Sports Insurance Blog » Business Auto

Controlling The Non Owned Auto Exposure In Sports

admin — Thu, 25 Feb 2010 15:31:46 +0000

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

admin — Thu, 30 Jul 2009 20:54:35 +0000

“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/

Hired Car Physical Damage Insurance For Sports Organizations

admin — Fri, 27 Mar 2009 13:00:36 +0000

Sports organizations occasionally rent vehicles for officers to travel out of state on business and for the transportation of participants. If a Non Owned And Hired Auto Liability policy is in existence, it will not respond to damage to the rented vehicle itself.

There are three options available for insuring damage to the rental vehicle:

1. Purchase Collision Damage Waiver from the rental car

company. This is the safest course of action to follow

as it will often pay for 100% of damages. The cost of

this coverage typically ranges from $15 to $30 a day.

2. Purchase Hired Car Physical Damage from the

insurance agent of the sports organization. Coverage

typically costs $250 per year. However, this policy will

not pay the following damages that are triggered by

many rental car contracts:

* The difference between Actual Cash Value and

Replacement Cost in the event the vehicle is

totaled.

* Loss of profits to the rental car company while the

vehicle is out of the fleet being repaired.

* Diminution in resale value

3. Rely on credit card benefits for physical damage. The

terms of credit card benefits vary greatly.

This is a complex area and consultation with an insurance professional is recommended prior to vehicle rental.

Source: John Sadler

Athletes At Risk While Transported By Charter Buses

admin — Wed, 25 Mar 2009 17:29:51 +0000

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

Non Owned And Hired Auto Liability For Sports Organizations

admin — Wed, 25 Mar 2009 13:00:28 +0000

Sports organizations need Non Owned and Hired Auto Liability to cover their liability arising out of the use of vehicles that are not titled to the sports organization.

A non owned auto is an auto that is not owned by the sports organization but is instead owned by an employee or volunteer who runs errands or transports participants at the direction of an authorized league official. Sports organizations benefit from the use of the non owned vehicles.

When these vehicles are involved in an accident where the passengers or other third parties are injured, the sports organization may be vicariously liable and can be shotgunned into these lawsuits as a deep pocket. Injured parties often seek out the sports organization as a deep pocket when the owner of the non owned vehicle is uninsured or underinsured for personal auto insurance.

Non owned Auto Liability covers the sports organization itself but does not normally cover the individual vehicle owner or driver. Individual vehicle owners or drivers must look towards their own Personal Auto Policy for coverage.

A hired auto is an auto that is borrowed (ex: church or school) or that is leased from a rental car company. Hired Auto Liability protects both the sports organization and driver from liability arising from an auto accident when a vehicle is borrowed or leased.

Non Owned and Hired Auto Liability can be obtained on either a Business Auto policy or a General Liability policy. However, the insurance carriers are reluctant to write these coverages for sports organizations due to the high severity potential and the fact that sports organizations typically don’t implement loss control protections. Basic loss control protections include driver screening by receiving acceptable Motor Vehicle Reports (MVRs) and by requiring employees to provide evidence that they carry a Personal Auto Policy with limits of at least $300,000 combined single limits.

In addition, many insurance carriers are reluctant to extend these coverages to the rental of 15 passenger vans due to their documented tip over propensity or for the transportation of participants. The actual policy language must be carefully reviewed for these restrictions.

It is important to note that Hired Auto Liability does not provide any coverage for damage to the rental vehicle itself. Another blog will address this topic.

Source: John Sadler