Michael Jackson’s event cancellation policy has a bit of history and is still very much in play according to a couple of news articles that have been forwarded to me. Last March, The UK Guardian ran a story, Michael Jackson Promoters Struggle to Find Farewell Tour Insurance, depicting problems with Jackson and his promoters finding event cancellation coverage:

AEG Live, the promoters behind the concerts, are "still negotiating" with insurers, they said this week. While AEG were able to insure the initial 10-day run – worth about £80m – insurers are less enthusiastic about covering seven months of dates stretching from July 2009 to February 2010. Fifty concerts would require around £300m in cover.

The insurers’ reluctance is easy to understand. The longest O2 arena residency has been taken out by a 50-year-old who has not toured in 12 years, was rumoured to be dying last year, and is nicknamed, well, Wacko Jacko.

But Randy Phillips, chief executive at AEG Live, reassured sceptics. "He’s in great shape," Phillips told the Telegraph. "The insurance brokers sent doctors and they spent five hours with him, taking blood tests."

AEG Live are prepared "to self-insure to make up the dates", Phillips emphasised. "It’s a risk we’re willing to take to bring the King of Pop to his fans."

"He’s a vegetarian," Phillips said. "They’re healthy, right?"

Last week, the Associated Press apparently obtained a copy of the event cancellation policy issued by Lloyd’s Underwriters. Its story, “Jackson Show Insurance Excluded ‘Illicit’ Drug Use,” apparently reported that the policy contained exclsionary language regading “illicit drugs” that may be applicable, depending on the medical autopsies:

[I]nsurance on Michael Jackson’s London shows has provisions that may deny a multimillion dollar payout if the pop star was found to have illegally possessed drugs or was involved in the "illicit taking of drugs."

The policy, a copy of which was provided to The Associated Press, covers cancellations resulting from death, but its provisions will hinge on the results of an autopsy that has been delayed twice.

Jackson’s doctor administered multiple sedatives along with the powerful anesthetic propofol, a potentially lethal combination, hours before the singer died June 25, a law enforcement official who requested anonymity because the death investigation is ongoing told the AP.

It was not immediately clear whether any medications Jackson was taking would negate a payout up to $17.5 million, which would ultimately benefit his estate.

The insurance policy, covering the first 13 shows of the 50-show run, was taken out by Jackson and concert promoter AEG Live in April. Such a policy and its provisions are considered standard for events on the scale of the one for which Jackson was preparing.

A copy of the insurance policy also showed that it had several clauses that would prevent a payout, including if the singer concealed information or acted carelessly to increase the risk of a no-show.”

Another entertainer, Toni Braxton reportedly had to file a lawsuit with over similar issues following cancellation of her shows as reported in the Daily Express:

Braxton, who has microvascular angina – a small vessel disease, claims she bought insurance from Lloyd’s of London in the event of "non-appearance" or "cancellation", which protects entertainers in case concerts have to be scrapped, reports TMZ.com.

[Insurance representatives] are refusing to pay up for the skipped shows, alleging Braxton never mentioned her pre-existing health issue when she signed with them – therefore deeming the insurance cover void.

One of the trends in insurance claims is that some insurance carriers are a lot more willing to litigate potential defenses regardless of the wealth or size of the policyholder. Two decasdes ago, corporate clients and those of public reputation infrequently needed to resolve insurance matters in courtrooms. That is no longer the case. With $17.5 million at issue, I would not be surprised if the underwriters were considering application defenses as well.

We’ll keep you posted on the developments of this case.