Key insurance policies in sport and the role of the lawyer

Insuring against the risks involved in sports has arguably never been more important. The amount of money now at stake, the scale and sophistication of tournaments, and the global geo-political landscape have all helped elevate risk levels.  

Take event organisation. All eyes were on the French authorities for the recent European Football Championships. Terrorism deterrence and response was a key issue before the tournament in light of recent terror attacks in Paris and Brussels. The U.S. went so far as to issue a formal travel warning to it citizens.¹ Stakeholders will have had to review their insurance cover and wider risk management strategies (especially in light of the fact that terrorism is an often excluded risk). In the end, it was not terrorism but hooliganism that caught the headlines. This in itself could have had significant insurance repercussions for those who suffered loss, depending on whether or not specific insurance policies 1) existed, and 2) provided cover for loss suffered as a result of riots, civil unrest, vandalism, or hooliganism.

Then there are the risks facing teams and individual athletes. There were numerous reports of athletes such as Jessica Ennis-Hill, Andy Murray and Rory McIlroy consulting experts about the risks of the Zika virus in Brazil for Rio 2016.² Rory McIlroy decided that it was a risk that he was unwilling to take.³ What would have happened if the Olympics had been postponed, or if something happened resulted in the cancellation of part or the entire event? That risk needed to be appropriately managed.

Risk managers, clubs, athletes, governing bodies and event organisers (amongst others) should all be seriously considering risk management day-to-day, and it ought to be an integral part of any individual or team’s commercial toolbox. This article explores some of the most common sports-related insurance policies that are available today and the legal issues involved in their effective deployment. 

Event cancellation/ event interruption insurance

Events-related policies could cover you for a number of losses sustained as a result of cancellation or interruption, but usually include lost advertising or broadcasting revenue; lost ticket sales; reimbursement of tickets; costs of rescheduling a postponed or interrupted event; and renting or leasing a new venue. Events policies can also indemnify policyholders for damages claims by third parties. Typically claims result from personal injury/ property damage at the insured events.

Some risks might be excluded from a generic policy so it is crucial, if you are involved in placing insurance within your business, that you sit down with your broker and discuss the various causes of cancellation that might be pertinent. In addition, where umbrella event insurance policies are in place, it is always worth taking the time to periodically review the full schedule of events covered to ensure that a new event falls within the scope of the policy. 

A prime example involves the Old Trafford bomb scare causing Manchester United to postpone its final Premier League match of the 2015/2016 season.⁴ Old Trafford was evacuated before kick-off due to the discovery of a suspect package. Old Trafford has a capacity of over 75,000 and had a fantastic atmosphere in the sunshine before kick-off. Brands had spent millions of pounds on TV, shirt, in-stadium and collateral advertising to ensure they were in the spotlight at the Theatre of Dreams. 

Some estimate that the loss flowing from the incident was £3m although it is unclear how that estimate was reached and it could easily be higher.⁵ The club will have incurred costs in evacuating the stadium; paying any contractual mechanisms for the postponement/ abandonment of a game; and reimbursing those ticketholders who could not make the re-arranged game. With hindsight comes a more focused picture of the risk associated with hosting each Premier League match, of which there are 380 across the country each season. 

General liability insurance