Live Nation claims COVID-19 outbreaks affected 35 company locations, infecting 62 of its employees during the first months of the pandemic, and cites “an unprecedented and nearly complete shut-down of the live music industry” that has cost the promoter billions of dollars in losses.
At issue is the Global Advantage policy’s property damage section, which Live Nation claims is “meant to protect the insured against all risks of loss, whether known or unknown” with enhancements added to the coverage protecting “against loss of income following a disaster, wherever you operate, or however indirect your connection to the loss.” (A copy of the policy was not included in the lawsuit.) The suit notes that while many outside All-Risk policies don’t cover “pathogens, viruses or other disease-causing agents,” the FM policy “expressly includes ‘Communicable Disease’ as a covered cause of loss.”
Other companies currently suing Factory Mutual include Ralph Lauren, Cinemark, New York University and the Atlanta Falcons -- all similarly claiming the insurer failed to pay out claims for pandemic-related financial losses.
While Factory Mutual Insurance Company has “failed to acknowledge coverage” for Live Nation’s claim, a number of recent court rulings foreshadow Factory Mutual’s likely legal defense -- that the provision covering property loss and damage only applies to physical damage and not losses caused by mandated closures.
In August, a District of Columbia judge ruled that the forced closure of a dozen restaurants in Washington did not constitute a direct physical loss and did not trigger a covered claim with the Erie Insurance Exchange. And in May, in one of the first court rulings on the issue, U.S. District Court Judge Valerie E. Caproni ruled that Social Life Magazine Inc.’s attorney deserved “a gold star for creativity” but ruled the publisher’s loss was not covered under the policy issued by Sentinel Insurance.
Besides likely disagreeing with the narrow reading of the property loss section, lawyers for Live Nation have pointed to more than a half dozen other applicable coverage areas in the policy. That includes time element coverage which insures against losses caused by “the inability to put property to its normal use” and “Civil or Military Authority coverage” which protects against losses caused by limitations placed on the company by civil or military leaders.
In a similar case filed by Ralph Lauren in August, attorneys for the fashion company accused Factory Mutual of “providing ‘talking points’ to its claim adjusters to help coach the adjuster to suggestively steer the policyholder toward the on-site communicable disease coverage, which provides only a fraction of the coverage limits otherwise available under the policy.”
In Live Nation’s case, Factory Mutual has “failed to acknowledge coverage for the [claim] or to pay any of the coverage it owes to Live Nation,” the suit alleges. “Rather, on information and belief, FM has institutionally taken the position that it will deny nearly all coverage sought by its policyholders for COVID-19 losses, and will also similarly seek to limit or deny coverage for Live Nation’s coverage claim.”
Live Nation is seeking declaratory relief, essentially finding that its claims are covered in its policy, and allow the promoter to proceed with a breach of contract suit against the insurer.
Neither Live Nation nor Factory Mutual responded to requests for comment.