Archive for the ‘Recreation Departments’ Category

COVID-19 and Return-to-Play Webinar

Sadler Sports Insurance and Go4Ellis Webinar Recording

Sadler Sports Insurance partnered with Go4Ellis (on demand per diem access to athletic trainers) to produce a fantastic webinar on COVID-19 and return to sports. It was very well received by the live audience. Many of the participants said they received real value for the first time in the form of an actionable return to sports plan.

In the webinar, John Sadler covers the major COVID-19 issues to be considered:

  • Liability risk for transmission
  • Difficulty in proving a case
  • Legal defenses that are available
  • COVID-19 waiver/release
  • COVID-19 warning signage
  • Will General Liability cover a transmission lawsuit?

Coronavirus protocol in sports organizationsEllis Mair, the chief medical officer for Go4Ellis, presented the role that an athletic trainer can provide as you factor the COVID-19 risks into planning and implementation of your events. Athletic trainers are not only experts in sports injuries, but also in dealing with diseases such as COVID-19. Their ability to be your COVID Coordinator in executing the safest events possible could be immeasurable.

Below is the Zoom meeting link to the the previously-recorded webinar:

https://us02web.zoom.us/rec/share/4cFRLIPRx15OGJX_9m_gV5J5Fau8eaa80CIc_vUKyR5Rnkkg0NT1o4R624XHsR_m

Outline of Topics Covered

COVID-19 Risk Assessment

Panelists

Objectives

Follow the Lead of Authority Sources

Risk Identification Checklist

  • Sport
  • Age Group
  • Event Type
  • Expected Attendance
  • Location
  • Local or Interstate

Insurance and Liability

  • Legal Theories of Recovery for COVID-19 Transmission
  • Elements Of COVID-19 Negligence Claim
  • Legal Risk Compared with Child Abuse or Concussions
  • Does General Liability Cover COVID-19 Transmission Lawsuits?
  • COVID-19 Waiver/Release
  • COVID-19 Warning Signage
  • Other Legal Defenses
  • Homeowners Liability and Personal Umbrella

How Hiring an Athletic Trainer helps Sports Organizations Execute Mitigation Strategies and Support Event Operators

  • COVID Coordinator
  • Pre-event Communication
  • PPE
  • Temperature Screening
  • Monitoring
  • State / Local Compliance Documentation
  • Participant Evaluation And Response

Q&A

 

Managing Risks to Participants and Spectators at Special Events

Precautions can save lives and lawsuits

Community calendars are full of local organizations sponsoring tournaments, festivals, outdoor fundraisers, races, craft fairs and more. You’ll likely attend at least one yourself in any given season.

Those putting on such events are responsible for the safety and security of attendees, participants and vendors. That even includes, in some cases, their property. Weather is one risk that can’t be controlled, but Special event risk managementother potential risks can be mitigated.

Event organizers need to develop a risk management plan long before the event takes place. First-time planners should realize this is as important as planning the venue, advertising, catering, entertainment and other aspects of an event. There are everyday incident types that can occur, like a collapsed tent or injured runner. But terrorist attacks and active shooters at public venues in recent years drastically changed security protocols for public events.

A lot can go wrong

Every event requires preparation, of course. And each step offers opportunities to consider what could go wrong and how to prevent it. Below are some general steps that can be taken to lower the risk of injuries.

  • Law Enforcement and Fire Department: Police presence at the event, in parking lots and directing traffic improves security drastically. Consider requesting bomb-sniffing K-9 units. Notify the fire department well in advance of the event.
  • Registrant/Vendor Check-in: Require participants to provide a photo I.D. at registration to receive their packets/T-shirts/bibs. Vendors should also provide proof they are contracted to be at the event.
  • Baggage Check: Consider making a policy that guests can only bring in clear plastic bags. Otherwise, set a limit on the size and number of bags, totes, or backpacks attendees may carry in.
  • First Aid and Safety Station: Post clearly visible signs designating the location of the first-aid and customer relations stations. Arrange for an ambulance and EMTs to be present for the duration of the event. We recommend that a physician, athletic trainer and/or registered nurse be in attendance at any sporting event.
  • Volunteer Staff: Station your volunteers (wearing event T-shirts, hats or armbands) throughout the venue. This includes parking areas, to monitor the crowds, assist attendees, answer questions, and direct the flow of automobile and pedestrian traffic

Special Events Game Changers

We all know about game changers. Sometimes it’s a certain player, a momentum swing, the venue or fans. Other times it’s an event that makes us stop and rethink our views on one particular topic or another. The bombings at 2013 Boston Marathon qualify as a game changer.

It’s often a catastrophe that makes us re-evaluate our priorities. The Boston Bombings forced us to address our personal safety and the safety of participants at sporting events.

Increasing event security

In attempts to strengthen event security at its football games, the NFL banned spectators from bringing in purses, coolers, backpacks and other miscellany. Some view this as overkill. Others view it as the natural evolution in the continual ramp up of security measures in a volatile setting.

The tech revolution

The technology boom is also helping to strengthen event security. While closed-circuit television is still the Event securityindustry’s main method, the use of cellphones proves the most beneficial in enforcing safety regulations at sporting events. And not just among event staff. Many venues advertise a number for spectators to text or call if other patrons become unruly or are acting suspiciously.

And did you know there are apps available for reporting security issues? Fans may now anonymously submit complaints/observations using ISS 24/7 (or other) software. Game changer!

In addition to security hotlines, social media helps monitor patrons at sporting events. People love Facebook, Twitter and Instagram. Many sports teams and event management companies use these tools to their advantage. They post on their accounts to spread the word of inclement weather, evacuation notices and other pertinent information.

Smartphones are good for more than just checking your Twitter feed. They are also important in documenting fan behavior at games, both good and bad.  In a world where anyone can be famous on the Internet, staying on your best behavior can mean the difference between YouTube fame and infamy.

Special Events May Require Special Coverage

Every event is different, and safety should be priority No. 1. The security measure you put in place depends on its size, venue, attendance and other factors. And while some will stretch your budget, you’re not saving anything by taking unnecessary risks.

There is one element of the planning stage that should never be overlooked. Determining whether your insurance program includes the coverage needed for a safe event for everyone involved. That includes the hosts, participants, volunteers, vendors and guests.

There are risks involved in hosting and managing special events that may require either added short-term or annual coverage. Check with your agent about the following areas that require particular attention as you plan your event.

Vendors

Vendors can include caterers, tent and equipment rentals, concessions, security, and parking attendants. Sports risk managmentResearch your vendors thoroughly because poor service or a mishap on their part can spoil an entire event. Think of the potential consequences of a collapsed tent or food poisoning. It’s critical that each of your vendors provide you with a valid certificate of insurance evidencing General Liability with a limit of at least $1 million each occurrence. Require that they can add your organization as an additional insured on their policy.

Venues

It’s not unheard of for the actual venue of an event to be a factor that causes an accident or injury claim. Stages collapse, fire exits get blocked, and severe weather sometimes triggers the need for fast evacuations. The more knowledge you have about the number of people attending the event, the electrical equipment needed, and potential for severe weather, the better prepared you will be. For indoor events, make sure you know the emergency protocols of the building. This includes knowing where all the fire extinguishers, exits and stairwells are located. For outdoor events, be sure the terrain and any light/sound rigging are properly installed. Monitor the weather in the days leading up to the event as well as during the event – storms can pop up unexpectedly with disastrous results. Weather apps for smartphones alert you to severe weather watches and warnings.

Emergency Planning

Every event should have a unique emergency plan that all staff and volunteers receive and sign confirming they have read it. The emergency plan should include who has the authority to shut the event down or ask a vendor to vacate. Sudden storms, a shooter in the area, or a vendor with a lapsed permit are only a few examples of when someone may need to make an on-the-spot decision.  The emergency plan should also include a protocol for announcing a closing or changes in the event programming. It goes without saying that all event staff and volunteers should be familiar with the event emergency plan, to include medical Security at special eventsemergencies, lost children, crime and severe weather.

Security

Security often tends to get overlooked because it doesn’t generate income. But consider security an investment that reduces your risk of liability, which is just as good or even better than income. These security tips help make for a much safer event for everyone involved.

  • Volunteers are a great resource. But don’t use them for security enforcement purposes, such as dealing with unruly people, enforcing parking or alcohol regulations, or providing first aid. It’s best to have trained medical and law enforcement professionals handling these duties.
  • Using teachers, senior/varsity athletes and other community leaders is also not a good idea when it comes to maintaining order in the crowd. These temporary-authority figures aren’t always respected by others when they’re out of their element.
  • If you pay for professional security, don’t scrimp. Going with the cheapest security service may not be your wisest decision. Are their employees simply hired staff or trained personnel? Ask what types of sports events and what size crowds they can handle. Ask for examples of situations they managed to control and get references.

Sadler offers Special Event insurance and one of our insurance experts would be happy to help you determine what coverage your event needs.

And further information we have several articles related to reducing the risk of liability and injuries at special events. We can also provide a quick quote for tournament insurance and non-sporting events or you can contact us or call at (800) 622-7370.

Sources:
  • William Dyson. “Safe and Secure: How to Protect Your Event, Your Athletes and Your Spectators.” sportsdestination.com 07 Sept., 2018.
  • Kelly Martin,  “Safety and Security: Changing your game for the better,” Sports Destination Management. Sept./Oct. 2013.

Teams/Leagues and Facility Owners: Beware of Low-Quality Sports Insurance

Insurance certificates, brochures, and proposals that can put teams/leagues and their respective directors, officers, employees, and volunteers at financial risk of uncovered lawsuit

Many sports team and league administrators hope or believe that they have adequate protection under their Accident and General Liability policies. They usually place their trust in their local insurance agent – or even a so-called sports insurance specialist. Some that have their insurance provided by their municipal recreation department may rely on their risk manager.

But, how do they know for sure that their insurance adequately protects against some of the most common types of devastating lawsuits?

Many would like to think that their insurance will never be tested. Perhaps they can get by for several years, but eventually something bad will happen.

What are the risks?

We created an article, “Horror Stories About What Can Go Wrong,” from claims that were filed by our own clients. Most of their experiences are the expected spectator slips/trips/falls, more serious player injuries resulting in lawsuits, and a number of bizarre and unexpected occurrences. You just never know where risk lurks. Some of the largest sports claims usually arise outside playing the sport itself. We’ve seen large lawsuits arising from the following areas:

  • Falls off parade floats
  • Bleacher collapse
  • Heat illness deaths
  • Charter bus crashes
  • Electrocutions from shorts in light poles
  • Burns when cooking in concession stand
  • League signage blocking view of driver resulting in fatal car crash
  • Large slander/libel lawsuits
  • Fights between umpires and parents

With so much risk abounding within sports and recreation organizations, the quality of insurance must be taken very seriously.

Where the problem begins

Sports and recreation administrators often rely on a simple review of the wrong types of documents. It is a Injury claimmistake for a sports administrator to depend on the review of a certificate of insurance, brochure, or proposal from an insurance agent. None of these documents contain complete details on all policy coverages, definitions, conditions, and exclusions. Dangerous exclusions that take away coverage are often hidden in the fine print.

For example, a certificate of insurance may disclose that a General Liability policy contains a limit of $1 million. However, that same policy may have an exclusion for Athletic Participants. The certificate of insurance will not necessarily disclose the existence of this devastating exclusion, which has a huge bearing on protection.

The  only source for finding the answers on coverage is the actual insurance policies themselves. The problem is that the policies can be exhaustive to review. A typical Accident policy may be 70 pages long, and a typical General Liability policy may be 90 pages long.

Adequate sports insurance checklistProtect yourself with our Insurance Coverage Checklists

We provide the following checklists that can be given to insurance agents for their completion. That way, signing their name to any wrong information on the document could mean that their Errors & Omissions insurance is on the hook.

  •        Sports Organization Insurance Coverage Checklist (Printable PDF)
  •        Recreation Department Insurance Checklist (Printable PDF)

Facility owners at risk when permit holders and facility users carry inadequate coverage

Facility owners such as recreation departments and schools are also at risk when they lease or permit their facilities to facility users. These may be teams, leagues, tournament hosts, camps, instructors, etc. Many facility owners blindly rely on certificates of insurance thinking they tell the whole story.  However, many facility owners are surprised when their own insurance takes the hit instead of the facility user’s insurance they relied upon.

See Insurance for Facility Users of Rec Departments and Schools for more information on how facility owners can protect themselves. Learn how you can offer a referral source so that facility users can quickly and affordably obtain high-quality sports insurance from an industry leading source.

Buyer beware: With just a little effort you can confirm the quality of your sports insurance

With just a little due diligence and use our our checklist tools, teams/leagues and facility owners can verify that they are adequately protected. Your organization and respective directors, officers, employees, and volunteers are counting on you to make the right decision regarding their protection.

If you have questions about the adequacy of your current sports insurance policies, we can provide a no-obligation review. Contact us with your questions.

Excess Accident Insurance

The first line of defense against lawsuits 

Sports Accident insurance pays covered medical expenses of injured participants such as players, coaches, managers, umpires, etc. The coverage is normally excess or secondary, which requires other insurance such as family health insurance to respond first.

How Excess Accident Insurance coordinates with family health insurance

There are three basic scenarios that can arise under excess Accident insurance:

  1. When existing family insurance pays for 100 percent of all medical bills, the excess Accident policy will not make payment for any benefits.
  2. If existing family insurance pays for only 80 percent of all medical bills (due to deductibles or coinsurance provisions), the excess Accident policy will pay for the remaining 20 percent less any deductible or other policy limitations.
  3. If no family insurance exists, the excess Accident policy becomes primary and pays covered benefits less any deductible or other policy limitations.

The existence of Excess Accident insurance on all participants is the first line of defense against lawsuits arising from injuries to sports participants. Much of the incentive for an injured participant or parent to file a lawsuit is removed if either existing family health insurance or the excess Accident policy will guarantee that no out-of-pocket medical bills will be incurred.

Uncovered medical bills = lawsuits looking for deep pocket

Uncovered medical bills will ultimately result in nasty dunning letters and collection phone calls to the responsible party. This usually leads to consultation with an attorney. Of course, the attorney will recommend filing a lawsuit against a deep pocket. That’s the sports organization and its directors, officers, and volunteers.

Why General Liability carriers in the sports niche insist on Excess Accident as the first line of defense

This is why the few General Liability carriers willing to insure sports organizations require Accident insurance as a precondition of coverage. Most General Liability policies include a warranty provision. This means coverage is voided unless a minimum amount of Accident insurance is in force (usually $25,000). For higher-risk sports, some General Liability carriers may require a $100,000 limit.

What if Excess Accident insurance is too expensive?

In these situations, there is really no way around purchasing Accident insurance if it is a requirement of General Liability coverage. However, one solution is to seek a high-deductible Excess Accident policy.  Accident insurance is discounted highly at certain deductible points, such as $500, $1,000, or $2,500. And some General Liability carriers will accept Accident insurance with these higher deductibles.

Different types of deductibles: corridor and disappearing

Most Accident policies have what is called a corridor deductible.  This means the deductible is owed regardless of the existence and contribution of other collectible insurance, such as family health insurance. However, some Accident polices have a disappearing deductible. This means the deductible is satisfied to the extent that other existing insurance has paid medical bills.

Has the Affordable Care Act had an impact on Accident Insurance?

Excess Accident policies pay claims both on an excess and primary basis. If no existing family health insurance is in force, the Excess Accident claim becomes primary. The extent to which the Affordable Care Act increases the percentage of participants covered under family health insurance decreases claim payouts under Excess Accident. However, the high cost of health insurance under the Affordable care act results in higher deductibles and coinsurance. As a result, Excess Accident insurance takes a higher hit than in the past. The two forces tend to balance each other out. However, most of my clients, overall, experienced fewer claims on their Accident loss history. This resulted in premium discounts on some larger experience-rated accounts.

Risks of Tents, Canopies and Umbrellas at Events

Collapsing and fly-away shelters can cause bodily injury and property damage

Tents, canopies and umbrellas are popular shelters and sun shades at sidewalk sales, farmers’ markets, craft fairs, cookouts and sporting events. Unfortunately, it’s all too common to see such equipment inadequately secured. The risk of injuries is great, and property damage can also result when these shelter frames buckle and collapse or they go flying in a gusty wind.

In July 2018, umbrellas sent flying by wind gusts impaled people at Maryland and New Jersey beaches. A number of our sports insurance clients experienced similar mishaps with canopies that blew into spectators and resulted in significant injuries.  

As a matter of fact, one of them recently shared what happened at their youth soccer event:

Opening ceremonies were taking place at the local YMCA on a clear and cloudless morning. Suddenly,  a tornado-like wind burst on the scene. An unstaked canopy went rolling in the air, the legs hitting both a small boy and a woman in their heads. The woman required major surgery on her crushed forehead and she sued the YMCA. The YMCA in turn sued our client because he supplied the canopy. The YMCA did not have secondary insurance covering injured players and participants. Following this tragic event, this soccer league took no more chances. It banned canopies and tents at their games and events, and only allowed hand-held umbrellas.

Best risk management practices for canopies, awnings, tents and umbrellas

Make sure that the people erecting and taking down canopies are not distracted. A poorly-secured canopy is as dangerous as an unsecured canopy.  

Canopy weights should be attached to canopies at all times. Weights should be secured in such a way as to not create a separate safety hazard:

  •      Anchoring weights should not cause a tripping hazard
  •      Ensure weights are attached securely and tethering lines clearly visible
  •      Weights should not have sharp edges that could cut people passing by
  •      Anchor the weights should be on the ground; never hang them overhead

Sufficient weight is at least 24 lbs. per leg. One canopy manufacturer recommends a minimum of 40 lbs. on each corner of a 10’x10’ tent; double that on a 10’x20’ tent. Umbrellas should be anchored by a 50 lb. weight.

Even properly-secured canopies can be precarious in inclement weather. Determine if weather dictates that canopies should be taken down during an event. If so, direct bystanders to stay clear in order to prevent injuries.

Proper canopy anchors

  • Fill 2.5 gallon buckets with cement and tie one to each canopy corner  with a rope or bungee. Do  not place the buckets on the feet of the canopy.
  • Purchase vertical sandbag weights specially designed to be strapped to the canopy legs. Make sure weights are a minimum 24 lbs. each.
  • Fill PVC pipes capped on one end with cement. Attach one to each canopy pole securely.

Improper canopy anchors

  • A gallon of water weighs 8 lbs. Therefore jugs of water are not heavy enough to anchor a canopy in a gust of wind.
  • Tents, canopies or umbrellas tethered to tables, coolers or vehicles make for tripping hazards and are not sufficiently weighed down.
  • Sandbags that don’t sit upright and can’t be securely tied to the tent or canopy should not be used.
  • Tent stakes are tripping hazards and typically do not provide enough anchor in strong wind gusts.
  • Cinder blocks are hard, easy to trip over, and are all too often the cause of broken toes and shins.

Umbrellas

Obviously, it’s best not to erect an umbrella or canopy on windy days. However, if you must, choose one of high quality.  An umbrella made of cheap plastic and a flimsy aluminum frame will not hold up in high winds. Always anchor canopies and tents as directed above.  

Beach umbrellas should always be tilted into the wind and anchored securely.  See the video below for information use of umbrella anchors. You can also purchase sand weights that are made especially for anchoring umbrellas.

We offer other important risk management articles to help lower the risk of liability at markets, festivals and out door events. We also encourage you to call us at (800) 622-7370 if you have questions or to receive a quick quote.

Sources:

School and Booster Club Blame Game Over Athlete Death

Lack of risk management leads to costly legal battle

The family of Joshua Mileto is seeking $15 million in damages following his fatal accident on the campus of Sachem East High School in Long Island. The suit names and alleges equal blame to both the school district and school’s booster club.

Mileto, 16, died when a log fell on his head during a summer camp exercise. He and four other players were carrying the 400-lb. log during an off-season football camp drill. The attorney for the Miletos said the suit names both parties because of the vague relationship between the two. The Sachem East Touchdown Club is registered as a nonprofit.

It remains to be seen whether coaches at the camp will also be named in the suit. Apparently, it isn’t clear yet for whom the coaches were working, the school or the booster club. Both entities played a role in running the preseason camp. The Miletos’ attorney stated the drill was too dangerous for boys that age and size.

If the school can prove it didn’t employ the coaches for the purposes of the camp, it may not have any liability, according to Michael Duffy, an attorney not involved in the case.  Michael Kaplen, a law professor a George Washington University, isn’t aware of any cases where a school district tried to shift blame onto a booster club. It would be difficult to do so, he said, because the camp took place on school property. That’s tantamount to a school district endorsement of the camp.

How schools can protect themselves

The New York State Education Department points to section 414 of education law, advising schools to not treat booster clubs as an extension of the district. The law states that the school should establish policies for use of the property that “provide for the safety and security of the pupils.”

At Sadler Insurance, we advise all facility owners, including school districts, to have an agreement clarifying the roles of the facility owner and facility user. This should include insurance requirements and an indemnification/hold harmless provision in favor of the facility owner. For more information, see Insurance for Facility Users of Recreation Departments and Schools.

Source: Jim Baumbach, Michael O’Keeffe. “Sachem East football player lawsuit would look to establish blame,” newsday.com. 09 Sept. 2017.

Falling Tree Branch Kills Child on Playground: $3.6M Settlement

Most sports and recreation complexes have this exposure

A recent news story in our local paper illustrates perfectly how recreation organizations and facility owner/operators can be liable, even when they appear to be following best risk management practices.

A tree limb  fell on a 3-year-old boy who was playing on a park playground in the town of Irmo, SC. Tragically, he died from his injuries. His parents alleged negligence on the part of the town hall and six companies involved in the planning and construction of the park.

A settlement of $3.6 million was reached, though none of the defendants admitted liability. The mayor insists the boy’s death was the result of an “act of God.”

The allegations and the defense

In the suit, the parents claimed that those involved in building the park neglected to clear trees that could constitute a threat or danger. They also alleged earlier complaints about falling limbs around the play area were ignored by town officials and that warning signs.

The trees in the three Irmo parks undergo weekly inspections, according to the town’s mayor. Approximately 100 were removed in the last three years. Independent specialists inspected the tree involved in the lawsuit after the boy’s death and found it to be healthy. The mayor also said that the town contracts for quarterly inspections of park trees by specialists.

What this means for you

Under common law principles, the property owner can be held liable for negligence if a dead tree or branch falls and injures a third party. However, old trees often have branches that are alive, as evidenced by greenery that falls due to rotting. Even if the law is on your side, defense can be expensive. And juries are often swayed by the amount of damages instead of the technicalities of the law of negligence. It’s best to play it safe and be over aggressive when eliminating older trees and pruning questionable branches. In addition, it might be helpful to post signage about the dangers of falling branches.

Source: Tim Flach. “Family settles lawsuit after tree limb kills child in Irmo park.” www.thestate.com. 31 May 2017.

When Youth Sports Teams Move Up One Year

Is it safe in all age categories?

What liability exposure exists for administrators and coaches who allow a younger sports team to play up in an older age category? That question was asked by a visitor to our website:
“I am struggling with a team playing up a year in age U12 Boys moving to U13 Boys in soccer. What are your thoughts? And do you know of any lawsuits. I am on the board and I want to be able to answer any questions.”
 
We invited a guest expert to respond to that for us. Gil Fried is an attorney and professor at the University of New Haven who provided the following answer:
“I am not familiar with any lawsuits from a younger group moving up one age category.  If they moved up several years the proportional difference in skill and size could open a door to liability.  Since the potential for in jury exists at all soccer levels, I would suggest that the children in the 12-year-old group and their parents be sent a letter indicating the potential concern that since younger kids are playing against older kids there could be a chance for injuries. The letter should be clear and allow parents to pull their child if they are concerned without any retribution.”
 

Sexual Abuse/Molestation Insurance for Sports Organizations

The risks organizations face and the preconditions for coverage

Child Abuse in Youth SportsSexual abuse and molestation is, unfortunately, a major topic of conversation within youth sports insurance in the past decade.  The sports insurance carriers that write General Liability have been decimated with a number of large settlements and adverse jury verdicts.

As a result, most carriers are not willing to extend coverage for abuse/molestation unless risk management controls are in place.  In other cases, the coverage is only available by tapping into custom programs for larger governing and sanctioning bodies that have significant negotiating power.

Coverage for abuse/molestation is important because all directors and officers will be sued along with the alleged abuser.  The directors and officers will be sued for failure to screen out staff with criminal backgrounds, failure to respond to an allegation, and failure to implement policies and procedures such as the use of a “buddy system” and prohibition of overnight sleepovers.

As a precondition of coverage, many insurance carriers will require mandatory background checks on all staff with access to youth, as well as the adoption of a risk management awareness program.

We have more detailed information on the various types of background checks and the strengths and weaknesses of each, as well as a free and simplified Abuse/Molestation Protection Program on our risk management page.

Crime Insurance for Sports & Recreation Organizations

Employee/volunteer theft are more prevalent than many realize

Sports and recreation organizations can have significant assets at risk from the traditional employee or volunteer embezzlement and the modern perils of electronic fraud. Most sports organizations are not properly insured for these exposures and don’t have adequate risk management controls in place.

The Commercial Crime policy form (ISO CR 00 20 05 06 and CR 00 21 05 06) offers the following coverage parts that may be individually purchased:

Employee Dishonesty Provides coverage for employee theft of money, securities, or other property such as equipment. Employees are defined as regular employees, temporary workers, leased workers, trustees of employee benefit plans, interns, managers, directors, or trustees.

If applicable, it is critical that sports and recreation organizations request special endorsements to extend coverage to theft from volunteers, non-compensated officers and members of specified committees, specified directors and trustees on committees, partners, LLC members, computer software contractors, agents, brokers, or independent contractors.

It is also important to purchase Employee Dishonesty coverage on a blanket basis that protects against theft from all employees or others in a designated class as opposed to specified employees or others who must be individually named on the policy. Sports and recreation organizations experience a high rate of personnel turnover. It’s not uncommon for an organization to fail to update the list of specified employees.

Forgery and Alternation Provides coverage for forgery or alteration of a check, draft, or promissory note drawn against the insured’s accounts.

Money and Securities Provides coverage for theft, disappearance, or destruction of money and securities from either inside the premises/banking premises or outside the premises. Coverage may also be extended to robbery or safe burglary of other property.

Computer Fraud Provides coverage for financial loss due hacker access effecting a fraudulent transaction. An example of computer fraud occurs when company A sells services to company B. An employee of company B hacks into the computer of company A and changes the bank routing and account numbers. The next time a payment is made foElectronic crimer services, the funds are fraudulently transferred to the employee instead of company A. According to a 2008 survey by Computer Security Institute, the average financial loss due to computer fraud was $289,000.

Electronic Funds Transfer Fraud Provides coverage for financial loss due to a hacker access to a financial institution, accessing an online account, and circumventing normal online authentication controls to affect a fraudulent wire transfer. An example of this type of fraud occurs when a hacker gains bank account and password information by planting a Trojan virus in an email attachment sent to a company bookkeeper. When the attachment is opened, a keyword logger is launched that secretly obtains account and password information. The hacker accesses the online banking system and completes a fraudulent electronic wire transfer. According to a 2008 survey by Computer Security Institute, the average financial loss due to funds transfer fraud was $500,000.

Money Orders and Counterfeiting Provides coverage due to loss by good faith acceptance of money orders that are not honored or counterfeit money.

Traditional Crime Risk Management Controls

Many smaller organizations are not run as serious businesses and as a result don’t have strong risk management controls to protect against employee and volunteer dishonesty. The key to preventing insider dishonesty is separation of duties so that no single person has total control over any one process or audit procedure. Below are recommended controls:

  • Require a countersignature on all checks or on checks over a certain amount.
  • The person who reconciles the bank account should not be authorized to deposit or withdraw funds.
  • If credit cards or debit cards are used, authorized users should not be tasked with reviewing the monthly statements.
  • Keep detailed inventory records of all equipment and require a log to be maintained when equipment is assigned or checked out.
  • Create an audit committee to review all financial records, account statements, and to take an inventory of all equipment.
  • Collect checks instead of cash during fundraisers.

Electronic Crime Risk Management Controls

Pfishing scams, Trojans, key loggers, and similar techniques allow hackers to gain access to online banking transactions and to circumvent standard online authentication controls. Internal controls such as antivirus software, firewalls, and employee training are critical but don’t offer 100 percent protection. Computer Fraud and Electronic Funds Transfer Fraud coverages are strongly recommended.

Get a Quote

Contact Sadler Sports & Recreation Insurance at 800-622-7370 for a Crime Insurance quote. We have an existing Crime Insurance program available for smaller, locally-based organizations for as little as $175, which includes coverage for Employee Dishonesty, Forgery and Alteration, and Theft of Money and Securities. Larger sanctioning and governing bodies will be asked to complete an application that outlines your financial risk management practices and we will be able to provide a proposal within several days in most cases.