Archive for the ‘Risk Management’ Category

Electronic Signatures on Waiver and Release Forms

Clients ask if they work as well as paper waiver/release forms

Clients often ask if electronic waiver/release forms will be upheld by a court to the same extent as paper waiver/release forms? The concern is that a forged signature may more likely on an electronic release or the language is not conspicuous enough.

The answer is that electronic releases are no longer an issue and courts readily uphold them. To the best of my knowledge, no court has ever invalidated a release merely because it was electronic.

As to the issue of forgery, electronic releases are more reliable than paper releases and have the advantage of authentication to match the signer of the web form either by email address, ISP, URL, IP address, and/or by the name on the credit card used for registration.

Court Cases Upholding Electronic Waiver/Release Agreements

Waiver/Release Should Be Conspicuous on the Web Page

The waiver/release language should not be buried or hidden on some obscure part of the web page or written using small font. We suggest a conspicuous header that is bold, in all caps, and/or underlined. An example would be WAIVER/RELEASE OF LIABILITY AND ASSUMPTION OF RISK AGREEMENT. The body of the release should be in a normal-sized font.

Make Sure the Minor Signs the Electronic Waiver/Release

Parental signatures are only upheld in about 10 states at this time. Therefore, for the other 40 states, it is critical that the minor is informed of the risks of participation and provides his/her consent to be subjected to those risks.

A well-drafted understanding of risk section in a waiver/release along with the accompanying name and signature of the minor may be introduced into evidence for an assumption of risk defense in many states. Therefore, always require the minor to sign the electronic release form. It might not be beneficial in all cases but it certainly won’t hurt.

Since the parent is typically the party that completes the online registration form, there could be some argument as to whether or not the parent signed “I Agree” on behalf of the minor.

To combat this, the waiver/release should include language that the parent agrees to explain all risks to the minor, the minor’s personal responsibilities for adhering to the rules, and to get the minor’s consent to be subjected to the risks. And the parent’s section of the release should state “I have read and understand and agree on behalf of myself and my minor child/ward to be bound by the terms of this agreement.”

This can provide additional protection but you should still require the minor to sign a separate “I Agree” box for the understanding of risk section.

Avoid Using a Paper Waiver/Release to Back Up an Electronic Release

Some organizations have electronic registration which includes a waiver/release form. But they worry that the electronic signature won’t be upheld by a court so they also require a paper waiver/release to be signed. This is entirely unnecessary as electronic releases are no longer an issue and readily upheld by the courts.

Having a back-up waiver/release can cause a novation, which may actually invalidate both releases. Novation is a legal term which means to substitute one contract in the place of another.

The bottom line: avoid a back up waiver/release in all circumstances.

Electronic Waiver/Release Forms Must Still Avoid Normal Pitfalls

Our article Are Waiver/Releases Worth the Paper on Which They Are Written? provides a list of pitfalls that should be avoided within a well-drafted waiver/release.

Of course, a custom waiver/release drafted by an attorney to be sport- and state-specific is always the best course of action. However, we provide the following sample waiver/release agreements that incorporate many of the principles discussed in this article:


Source: James H. Moss, J.D., Recreation Law 

Controlling the Non-owned Auto Exposure in Sports

Coverage for a serious risk

It’s 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 an employee or volunteer or borrowed from an organization such as a church. If a non-owned vehicle is involved in an accident while on association business, the following parties can normally be sued: the vehicle owner, 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 olicy to provide liability and physical damage protection.

I 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 million. The insurance carriers that insure sports and recreation organizations are concerned about this exposure because it’s 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 million

Personal vehicle usage precautions

Driver eligibility criteria

Driver training and motivation

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

Spectator Injuries at the Ballpark

Does the “Baseball Rule” need to be revisited?

Spectators and baseball stadium employees occasionally suffer injuries from home run balls and shattered bats flying into the stands. However, foul balls were the most frequent cause of the 1,750 spectator injuries that occurred last year in major league baseball, according to Elias Sports Bureau.  That number translates to about two injuries for every three games. That’s more than the 1535 occurrences of batters being hit by pitches in the 2013 season.

What’s worse is the rising trend in foul ball injuries. Contributing to the increase in incidents are seats in the new and renovated ballparks being seven percent closer to the field, stronger players, and spectators who are increasingly distracted by smart phones and the flashing messages and graphics on enormous electronic scoreboards.

Hard-hitting facts

Fans have almost no time to respond to foul balls driving into the stands, sometimes at more than 100 mph. A ball traveling at 80 mph is traveling 117 feet per second. Spectators sitting 150 feet from home plate have only a second to dodge the missile.

In response to the 2002 death of a fan by a flying puck, the National Hockey League required netting behind the goal and taller Plexiglas shields over the side boards. Major League Baseball has done almost nothing to reduce such risks and maintains that individual teams are responsible for the safety of spectators. Following the death of a minor league first-base coach in 2007 after being hit by a line drive into foul territory, it was mandated that all base coaches must wear helmets.

The “Baseball Rule” culture

The courts are apparently paying attention:  judges hearing appeals in Georgia and Idaho this year rejected arguments invoking the “Baseball Rule.” That’s a long-standing principle that absolves stadium owners and teams from liability as long as the spectators in the seats behind home plate are protected by netting.

MLB teams are responsible for their stadium backstop designs, display of warning signs and following local safety ordinances. Injuries this year took place in seating in field level and 2nd-tier seats, as well as the higher sections that are typical landing grounds for home run balls.

Source: David Glovin, bloomberg.com, 09 Sept. 2014.

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.

Injuries at Gyms and Homes

Thousands suffer in pursuit of fitness

Fitness Instructor Insurance and Health Club Insurance is in high demand due to frequent gym injuries.

According to the U.S. Consumer Product Safety Commission, the following injury statistics occurred in 2009:

  • 1500 emergency room visits resulting from equipment related
    mishaps in gyms
  • 50,000 emergency room visits from home exercise equipment incidents including treadmill falls, exercise ball falls, elastic stretch band hits to face, and dropping free weights on feet.
  • Treadmills are the number one cause of equipment related injuries with 575 occurrences of falling off and tripping
  • Weight machines and free weights caused 224 injuries.
  • Common gym equipment related injuries include broken ankles,fractured arms, fractured legs, and fingertip amputations.

Fitness instructors cite the following reason for gym/exercise related injuries:

  • Inattention due to Ipods, cell phones, and reading
  • Using equipment for the first time without proper instruction
  • Working out too hard, too soon after a period of inactivity.

Source: http://www.msnbc.msn.com/id/35127528/ns/health-fitness/

Insurance Policies Needed by Sports Organizations

The minimum needed for maximum benefit

Because many sports organizations are run by volunteers, they are often under-insured. Insufficient insurance coverage may be a by-product of money-saving efforts or simply a matter of not understanding the risks of exposure to the athletes, coaches, staff and volunteers, and board members

Below 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 lawsuitSports orginizationss 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.

We provide more detailed information on each of these policy types and insider tips on purchasing insurance in our article, 7 Critical Mistakes to Avoid When Buying Sports Insurance. If you have questions or want assistance in deciding which policies your organization needs, call us at (800) 622-7370.

Copyright 2002-20014, Sadler & Company, Inc.

Is a League Liable for Faulty Sports Equipment?

Concerns regarding older equipment

We received a phone call from a youth lacrosse club coach who was concerned about the use of 20-year-old helmets that haven’t been reconditioned or re-certified. He wanted to know if he could be liable in the event of a head injury to a player since it his responsibility to verify to the referee prior to the game that all equipment is in safe operating condition. He also wanted to know if his General Liability policy would cover any potential lawsuit.

 The short answer is that league administrators and coaches are responsible for the following aspects of equipment safety:
  • Long-range planning for the repair, refurbishment, and replacement of helmets. These decisions need to be made far in advance as they can take time to budget and complete.
  • Confirming helmets meet current National Operating Committee on Standards for Athletic Equipment (NOCSAE) requirements, as well as the requirements of the sports governing body.
  • Helmets should be inspected for defects in post season, pre season, weekly, and prior to any game or practice.
  • Maintaining repairing, and conditioning equipment on a regular basis.
  • Reconditioning to “like new” basis of safety equipment such as helmets should be performed by a reputable reconditioning business as opposed to an on staff trainer. NOCSAE may require re-certification.
  • Replacing helmets on a periodic basis per manufacturers recommendations.
  • Record keeping for documentation purposes on all of the above.Lacrosse equipment
There is no doubt that many of the above outlined principles may have been violated and the coach is justified in his concerns about liability.
 
General Liability policies generally don’t have an exclusion for lawsuits arising from of injuries due to failure to follow proper equipment safety protocol as outlined above. Therefore, coverage is likely to exist under most policies. However, a minority of policies may have a punitive damages exclusion. 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 and pretrial discovery and litigation is an emotional drain on league administrators and coaches.
 
For a more detailed resource on Equipment Safety, see our Risk Management Program for Sports Organizations

Stealing from your local league

Yes, it’s really a crime

How can a youth sports league protect itself from embezzlement and theft by volunteers? These crime rates are  growing quicker than people may notice or care to see, and it’s no longer just a corporate problem. In a tough economy many people are losing their homes and vehicles, and desperate to find a means to pay for the lifestyle to which they’ve become accustomed.

Unfortunately, all too often their solution isn’t just an innocent rearranging of funds, but a matter of stealing from children.  Although we have stressed the importance of risk management in local leagues for years, even national organizations such as the National Alliance for Youth Sports have begun an awareness campaign about swindling of funds in their publication, Sporting Kid Magazine.

When we speak to leagues about risk management and crime insurance for league funds, here are some of the responses we often receive:

  • “It would never happen to us.”
  • “We have measures in place for that.”
  • “I’m the only one in control of the money, and I wouldn’t take it.”

Unfortunately, we can’t dictate people’s actions or decisions.  We’ve seen too many cases of individuals who went to great lengths to appropriate funds and no one, not even the treasurer, saw what was was going on until it was too late.

Don’t let it happen to your organization. Call us at (800) 622-7370 so we can help you put the safeguards you need in place today.

Identifying Theft in Organized Sports

An insider tells why you need Crime Insurance

One of our clients wrote a fantastic article on how to prevent insider theft in youth sports organizations. Unfortunately, this insight was gained from his first-hand experience and he now wishes that he had purchased crime insurance to go along with his Accident and General Liability coverages.

This article covers Corruption cartoonnew ground on the following topics:

  • Behavioral signs of those most likely to steal
  • Warning signs that theft may be occurring
  • Overall protections that should be implemented
  • Protecting against  concessions and gate receipts theft
  • Statistics on the mindset of the embezzler

To protect against the 10% who will steal no matter what, all sports organizations need Crime Insurance. We offer a $25,000 Sports Crime Insurance policy for $175 a year.

You can read the article in its entirety here.


Source: Anonymous