Below are the basic policies most sports teams and leagues should be required to carry.
- Accident: Pays medical bills on behalf of injured players and staff on an excess basis.
- General Liability: Responds to lawsuits arising from bodily injury, property damage and personal / advertising injury.
- Directors & Officers Liability (or 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 by-laws, and violation of rights of others under state, federal, or constitutional law.
- Property/Equipment: Covers buildings and their content and equipment against loss due to fire, vandalism, theft, etc.
- 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.
- Workers' Compensation: May be required by state law if organization has three or more employees (varies by state law) 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.
- Business Auto: Covers liability and physical damage to owned, non-owned and hired autos.
Consult with your insurance agent about other types of policies such as Liquor Liability, Cyber Liability, Media, etc.
Protecting the sports organization's directors and officers
Directors, officers, employees, and volunteers of teams and leagues can be exposed to certain types of lawsuits such as financial mismanagement; discrimination based on race, sex, age, or handicap; violation of rights of others under state, federal, and constitutional law; and failure to follow rules or bylaws when making an administrative decision. These types of lawsuits are not covered under a General Liability policy which primarily responds to lawsuits alleging bodily injury of spectators and participants, property damage, personal injury (ex: slander, libel, invasion of privacy), and advertising injury (ex: disparagement of competitor in advertising materials).
A common misconception is that a D&O policy protects against all types of lawsuits, including those alleging bodily injury. Therefore, it's critical for directors and officers to be protected by a General Liability policy as well.
We have much more information about D&O insurance policies on our blog.
Equipment related liability exposures
Should a coach be concerned about 20-year-old helmets that have not been reconditioned or recertified? If the coach is responsible for verifying to the referee that all equipment is in safe operating condition, can the coach be liable in the event of a head injury to a player?
The short answer is that league administrators and team coaches are responsible for the following aspects of equipment safety:
- Long range planning for the repair, refurbishing, and replacement of equipment. These decisions need to be made far in advance as they can take time to budget and complete.
- Confirming that all equipment meets current NOCSAE requirements, as well as the requirements of the sports governing body.
- Inspecting equipment for defects in post-season, pre-season, weekly, and prior to any game or practice.
- Maintenance, repair, and conditioning on a regular basis.
- Reconditioning to restore to "like new" basis of safety equipment, such as helmets, should be performed by a reputable reconditioning business as opposed to a staff trainer for liability reasons. NOCSAE may require recertification.
- Replacing of safety equipment on a periodic basis per manufacturers recommendations of the useful life of the helmet.
- Recordkeeping for documentation purposes on all of the above.
Coverage for equipment related injuries and resulting lawsuits is likely to exist under most General Liability policies. However, a minority of policies may have a punitive damages exclusion, and willful disregard of known safety protocol could result in punitive damages. In addition, any litigation, even if covered by General Liability insurance, results in a "black eye" for the program, not to mention the emotional drain of league administrators and coaches caused by pretrial discovery and litigation.
For a more detailed resource on equipment safety, see our Risk Management Program for Sports Organizations.
Protecting against crime
Here is the most basic thing you need to know about crime insurance:
Crime Insurance covers theft of equipment by employees/volunteers or embezzlement of funds. Equipment Insurance covers loss of sports equipment due to fire, wind, vandalism, theft, etc.
Sports organizations can suffer serious damage from embezzlement and various forms of electronic fraud, which can include but is not limited to employee theft, forgery, and online hacking. Most sports organizations are not properly insured for these all-too-common exposures and rarely have adequate risk management controls in place.
We offer policies for the crimes for which your organization is most susceptible.
Traditional Crime Risk Management Controls
In addition to Crime Insurance, we strongly recommended putting in place these basic risk management controls:
- Requirement of a countersignature on all checks or on checks over a certain amount.
- One designated person authorized to make deposits/withdrawals, and another to reconcile the bank account.
- Anyone authorized to use credit cards or debit cards should not be authorized to review the monthly statements.
- Maintenance of detailed inventory records of all equipment and require a log to be maintained when equipment is assigned or checked out.
- Creation of an audit committee to review all financial records and statements, and to inventory all equipment.
- Standard policy of collecting checks, not cash, during fundraisers.
Workers' Compensation is a frequently overlooked insurance policy by sports and recreation organizations. Whether or not a particular sports or recreation organization is required to carry Workers' Compensation varies by state. Most states require an organization to carry Worker's Comp if they regularly employ three or more employees. Officers are considered employees, and employees of subcontractors may be considered your employees as well. The best way to determine if your organization is required to carry Worker's Comp is to contact your state's Workers' Compensation commission.
However, one thing is certain: any organization required to carry Worker's Comp that fails to do so can suffer severe penalties and liabilities if a worker is injured.
You can find detailed information and get many of your questions answered in our article "Workers' Compensation for Sports/Recreation Organizations."
Protecting your drivers and passengers
Auto accidents and related lawsuits are a high risk area for sports and recreation organizations and a Business Auto policy should be a high priority. A Business Auto policy (or Commercial Auto) should cover all owned, non-owned, and hired autos of the sports or recreation organization.
An owned vehicle is one that is titled in the name of the sports or recreation organization.The minimum insurance limits set by state financial responsibility laws are too low to cover the damages resulting from an auto accident resulting in moderate to serious bodily injury or property damage. For this reason, it is strongly recommended that sport organizations carry limits that are significantly higher than the minimum state requirements.
A non-owned auto is one owned by an employee or staff member that is used on behalf of the organization for errands such as making a deposit at the bank or making a purchase at the local sporting goods store. Non-Owned Auto Liability coverage protects the sports organization but not the individual driver, who would depend on his or her own Personal Auto Policy for protection.
A hired vehicle is rented from a car rental company or borrowed. Hired Auto Liability coverage protects both the sports organization and the authorized driver when a hired vehicle is used for official organization business.
Detailed information and answers to many of your questions can be found in our article "Business Auto Insurance for Sports/Recreation Organizations."