Controlling The Non Owned Auto Exposure In Sports

Category : Auto Insurance, Business Auto, Risk Management

Its a must for most sports and recreation organizations to carry Non Owned And Hired Auto Liability insurance which can be a stand alone policy or part of the General Liability policy. Very few sports administrators understand the importance of this coverage and what they should be doing to protect their insurance carrier from ever having to pay a claim.

A non owned auto is one that is not owned by the sports or recreation organization, but is instead owned by a staff member (employee or volunteer) or borrowed from an organization such as a church. When these non owned autos are involved in an accident while on association business: the following parties can normally be sued: the owner of the vehicle, the driver, and any organization for whose purpose the errand is being run. In other words, the sports organization can be sued for their vicarious liability of their staff member.

Its important to note that Non Owned Auto Liability insurance does not cover the driver or damage to the vehicle. It only covers the association that is the named insured on the policy. The driver will have to rely on his or her own Personal Auto Insurance Policy to provide liability and physical damage protection.

I just came across some excellent loss control material from Philadelphia Insurance Company on the topic of controlling the Non Owned Auto Liability risk in the sports and recreation context. This exposure represents an infrequent, but high severity risk where damages can easily exceed $1,000,000. The insurance carriers that insure sports and recreation organizations are very concerned about this exposure because its difficult to collect the proper premium for a low frequency – high severity risk. Sports organizations need to take this risk very seriously and implement the recommended controls.

Here are some links that you will want to check out:

Case studies on actual Non Owned Auto Liability losses in the non profit association context where damages exceeded $1,000,000: http://image.exct.net/lib/fecd15717367027c/m/1/InvestigationForm2.24.10.pdf

Personal vehicle usage precautions: http://image.exct.net/lib/fecd15717367027c/m/1/Employee-Volunteer.Use.of.PersonalVehicles2.19.10.pdf

Driver eligibility criteria: http://image.exct.net/lib/fecd15717367027c/m/1/Driver+Eligibilty_4400.pdf

Driver training and motivation: http://image.exct.net/lib/fecd15717367027c/m/1/Driver+Training+and+Motivation_2200.pdf

Source: Philadelphia Insurance Company, Hired And Non Owned Automobiles, Large Loss Lessons Learned

Unsafe Chartered Bus Companies Evade Sanctions

Category : Auto Insurance, Business Auto

“Hundreds of tractor-trailer and bus companies ordered to shut down because of federal safety violations ranging from suspended licenses to possible drug use have stayed on the road by using different names, investigators say.”

 “The GAO report found that at least 20 of the roughly 220 commercial bus companies that had been fined and ordered out of service in 2007 and 2008 by federal regulators evade compliance by setting up shop under a new name…”

 This is a follow up to a prior blog posting entitled “Athletes At Risk While Transported By Charter Buses” which exposed the dangers and possible liability risks of hiring a service without checking out their background. 

 Source: http://www.msnbc.msn.com/id/32213170/ns/us_news-life/

Athletes At Risk While Transported By Charter Buses

Category : Auto Insurance, Business Auto

A recent report by ESPN’s “Outside The Lines” indicates that charter bus safety is an issue for college athletes who are being transported to competitions. Due to the tip over propensity and structural integrity problems of 15 passenger van, college athletics departments started to use charter buses more frequently in recent years. Charter buses are statistically safer than 15 passenger vans but bus crashes have climbed from 8,555 in 2003 to 13,195 in 2007. Over this five year period, there have been 1,651 fatalities.

 

Most athletic department administrators hire charter buses on the basis of price and availability and have never paid any attention to the safety record. However, experts recommend that safety record be given top billing. All athletic departments should refer to The Federal Motor Carrier Safety Administration website at  http://www.fmcsa.dot.gov/ and click on “search company safety records”.  The safety record of a charter bus service can be referenced if you know their DOT number.

 

An “Outside The Lines” study for the time period 2007-2008 found that almost one-third of NCAA Division I schools used charter bus services that had one or more deficiencies on federal safety scores. Of these 85 schools, approximately 35 used companies with an overall safety rating of “conditional” which is one step under “satisfactory”. The U.S. DOT ratings range from “satisfactory” to “conditional” to “unsatisfactory”. These ratings are issued based on drug testing, record books, bus maintenance, and driver qualifications. It is recommended that a charter bus service should not be hired unless it has a rating of “satisfactory”.

 

Another commonly used test of safety is the SafeStat score which keys in on both drivers and vehicles based on tickets, accidents, and violations found during road side inspections. A score 75 of above is considered to be deficient.

 

Examples of common safety violations which raise “red flags” include reports of crashes, driver violations, worn tires, unqualified drivers, failure to record entries in logbooks, driving without adequate rest, allowing drivers to drive prior to passing drug tests, and inoperable emergency exits.

 

It is my opinion that potential legal liability exists for athletic departments that subcontract out their transportation to charter bus services without first checking their safety record to verify adequacy.

 

John Sadler

 

See Full Article: ESPN, “Outside The Lines”, Paula Lavigne, http://sports.espn.go.com/espn/otl/news/story?id=3997988

Insurance Policies Needed By Sports Organizations

Category : Accident Insurance, Auto Insurance, Crime, Directors & Officers, Equipment, General Liability, Recreation Departments, Teams / Leagues, Workers' Compensation

To follow is a list of the most important insurance policies that may be needed by community based sports organizations such as teams, leagues, and municipal recreation departments:
 
1. Accident: Pays medical bills on behalf of injured participants such as players and staff.
 
2. General Liability: responds to lawsuits arising from bodily injury, property damage, personal/advertising injury.
 
3. Directors & Officers Liability (AKA Trustees Errors & Omissions for municipal recreation departments): Responds to certain lawsuits not covered by General Liability such as discrimination, wrongful suspension or termination, failure to follow your own rules or bylaws, and violation of rights of others under state, federal, or constitutional law.
 
4. Property / Equipment: Covers your buildings, equipment, and contents against loss due to fire, vandalism, theft, etc.
 
5. Crime: Covers employee or volunteer embezzlement of funds or theft of property; forgery or alteration of checks by outsiders, and theft of money and securities by outsiders.
 
6. Workers’ Compensation: May be required by state law if three or more employees and pays benefits to injured workers for “on the job” injuries including medical bills, lost wages, disability lump sums, disfigurement lump sums, and death benefits.
 
7. Business Auto: Covers liability and physical damage to owned, non owned, and hired autos.
 
8. Consult with your insurance agent about other types of policies such as Liquor Liability, Cyber Liability, Media, etc.
 
Copyright 2002-2008, Sadler & Company, Inc.