With the passing of Bill Paxton coming on the heels of the deaths of several other lauded talents—including Carrie Fisher, Debbie Reynolds, and Mary Tyler Moore—fans continue to mourn the losses of their beloved artists, as well as the lost opportunities to see them in their upcoming roles. And those losses reverberate across entertainment industries. Disney must now grapple with pushing forward with its Star Wars film saga and related advertising campaigns without its leading princess. It is a challenge that The Hunger Games filmmakers likewise faced with the passing of Philip Seymour Hoffman, which involved cast mourning periods and script rewrites. Similarly, Fast & Furious 7 filmmakers reportedly spent an extra $50 million to complete the film following the death of Paul Walker. The risk of an unfortunate passing looms over projects in other contexts, as well. In television, John Ritter, John Spencer, and Cory Monteith passed away in the midst of successful runs of 8 Simple Rules, The West Wing, and Glee, respectively. And entertainers David Bowie, Whitney Houston, and Prince, all likely had pending performance contracts at the times of their deaths. This creates the risk of broken deals, unrealized projects, and even downstream litigation.
These unfortunate events are a reminder to employers to have a contingency plan in place for their ventures that depend on an individual’s unique skills and talents. Event cancellation insurance policies can be helpful in providing relief for specific events, such as covering expenses associated with a cancelled musical performance. Event cancellation coverage insures against loss arising out of the cancellation, interruption, or postponement of a covered event, provided the cause of the cancellation or postponement is covered under the policy. Coverage may be available for cancellations and postponements stemming from a wide variety of perils, including the loss or unavailability of key personnel. Such policies are not standard, are typically “manuscripted,” and therefore the terms and conditions may vary among policies. Depending on the particular terms of each policy, event cancellation policies will frequently cover financial losses suffered by policyholder, such as out-of-pocket costs incurred before the cancellation or interruption, contractual payments that the insured is obligated to make, lost profits, lost advertising revenues, lost ticket sales and the costs associated with rescheduling the entertainment event or, for instance, the launch of a film or TV series. These policies will also be subject to common conditions and exclusions that require close attention by the policyholder.
Another option—contract protection insurance—is a form of contingency coverage that is gaining attention due to its emphasis on calculating and covering losses attributable to the after-effects that an untimely passing has on the performance of a contract. This may include lost revenues, costs of re-shoots and re-writes, impediments to contracts with third-parties, and various other out-of-pocket expenses associated with business interruption. Unlike a life insurance policy that provides a flat amount, this model attempts to account for the numerous moving pieces that stem from an individual’s unique performance or contribution to a project.
Still, exploring such a risk-prevention strategy has its complexities, and requires careful assessment of an employer’s risk profile associated with a particular actor, artist, or project. As these contingency policies gain in popularity and the potential risks increase in scope, employers should call on capable counsel to advise on the long-term litigation and coverage consequences that should be considered. Adopting a careful strategy to present a claim in a manner that maximizes coverage and, if necessary, litigating a claim against an insurer, can make a crucial difference in salvaging projects hampered by an unfortunate passing.