Archive for the ‘Indemnification/Hold Harmless’ Category

Transfer the Risk of Loss to Others

Don’t bear the responsibility that belongs to others

There are two common situations in which local sports organizations need to be careful to protect themselves from assuming the risk of loss (Ex: bodily injury to a spectator or player and property damage liability) that should fall upon the other party. These situations occur with field/facility owners from whom practice and playing fields are leased and with vendors who provide critical services to the sports organization.

When the negligence of these parties is the cause of injury to a third party, you want them and their insurance carriers to be responsible for providing legal defense and paying any damages. One of the best ways to achieve this result is to make sure that you have a contract in force with them that specifies this outcome. Of course, this simply requires a review of  your lease and vendor services agreements and occasional negotiation of provisions regarding insurance requirements and hold harmless/indemnification.

Below are two articles that provide clear instructions on how to deal with these two situations:

Before You Sign the Sports Facility Lease Agreement

Collect Certificates of Insurance from Your Vendors

Lease of Premises Agreements

Something all sports and recreation organizations should review

Most sports and recreation associations lease office space. Lease agreements contain numerous insurance and risk management considerations that must be addressed up front before entering into the lease or reviewed after the fact if the lease has already been entered into. It’s customary for the landlord to require the tenant to carry the following types of insurance policies to protect the interests of the landlord:

  • General Liability in the amount of $1,000,000 combined single limits to protect against bodily injury, property damage, personal injury, advertising injury, and damage to premises of others in the amount of $300,000. It’s usually required that the landlord be named as an additional insured.
  • Property insurance may be required to protect the replacement cost value of tenant’s improvements, contents, and sometimes building (in the event of a net lease) under the “special perils” coverage form. On occasion, it is required that earthquake and flood insurance be carried. Also, the tenant may be required to insure the glass against breakage and the heating, air conditioning, electrical, and plumbing systems against mechanical breakdown. If this is the case, the Property policy of the tenant must be endorsed to specifically provide coverage for glass and mechanical breakdown.

In the spirit of efficiency and reciprocity, most well-written leases should contain a waiver of subrogation clause. This means that both parties agree that if their property insurance company pays the claim, that the insurance company will waive its subrogation (or lawsuit) rights against the other party in order to recoup the loss. Sadler & Company can provide the sample wording for this provision.

Most well-written leases will also contain an indemnification/hold harmless provision whereby each of the parties agrees to assume the liability and legal defense cost of the other party for lawsuits arising out of each party’s own negligence. In many cases, since the landlord is the party in power, this provision is often heavy-handed in their favor and should be negotiated on a more reasonable basis.

So why should you care if your lease contains insurance requirements that you’re not meeting or unreasonable contractual liability assumptions through hold-harmless/indemnification agreements? These considerations don’t matter  – until a problem arises. And then it’s too late to do anything about them.

Within minutes, Sadler & Sports Recreation insurance can review your lease agreement and make recommendations based upon your unique situation. If you are interested in a no-obligation review, please call us at 800-622-7370.