Organization has officially named this outbreak COVID-19, and that is probably the name planners will see listed on any communicable disease policy exemptions they take out in the near future.

Fleischer cautioned that insurance companies will only pay if the event is actually impacted by the virus, not because of a threat or fear of the virus. For example, if all of your attendees are coming from China and the U.S. government has banned travelers from China, the event probably can’t go ahead. However, if a viable event is canceled because of fear of the virus then your insurance company will probably not pay. Fleischer emphasized that while he did not know the specifics of the case of Mobile World Congress Barcelona, that event appears to have been canceled over coronavirus fears. The official statement reads, “With due regard to the safe and healthy environment in Barcelona and the host country today, the GSMA has canceled MWC Barcelona 2020 because of the global concern regarding the coronavirus outbreak, travel concern, and other circumstances, make it impossible for the GSMA to hold the event.” There were no cases of the virus in Barcelona; the Spanish government had not placed any restrictions on travel; and the event venue is still open for business, so the conference was not impossible to execute.

Fleischer advised planners to look at communicable disease coverage for future events, even though it may take a while for COVID-19 to be included. He also made a prediction, based on the aftermath of Hurricane Katrina, that there would be some rate increases for insurance in certain regions and some insurers would pull out of markets where they are likely to take a loss.

Legal speaker Jeffrey Tenenbaum called this outbreak an opportunity for planners to reexamine their force majeure contract clauses to control risk even in cases of partial performance. If, for example, 25 percent of exhibitors are from China and cannot travel, will your contract protect you? Tenenbaum suggested modifying force majeure clauses to provide for partial termination of performance, as well as complete termination. This, he said, will help planners mitigate attrition penalties with hotels if a significant number of attendees have to cancel.

Impossible, Illegal, Impracticable, or Frustration of Purpose
Tenenbaum said that hotels and other event venues prefer to allow termination without penalty only if the event becomes impossible, but planners should attempt to include contract language for commercial impracticability—for example, the event could take place but there would be few attendees—or frustration of purpose and illegality—for instance the event was to launch a Chinese product with Chinese speakers who could not attend. For frustration of purpose clauses, make the purpose of the event known to the venue from the outset. 

Tenenbaum said there is no reason to cancel a meeting in the U.S. because there is a negligible risk of infection. But he suggested that asking venues to provide alcohol-based hand sanitizers might provide some protection from liability—and more protection from the common flu the as well. He also urged planners to remember that while the government may have banned travelers from China, there are no grounds for banning exhibitors or attendees from any other country, or anyone from China who is already in the U.S. Doing so will leave the event open to lawsuits and won’t make it any safer.






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