The U.S. Court of Appeals for the Eighth Circuit ruled Monday that Auto-Owners Insurance Company properly denied coverage to a nonprofit organization after technical problems disrupted its virtual charity auction, affirming a lower court's summary judgment in favor of the insurer.
In *Auto-Owners Insurance Company v. Halo Foundation: Helping Art Liberate Orphans* (8th Cir. 2026), the appeals court rejected the nonprofit's argument that losses from a broken YouTube link during its 2022 virtual art auction should be covered under its insurance policy.
The Halo Foundation: Helping Art Liberate Orphans, known as HALO, operates an annual art auction to raise funds for its charitable mission. Due to pandemic restrictions, the organization moved its 2022 auction to a virtual format, contracting with Paradise Productions KC, LLC to handle the visual livestream and Qtego Fundraising Services to manage the bidding software.
The technical setup required Paradise Productions to create a YouTube link that would allow attendees to view the auction livestream. Qtego then synchronized its bidding software with this YouTube feed, enabling participants to watch the auction and place bids simultaneously on a single screen interface.
The problems began just minutes before the auction was scheduled to start. Paradise Productions lost its internet connection at its studio, creating what the court described as a "short lived" outage that nonetheless "permanently broke the YouTube link." This technical failure severed the connection between the visual feed and the bidding software, preventing attendees from both viewing the auction and placing bids.
Facing a potential complete loss of the fundraising event, HALO attempted to salvage the situation by quickly diverting the stream to Facebook Live. However, this emergency solution created what the court termed "asynchronous visuals and bidding," where the video feed and bidding platform were no longer properly synchronized. The technical disruption significantly impacted the auction's success, with HALO raising substantially less money than it had projected for the event.
Following the failed auction, HALO initially threatened legal action against Paradise Productions over the technical failure. However, the nonprofit ultimately turned to its insurance carrier, Auto-Owners Insurance Company, seeking coverage for the losses incurred due to the YouTube link malfunction.
Auto-Owners denied the claim, leading HALO to file suit in the U.S. District Court for the Western District of Missouri. The nonprofit argued that the technical failures during its virtual auction constituted covered losses under its insurance policy with Auto-Owners.
The district court disagreed with HALO's interpretation of the policy coverage and granted summary judgment in favor of Auto-Owners Insurance. Summary judgment is typically granted when there are no genuine disputes of material fact and one party is entitled to judgment as a matter of law.
HALO appealed the district court's decision to the Eighth Circuit Court of Appeals, which has jurisdiction over federal cases from Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. The case was submitted to the three-judge panel on Nov. 18, 2025, and the court issued its opinion on Jan. 27, 2026.
Circuit Judge David R. Benton authored the opinion for the unanimous panel, which also included Circuit Judges L. Steven Grasz and David R. Stras. The appeals court affirmed the district court's grant of summary judgment, rejecting HALO's arguments that the insurance policy should cover losses from the technical failure.
While the full reasoning of the Eighth Circuit's decision was not detailed in the available court records, the ruling represents a setback for organizations seeking insurance coverage for technology-related disruptions to virtual events. The decision comes as many nonprofits and businesses have increasingly relied on virtual platforms for fundraising and other activities.
The case highlights the potential coverage gaps that can arise when traditional insurance policies encounter modern technological failures. As virtual events have become more common, particularly following the COVID-19 pandemic, questions about insurance coverage for technology-related losses have become increasingly important for event organizers.
For HALO, the ruling means the organization will not receive insurance compensation for the losses suffered during its disrupted 2022 auction. The nonprofit will need to absorb the financial impact of the failed fundraising event and may need to review its insurance coverage for future virtual events.
The decision also provides guidance to other organizations about the limits of traditional insurance coverage when it comes to technology-dependent events. As virtual and hybrid events continue to be popular options for nonprofits and businesses, the ruling suggests that specialized coverage may be necessary to protect against technical failures.
The case underscores the importance of carefully reviewing insurance policy language and understanding coverage limitations, particularly when organizing events that depend heavily on technology platforms and internet connectivity.