- Aerosmith have announced that they have retired from touring and canceled the remaining dates on their farewell tour
- Insurance expert Paul Bassman explains what happens to all the money at stake
- Insurance usually covers 80% of the guaranteed compensation
On August 2, Aerosmith made the heartbreaking decision to pull out of the tour nearly a year after Steven Tyler broke his larynx during a show in September 2023.
The band, who only made it to the third stop and subsequently postponed their farewell tour several times, announced the news in a lengthy statement on Instagram.
“As you know, Steven’s voice is an instrument like no other. He has spent months working tirelessly to get his voice back to where it was before his injury. We have seen him struggle despite having the best medical team by his side. Unfortunately, clearly is that a full recovery from his vocal injury is not possible,” the statement said.
When a tour, especially one of this caliber, is cancelled, there are more logistics to deal with than automatic ticket refunds for fans. Artists and their teams will often purchase cancellation policies in advance of their tours to protect the artist from the financial burden of cancellation.
Paul Bassman, director of Higginbotham Insurance, answered all of PEOPLE’s burning questions and clarified what happens in these circumstances.
Aerosmith performs in September 2023 in New York.
Kevin Mazur/Getty
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Since Aerosmith’s tour was canceled for medical reasons, is that covered by insurance?
Generally speaking, when an artist obtains tour cancellation insurance, there will be exclusions for pre-existing conditions on that policy. So if, for example, an artist has a heart problem that has been diagnosed, there will be an exclusion for any heart problems, unless of course the artist is being treated by a doctor and the doctor guarantees that the medicine the artist is receiving or the treatment the artist is undergoing will alleviate it state. Since Steven Tyler has canceled previous tours due to a sore throat, this tour cancellation is unlikely to be covered by insurance. However, if he had a long-term disability policy before the cancellation of the initial tour, he might have coverage there.
How detailed are these policies when it comes to medical conditions?
It would clearly indicate which conditions are excluded. Artists usually require a medical check beforehand, especially on big tours. Sometimes the smaller ones don’t require medical appointments because they are too clumsy to require one. But when the artists are old enough, they will have to go to the doctor, the doctor has to fill out a medical questionnaire, they have to disclose all the medications they are taking, what pre-existing conditions they have. Then the tour insurers take that into account and go, we’re not going to cover this, or we’re not going to cover that, or we’re going to decide to cover that because he’s on XYZ medication.
Who is responsible for ticket refunds?
Live Nation would likely pay Aerosmith up front, and the terms and conditions of that advance would be that you had to fulfill your tour commitments to keep that money. So the money may have to be returned from Aerosmith, but initially Live Nation and Ticketmaster would be the entities that would refund patrons.
Is Aerosmith losing money because of this decision?
Aerosmith would lose the money they were supposed to receive in guarantees, but they would not get paid because they did not fulfill their obligations under the tour contract. There is a possibility that Aerosmith or Steven Tyler may have taken out disability benefits to cover catastrophic illness or injury. Sometimes tour cancellation insurance can be quite expensive, so what artists can do is get a disability policy that says if your injury or illness has caused you to be unable to do your job or do what you do for six months or sometimes a year. .. then the policy will pay out the face value.
The obstacle to paying out a disability policy is mostly the end of a career or just shyness. You have to be physically unable to tour for six months or a year because of that illness or injury, and this Steven Tyler injury would qualify for that…but I’d say it’s challenging to get insurance and possibly very expensive.
[Aerosmith] there will still be out-of-pocket costs for their crew, and who knows what kind of contracts they sign with their bus companies and trucking companies, whether they have to pay the whole thing or is there, “Hey, we canceled the tour, we’ll pay you 50%.” Each contract has different provisions about what happens if. They would still get what they made, for the plays they put on.
How is each reserved seat handled after the tour is cancelled?
Sometimes places will have a minimum guarantee, they call it House Nut, which is, ‘OK, you have to pay this amount to secure the place and it’s non-refundable.’ So the spaces could have some security in that regard. Live Nation sometimes has its own cancellation policy for its own charges or potential charges. That is also possible. The place can always be rebooked by someone else. If it’s very close to the date, they may have a clause in their contract that says we’ll keep the deposit you put down for the place.
How much of the trip is covered by insurance?
The amount covered by the tour cancellation policy is based on the percentage of guarantees that the promoter is contractually obligated to pay to the artist. I usually see this figure at 80%, but it can be as high as 85% of guarantees, depending on the contractor and contract. The reason you can’t provide 100% guarantees is that insurers know that if a tour is cancelled, there will be some level of cost savings due to additional costs such as crew, transport, hire equipment and so on. Ideally, the artist wants this figure to be based on an agreed value (known at Lloyds of London as “pay”) which will automatically pay the artist if the show is canceled due to a covered cause of loss.
Can you give an example?
Aerosmith for example, let’s say for round numbers, the guarantee from Live Nation is a million per show, over 20 shows, that’s a $20 million deal they have with Live Nation and they can guarantee 80% of that. If they cancel for a covered reason, then they get a check based on the number of shows they missed. It is a very simple process of paying out the cancellation insurance because once it is determined that it is a covered cause of loss, then the amount is already agreed upon.
Does the artist not get insurance?
It happens all the time. People think they are invincible. People think, “Oh, we’ll never cancel. The concert must go on. We’ll get a new guitarist.” Whatever it is. Nine times out of 10, you’ll come out ahead. Most of the time you just don’t do it that one time, it’s painful.
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Source: HIS Education