Live Nation Sues Factory Mutual for COVID-19 ‘Property Damages and Business Interruption Losses’

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Live Nation is suing Rhode Island-based insurance company Factory Mutual for allegedly failing to provide policy-related compensation “for property damages and business interruption losses” incurred amid the COVID-19 pandemic.

Beverly Hills-based Live Nation recently submitted the 25-page-long complaint to a California federal court, and Digital Music News obtained an exclusive copy of the corresponding filing. According to the straightforward lawsuit, Live Nation purchased, “at significant expense,” a Factory Mutual “Global Advantage® Policy,” which “specifically designates communicable disease as a covered cause of loss.”

The policy’s coverage was in effect from June of 2019 until June of 2020, and by May of last year, “Live Nation had timely provided notice of its coverage claim for the losses referenced.” November saw the leading live music promoter, which said that it had canceled north of 5,000 concerts, “equating to approximately 15 million tickets,” by Q3 2020’s end, provide a “proof of loss” to FM Global.

And despite the disclosure of “additional information” in January of 2021 that Factory Mutual had requested, the 186-year-old mutual insurance company “has failed to acknowledge coverage for the Coverage Claim or to pay any of the coverage it owes to Live Nation.” Moreover, the insurer has allegedly “taken the position that it will deny nearly all coverage sought by its policyholders for COVID-19 losses.”

As an aside, FM Global is in fact engaged in other courtroom confrontations centering on allegedly owed policy payouts. In a lawsuit over Ralph Lauren’s $700 million policy, Factory Mutual counsel said that the plaintiff had “not adequately alleged the existence of COVID-19 on any of its properties,” before relaying that the 54-year-old fashion company “is unable to demonstrate that any of its covered properties were physically damaged by the stay-at-home orders or their underlying causes.”

Predictably, the remainder of Live Nation’s lawsuit chiefly describes the timetable associated with the COVID-19 pandemic (giving particular focus to the situation in California, “the hardest hit of any state” – and the state with the most Live Nation properties) as well as the nuances of Live Nation’s Factory Mutual coverage.

The aforementioned Global Advantage Policy “covers property, as described in this Policy, against ALL RISKS OF PHYSICAL LOSS OR DAMAGE,” according to Factory Mutual text that the plaintiffs included in the complaint.

Building upon the point, Live Nation and its legal team indicate that while “the Policy does not define the terms ‘physical loss or damage,’” they “have separate and distinct meanings, with ‘loss’ tending to include loss of use, loss of functionality for intended purpose, and loss of value, and the term ‘damage’ tending to require some form of physical alteration.”

Moreover, “‘physical loss or damage’… reasonably encompasses a basis for many or all of the losses Live Nation has sustained,” in large part because the policy mentions communicable disease as a “covered physical loss or damage.”

To be sure, over 62 Live Nation employees, across 35 of its insured locations, have tested positive for COVID-19, per the text, and “under the Policy, where someone with COVID-19 is on-site, or has been on-site, at a location, the presence of Communicable Disease causes physical loss or damage to that property.”

Finally, the plaintiffs elaborate on the latter idea by emphasizing: “The presence of COVID-19 within Live Nation’s insured locations is not required in order to trigger coverage. If there is a loss of a property’s functionality for its intended purpose due to the outside presence of Communicable Disease, that is sufficient.

“Live Nation’s loss of use of its property or damage to its property due to COVID-19 is ‘physical’ because Live Nation has been deprived of the use and function of its buildings, land on which the buildings are located, and the immovable objects within these buildings.”

At the time of this piece’s publishing, FM Global hadn’t commented publicly on Live Nation’s lawsuit. SXSW organizers, who are moving forward with SXSW Online next month, reportedly failed to receive an insurance payment for their event’s canceled 2020 edition because the policy didn’t cover disease-related expenses.