Tapping Insurance To Recoup Losses Resulting From Government Shutdown

Author:Mr Sergio F. Oehninger, Latosha M. Ellis, Walter J. Andrews, Syed S. Ahmad, Michael S. Levine, Lawrence J. Bracken II and Lorelie S. Masters
Profession:Hunton Andrews Kurth LLP

The country's longest government shutdown in history is over, at least for now, but its impact is still felt by many, including organizations experiencing multimillion dollar losses related to postponing or cancelling events during the shutdown. A number of government contractors and other organizations with large meetings throughout the United States were forced to cancel large conferences or other events and suffered resulting financial losses. For instance, groups had to cancel receptions at federally owned museums and other properties because they were closed. Conventions were impacted because government speakers were forced to cancel their appearances. Conferences with attendees consisting primarily of government and defense industry employees were impacted. Even the Air Force Academy had to cancel home and away intercollegiate athletic events for men's and women's basketball, swim and dive teams, and the men's ice hockey team because of the shutdown, which resulted in losses related to tickets, concessions, vendors, parking, and other revenues. Tour companies, hotels, or other businesses that do not contract with the government were also affected by postponed or canceled events and the closing of national parks and federally owned museums.

The shutdown serves as a reminder of the importance of securing event cancellation and business interruption insurance coverage for all of your organization's events and promptly pursuing coverage in the event of any such cancellation or interruption. Many insurers, including Lloyd's of London insurers and major US insurers, offer event cancellation insurance policies promising to:

Indemnify the insured against any loss occurring during the policy period and causing the unavoidable ... cancellation, curtailment, postponement, removal to alternative premises, or abandonment of the event.

Some insurers also offer contingent business interruption insurance for reimbursement of lost profits and extra expenses from an interruption of business resulting from a third party or distributor that directly impacts the policyholder.

Hunton Andrews Kurth LLP's insurance recovery team has experience assisting policyholders with recovery under event cancellation policies. After the 2013 government shutdown, the insurance recovery team helped a client recover losses resulting from a canceled educational conference, cancellation fees and penalties with hotels and vendors, and rescheduling. Given the inability of...

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