In 2018, ViacomCBS – a global media and entertainment company that creates and distributes content across various platforms to audiences around the world – bought a Television Production Portfolio Policy to insure its productions against delay, cancellation, or abandonment deriving from several causes of loss.
The policy provided, inter alia, for a “Cast Coverage” – which covered losses resulting from any covered person "being necessarily prevented by their death, injury or sickness […] from commencing or continuing or completing their respective duties in an Insured Production” – and an “Extra Expense Coverage”, which covered losses sustained on account of the extra expense ViacomCBS “necessarily incurs in the event of the interruption, postponement or cancellation of an Insured Production" as a direct result of actions of a Civil Authority that revokes the insured’s permission to use its production facilities. The Policy also included a Due Diligence Clause pursuant to which the insured shall have used due diligence and should have done all things reasonably practicable to avoid or diminish any loss insured under the policy. Such clause provided that the insurer would have indemnified the insured for the losses deriving from the efforts put in place by the latter to comply with the due diligence clause.
On account of the pandemic, ViacomCBS was forced to delay or cancel more than 100 TV productions, including that of "Goldie's Oldies" which was first halted and then resumed after the company had developed and set in motion several protocols aimed at reducing the risk of COVID-19 infection. The company was also forced to cancel the “2020 Kid’s Choice Awards”, a live awards ceremony produced in Los Angeles.
ViacomCBS sought cast coverage and extra expense coverage in relation to both productions (and many others). It also asked the insurer to cover the costs it incurred with respect to "Goldie's Oldies" in developing the protocols under the "due diligence" provision of the policy. Since the insurer either did not respond or denied its claim, the insured filed suit.
By decision of 10 November 2022, the California Central District Court partially upheld ViacomCBS’s claims. Namely, it held that the insured was entitled “to a finding as a matter of law that, pursuant to the Due Diligence Clause of the Policy, [its] efforts in developing and implementing COVID-19 safety protocols for the production of Goldie's Oldies were reasonably practicable efforts taken to avoid or diminish loss or circumstances likely to give rise to a loss or claim insured under the Policy”; this was all the more so considering that, in order to develop the protocols, the insured had relied on medical experts and government guidance. As for the claim related to the “2020 Kid’s Choice Awards”, the Court held that, in order to cover the relevant losses, the policy required that the suspended production had then be resumed and completed. Since that was not the case, the insured could not claim reimbursement.
Reference: ViacomCBS Inc. v. Great Divide Insurance Co., California Central District Court.