Jackson's Concerts Highlight Risky Business

But, he added, "even if they paid $100,000 per concert for the cancellation and non-appearance, it's still worth it for a mega-headliner."

While AEG hasn't said how much it paid for Jackson's insurance, experts say that Jackson's history likely meant the company had to pay fairly high premiums.

Jackson "was basically blacklisted from doing concerts" without the benefit of a high-cost insurance, a Jackson associate told ABCNews.com.

For non-appearance insurance, in particular, underwriters require performers to undergo physicals. Jackson's physical lasted five hours and included "a battery of tests," Phillips told ABC News.

Insurance Uncertainty

Both the physical and a star's history will determine how much an insurance company charges, said Candysse Miller, the executive director of the Insurance Information Network of California.

"Whether it's an entertainer, a car or home, [insurance is about] trying to somehow put a dollar value on the risk," Miller said. "If I live on top of the San Andreas fault, I'm going to pay a lot more for earthquake insurance."

But even high-priced insurance isn't a safe bet. In 2005, Britney Spears and her tour production company, Britney Spears Touring Inc., sued eight different insurance companies after they declined to compensate her for about $9.8 million in losses for shows canceled in Chicago and Detroit. Spears canceled the shows because of a knee injury, but insurers declined her claim, alleging she failed to report having had knee surgery five years earlier.

The insurers argued that they would have denied coverage in the first place had they known about the surgery.

The case was eventually dismissed; Spears' lawyer would not comment on whether a settlement had been reached with the singer.

How much AEG will recover through the insurance policies on its Jackson concerts, meanwhile, remains unclear. AEG's Phillips told the Associated Press that the company will receive an insurance payout if Jackson is determined to have died of accidental causes, including a drug overdose. But natural causes of death, Phillips said, won't be covered.

Even under a full, $25 million payout, AEG wouldn't recover all its costs -- Phillips told the Associated Press he spent $25 to $30 million on Jackson's advance, while Billboard reports that AEG sunk as much as $30 million into concert production costs.

The company could, however, break even, thanks to sentimental fans. Phillips said that 40 percent to 50 percent of concert ticket-buyers have decided to forego full refunds. They're keeping their unused tickets as memorabilia instead.

ABC News' Richard Esposito, Eileen Murphy and Nathalie Tadena contributed to this report.

-- This embed didnt make it to copy for story id = 7991472. -- This embed didnt make it to copy for story id = 7991472. -- This embed didnt make it to copy for story id = 7991472. -- This embed didnt make it to copy for story id = 7991472. -- This embed didnt make it to copy for story id = 7991472.
  • 1
  • |
  • 2
  • |
  • 3
Join the Discussion
blog comments powered by Disqus
You Might Also Like...