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Why the Rolling Stones’ insurance battle matters to mere mortals

They may be gods in the world of rock’n’roll, but the Rolling Stones are, it would seem, not untouchable when it comes to dealing with the wolves of the insurance industry. Earlier this week, it emerged that the band is embroiled in an all too common consumer battle against its insurer, which is refusing to pay a $12.7m (£8m) claim for shows that were cancelled on a recent tour.

The Stones cut short the Australian and New Zealand legs of their world tour in the spring after Mick Jagger’s girlfriend, L’Wren Scott, took her own life. While this was just the kind of shock event that the band had bought insurance for, the underwriter pointed to a clause in the small print stating that claims would only be paid if they were due to events that were “sudden and unforeseen”.

Given that Scott’s death was caused by suicide, the insurer is arguing it was neither sudden nor unforeseen – and alleges she was suffering from serious mental health problems in the months before her death, which had not been disclosed.

While high-profile celebrity insurance disputes are fairly rare, rejected claims of this nature are common enough among the rest of the non-celestial consumer public. If you buy a travel or health insurance policy and don’t declare all medical conditions beforehand, don’t be surprised if your claim is rejected. Similarly, life insurance policies will not pay if policyholders kill themselves within a year of taking out the cover.

There is actually some sensible logic that sits behind these clauses – but the way they are applied often stretches the initial reasoning. Here’s the sensible part. If you’ve got a heart condition or high blood pressure, the chances of you having to make a claim on your insurance policy while you’re on holiday are higher. So it’s fair enough that your insurer insists that you disclose this, and says it won’t pay out if you make a claim as a result of something you hid from them. If you’d been honest at the outset, your insurer would either have turned you away or charged you a higher price.

But in the case of Scott’s death, it’s not nearly as clear-cut. To the Stones, her death clearly was unexpected – and Jagger is reported to have been diagnosed with acute traumatic stress disorder in the weeks that followed.

Nevertheless, if the insurer can prove that Scott had a track record of serious mental health issues – which greatly increased the likelihood of her killing herself during the tour – then it’s very possible that a court will take the insurer’s side and uphold its right to reject the Stones’ claim.

These kind of cases can be heartbreaking for the claimants. Even if the insurer is proven to be legally within its rights, few will be able to accept it on moral grounds.

Last time insurance and celebrity hit the headlines was a few years back, when the Observer started a campaign to get Friends Life to pay out when a 44-year-old father of two died from gall bladder cancer. Nic Hughes’ life insurance claim was turned down as he had failed to tell his insurer about some pins and needles he had felt before he took out his policy. But he had disclosed that he had ulcerative colitis, which doctors say could have been the cause of the symptoms.

When Stephen Fry, Miranda Hart and others took to Twitter to lobby Friends Life, the firm eventually backed down and paid the claim. But for others, who don’t manage to get celebrity or media backers for their cause, it can be upsetting.

For the Hughes family, £100,000 was a lot of money. For the Stones, £8m is not likely to be as significant. Nevertheless, there’s a matter of principle that links these cases. Insurance policies are designed to cover the unexpected – and while most of the time they do pay out, the minority of cases where they dig in lead to a perpetual mistrust between the public and the industry.

The finger in the air test tells you that no one could have known that L’Wren Scott would kill herself in the middle of the Stones’ tour. Even if there are some facts around her mental health that were left undisclosed, they would need to be fairly definitive to justify withholding the entire £8m.

If there is a lesson for the rest of us in this and Hughes’ case, it’s that you can never be too careful when you’re filling out an insurance questionnaire. Anything that could be painted as non-disclosure can end up being used to turn down a claim. If you’ve had any health conditions, or made any recent visits to the doctor, make sure they’re declared – and if you’re buying a complex product such as critical illness, consider using a broker who can help ensure you are as thorough as you need to be.

Thankfully, if you do end up being unfairly treated, regular non-celestial consumers can always take their case to the Financial Ombudsman Service – which will take an independent view of the matter, and should right any wrongs. For the Rolling Stones, however, it will be a matter of fighting it out in the courts.

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