How to lease: Why The Jonas Brothers' Tour Cancellation Could Cost Them Big Time

Friday, October 11, 2013

Why The Jonas Brothers' Tour Cancellation Could Cost Them Big Time

The Brothers could be on the hook for millions, depending on their tour insurance.
By James Montgomery

Jonas Brothers
Photo: Mike Coppola/ Getty Images

When the abruptly canceled their tour earlier this week, fans were were crushed. Though, ultimately, it may be the Brothers themselves who get squeezed.

That's because the reason their rep gave for canceling the 19-date trek — "a deep rift within the band" — probably wasn't covered under the insurance policy they took out on the tour, meaning that the Jonas Brothers may be on the hook for millions of dollars, as promoters and vendors look to recoup the money they've laid out in advance of the shows.

"It really depends on how their [insurance] policy is tailored, but generally speaking, there are cancellation policies that cover things beyond their control," Carol Thornhill, executive vice president at insurance broker Robertson Taylor, told MTV News. "If they canceled because they had a rift within the band, that's something that's not insurable, because that's within their control. ... There is no insurance that is going to respond to something that is within their control."

Since the 1970s — Robertson and Taylor were early pioneers in entertainment insurance, and have written policies for artists like Paul McCartney and Elton John — artists and promoters have been taking out insurance on their tours, offering them financial protection for everything from general liability and worker's compensation to "kidnap and ransom." There are also cancellation policies, which, as Thornhill explained, cover everything from natural disasters to venues losing power, and allow artists and promoters "not to profit from cancelations, but put them back where they were."

"If an artist had, say, $2 million of cost and expenses on a tour, they're going to want to insure for that if the tour is canceled," she said. "The same goes for a promoter like Live Nation; they can also take out a policy on a tour, because they want to insure it in case something happens. After all, they've outlaid a considerable about of money."

"Artists are basically required by the promoter of the event to have a certain amount of insurance, and the way it's underwritten depends on the artist themselves," Andrea Wells, editor in chief of "Insurance Journal" added. "Someone who has a history of risky behavior, the insurance company may decide to exclude certain things like no-show coverage, or it may be very costly to the artist ... in this case, it's likely there is partial coverage for what the promoter has spent; the insurer may have to pay out and, if they do, they would probably go after the artist to recoup some of their losses."

For example, when Lady Gaga scrapped her Born This Way Ball earlier this year, she lost out on a serious payday, though it could have been much worse: Gaga canceled the trek due to an injury, which is covered under cancellation policies. That meant her insurance broker paid out to promoters and vendors — it's the reason artists take out policies, after all. Unfortunately, the same can't be said about the Jonas Brothers.

Reps for the band did not respond to MTV News' request for comment, nor did a spokesperson for Live Nation, who was promoting the Brothers' tour, though based on those who know insurance best seem to think that the JBs could be on the hook for millions of dollars ... which points to just how deep this "rift" may be.

"I think you could assume that this is going to cost them. When an artist just doesn't have a particular reason [for canceling a tour] that's listed within the policy form, the insurer can deny it, and there's a good chance they will," Wells said. "The promoter can certainly appeal that, and it can go to the legal system — that definitely happens in most cases. And who knows what will happen after that."

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