When COVID hit, a huge number of businesses were surprised to suddenly understand that their Business Interruption policy did not cover SARS-COV19. In the movie industry, it is a requirement to carry heavyweight Business Interruption and associated perils cover. This can provide financial assurances to investors that they are covered for anything from a lead actor getting injured to a soundstage full of sets burning down.

Now Paramount has filed a breach of contract lawsuit against its insurer on Monday for refusing to pay out the claim resulting from losses due to pandemic-related shutdowns on Mission: Impossible 7.

Filming was supposed to have started in Venice in February 2020. Then COVID hit Italy hard and the local authority banned large public gatherings. Production was shut down because one of the people covered under the productions cast insurance policy had become sick.

Eventually, they started in July, but in October 2020 there were two separate outbreaks on set and things shut down again.

February 2021 there came another shut-down in the UK. And another in June 2021. The production also had to work around quarantines and isolation periods for cast members moving from country to country.

Paramount’s cast insurance policy for Mission: Impossible 7 had a $100 million coverage limit to pay out when key personnel becomes unavailable for reasons that can range from sickness through to death or even kidnapping.

Paramount says the various pandemic-related shutdowns should have triggered that policy to pay out.

When they tried to claim, Federal Insurance Company refused to pay out on this basis. The policy has a separate provision for “civil authority” disruption, which is what government-mandated shutdowns are. In this case, the policy only pays out $1million per incident.

So Paramount is taking them to court. The entire case will hinge on when production was ceased due to a government’s actions, and when it was due to cast illness.

What we have here is a classic example of a client not understanding what they were buying. In these instances it would be up to Paramount’s risk management team, in conjunction with their insurance broker, to ensure the policy meets their needs and has been explained to them. The insurance broker is supposed to be the client’s professional advisor here, so there are probably some nervous people at whoever the brokerage is.

Mission: Impossible 7 is due to be released on May 27th, 2022.

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