“Lloyd’s of London Insurance? Kan-ye please pay my policy…?”
Kanye West has filed a $10M lawsuit against Lloyd’s of London over a denied insurance claim arising from his recently cancelled Saint Pablo Tour in 2016. West’s withdrawal meant 21 shows were cancelled. He took out the insurance policy to cover him in the event of any illness that may have prohibited him from performing.
West’s touring company Very Good Touring Inc have alleged that the insurance company is withholding payments for the tour cancellation in 2016. The lawsuit claims Lloyd’s are citing his “use of marijuana” as a major reason to not pay the claim. He has also accused Lloyd’s of trying to smear him in the press and use “unfounded” allegations to deter his company from pursuing damages.
Lloyd’s has so far refused to pay the claim even though the lawsuit alleges claims for breach of contract and breach of the implied covenant of good faith and fair dealing.
The initial burden relies on the client showing the loss falls within the insuring agreement. The insurance company can get out of paying a claim if they can prove the loss was due to something excluded on the policy. In the case of West and Lloyd’s the lawsuit is filed in California and any any disputes will be dealt with by a jury.
Insurance companies can normally deny a payout if a client has a pre-existing medical condition that hasn’t been disclosed when the policy was initially set-up. It isn’t clear if Kanye was suffering from anything previously or if everything had been disclosed at the time.
There are a few potential outcomes which include:
- Very Good Touring prove the claim is covered and court awards in their favour. Lloyd’s will have to pay the claim.
- If Very Good Touring can show Lloyd’s acted in bad faith by denying the claim they can claim for additional damages
- If Very Good Touring can show Lloyd’ acted with “malice, oppression or fraudulently” the court can award punitive damages to punish Lloyd’s
- If Lloyd’s is able to show that the claim is not covered under the policy, Very Good Touring will get nothing
- If Lloyd’s win then Kayne can use it as artistic fuel for any future material. He can sell millions of records that far outstrips the original cost of the claim.
With so much to consider when buying event insurance, what does it actually cover?
Cover can include costs and expenses relating to venue costs, merchandising, advertising, marketing, etc. This can be extended to include ticket sales, sponsorship and advertising.
Additional extensions include weather cancellations like the recent Y NOT festival where the weather became so adverse they had to cancel on the last day for safety concerns.
There are other additional covers that can be bought to include food poisoning, sanitation issues or even murder at the venue. Other perils can include natural catastrophes, public transport failure or denial of access to the event.
Event cancellation policies can a wide range of comprehensive cover, but it doesn’t cover poor sales, financial failure or default. As of yet there isn’t a clause to include marijuana use. They generally include a drug clause where non-appearances stemming from use of alcohol or drugs will not be covered.
Lloyd’s of London Insurance
Finally a word about Lloyd’s and how it operates. It is an insurance market instead of as company. Members of Lloyd’s join together to form syndicates to insure unusual or huge risks. In the past they have insured David Beckham’s legs for £100M and In 2004, they insured £27m worth of jewellery worn by the stars at the Oscars.
Lloyd’s is the oldest insurance institute in the world. In 2016 over £14 billion in claims were paid, any accusations that they don’t pay out claims is unfounded. Ultimately where there is cooperation between both parties, an amicable solution is normally found. As West and LLoyd’s haven’t found that common ground it remains to be seen what happens in this particular case.