Archive for the ‘Sports Camps/Clinics’ Category

Sports Insurance for Sexual Abuse and Molestation

Check if you’re covered under General Liability

Insurance carriers that write General Liability insurance for sports and recreation organizations take two approaches to covering lawsuits alleging sexual abuse and molestation.  Some carriers’ policy forms remain silent on the issue under the theory that it is covered if it is not excluded.  This is usually true, but some state case law may reach a contrary conclusion.  However, most policy forms provide an affirmative grant of coverage for sexual abuse and molestation through a special endorsement.

For example, many carriers provide an endorsement that provides sex abuse and molestation coverage in the amount of $1 million Each Occurrence and $1 million Aggregate.  Furthermore, the endorsement will usually include a laundry list of exclusions. An example of an exclusions would the perpetrator for remaining passive after an incident has come to the attention of management, etc.

Some policy forms may void sexual abuse and molestation coverage if the sports organization has not implemented a written procedure requiring a background check on all staff with access to youth. program or separately to each individual named insured, such as a league or club.  It’s obviously best if the Aggregate applies separately to each league or club.

Hired Car Physical Damage Insurance

What is and isn’t covered

Sports organizations occasionally rent vehicles for transporting athletes to out-of-town games and tournaments or officers to travel out of state on business. If a Non-owned and Hired Auto Liability policy is in place, it will not respond to damage to the rented vehicle itself.

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

  • 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 percent of the damages. The cost of this coverage typically ranges from $15 to $30 a day.
  • Purchase Hired Car Physical Damage from the sports organization’s insurance agent. Coverage typically costs $250 per year. However, this policy will not pay the following damages that are triggered by many rental car contracts:
  1.  The difference between actual cash value and replacement cost in the event the vehicle is totaled.
  2. Loss of profits to the rental car company while the vehicle is out of the fleet being repaired.
  3. Diminution in resale value.
  • 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.

Non-owned and Hired Auto Liability for Sports Organizations

What’s covered and what’s not

When vehicles in use for business pertaining to a sports organization are involved in an accident where the passengers or other third parties are injured, the sports organization may be vicariously liable. This means they can be included in any lawsuits arising out of the accident.  Injured parties often seek out the sports organization as a deep pocket when the owner of the vehicle is uninsured or underinsured.

This is why 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 non-owned vehicles.

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 either borrowed (ex: church van or school bus) or 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. It is important to note that Hired Auto Liability does not provide any coverage for damage to the rental vehicle itself.

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 potential for high severity and the fact that sports organizations typically don’t implement loss control protections.

Basic loss control protections include driver screening by obtaining acceptable Motor Vehicle Reports and requiring that employees 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 coverage on the rental of 15-passenger vans due to their documented propensity for tipping over.

The actual policy language must be carefully reviewed for these restrictions.

Fire Damage Legal Liability Coverage for Sports Organizations

It’s important for sports organizations that lease or rent buildings from a landlord to be covered by Fire Damage Legal Liability in their General Liability coverage. This coverage is also known as Damage to Premises, and applies in the event that the negligence on the part of the sports organization results in damage to rented premises (by fire or otherwise) and is sued for damages.

Typical limits for Fire Damage Legal Liability are either $100,000 or $300,000 depending on the carrier.

In the event that the replacement cost value of the lease building exceeds the Fire Damage Legal Liability limit, you should either increase your limit or attempt to negotiate a joint waiver of subrogation provisions to your lease agreement.

Under a joint waiver of subrogation provision, both the landlord and sports organization tenant agree that each will rely on their own property insurance to cover their respective property losses and that each will waive the subrogation rights of their property insurance carrier to recoup its claim payment loss via lawsuit against the negligent party who caused the loss.

Premises Medical Payments for Sports Organizations

Premises Medical Payments (or simply Medical Expense) can be an important coverage for sports organizations to have on their General Liability policy.  Normally, a General Liability policy does not respond unless there is a threat of a lawsuit. However, Premises Medical Payments allows the carrier’s claims department to respond and pay benefits without the threat of a lawsuit.

Premises Medical PaymentsThe purpose of Premises Medical Payments is to appease the injured party by quickly offering to pay their medical bills in an effort to convince them not to hire an attorney.

The normal policy limit for Premise Medical Payments is $5,000.  In the event that damages exceed $5,000, the fallback position is to revert back to the Each Occurrence limit for bodily injury liability.

Premises Medical Payments is typically used for minor spectator injury claims.  Most policy forms exclude Premises Medical Payment coverage for athletic activities which are defined as practicing, instructing, or participating in any physical exercises or games, sports, or athletic contests.  However, this exclusion is not a problem since athletic activities should be covered by an Excess Accident policy.

Personal And Advertising Injury Exposures

Coverage sports organizations may think they don’t need

Sports organizations such as teams, leagues, and recreation departments have definite personal and advertising injury exposures Personal and advertising injury insurancewhich should be covered under a General Liability policy.

Personal injury is defined as a certain types of slander, libel, invasion of privacy, and false imprisonment.  A typical personal injury example in the sports context would be if a a slanderous statement is made about a coach, umpire, or parent arising out of the heat of competition.

Advertising injury is defined as certain misleading statements or infringement of intellectual property rights in advertisements.  An example is if a sport organization makes a misleading statement about a competing sports organization in its player recruitment advertising materials.

Each Occurrence Limit for Teams and Leagues

Understanding your Sports General Liability Policy

The each occurrence limit under a General Liability policy for a sports or recreation organization such as a team, league, camp or recreation department should be at least $1 million at a minimum.  The limit is expressed as a combined single limit for both bodily injury and property damage liability.

The each occurrence limit is the amount of coverage that will apply to any one occurrence (incident or accident), even if it results in more than one lawsuit.  For example, in a bleacher collapse incident involving multiple injuries and lawsuits, the entire $1 million limit would be split between all claimants.

Many facility and field owners now require facility users to provide evidence of a $2 million each occurrence limit before they are allowed access.  For this reason, a sports or recreation organization may want to consider carrying a $2 million each occurrence limit.  If this option is available, the additional cost is normally 20% of the underlying $1 million limit.

If limits higher than $2 million are needed, the best way to accomplish this is to request a quote for an Excess Liability policy which can be purchased in increments of $1 million.  The minimum premium for each additional $1million increment will likely be in the $750 to $1,000 range.  The actual premium may be higher than the minimum premium, depending on the size of your exposure basis.  (Ex: number of participants or teams).


General Aggregate Limit for General Liability

The General Aggregate limit on a General Liability policy for a sports or recreation organization such as a team, league, camp, or recreation department describes the maximum amount that is available under the policy to pay multiple lawsuit occurrences during a one year policy period.

The General Aggregate applies to premises and operations types of lawsuits such as those arising from spectator and participant injuries.

The minimum acceptable limit for the General Aggregate is $2 million or NONE per league.  Having a General Aggregate of NONE provides the broadest coverage since NONE means that there is no General Aggregate cap.  In other words, there is an unlimited amount of coverage available.

For example, if a sports organization’s Each Occurrence limit is $1 million and their General Aggregate limit is $2,000,000, they will have enough General Aggregate limits to pay the following:

  • 2 different $1 million lawsuit occurrences in a policy year
  • 4 different $ 500,000 lawsuit occurrences in a policy year

Once the General Aggregate has been breached by multiple lawsuit occurrences during the policy year, the policy will no longer respond. Some larger local, state, regional, and national sports organizations have customized their own General Liability programs for their membership.  If a large number of teams or leagues share the same General Aggregate limit, this can be a problem as there might not be enough General Aggregate limits available.

For example, I have seen national organizations with thousands of leagues that have shared a single General Aggregate limit of $2 million.  If several leagues were to have claims during a single policy year that totaled $1,500,000, there would only be $500,000 in General Aggregate limits left for the rest of the leagues.

The solution is to endorse the policy to make the General Aggregate limit to apply separately to each insured league.

Products and Completed Operations

Product liability and other risks you never think about in sports

Sports teams, leagues, camps, and recreation departments need to carry General Liability policies that protect against Products and Completed Operations lawsuit exposures.

Teams & Leagues insuranceProduct liability for sports organizations can arise from the sale of defective products that injures someone away from the premises after control of the product has been relinquished.Common examples include injuries arising from concession sales such as food poisoning or a broken tooth from biting into a hard object hidden in food. Other exposures can result from the sale of fundraising products, team identity items, and pro shop sales.

It’s also possible for a completed operation of a sports organization to result in liability exposure.   An example would be a construction project off premises such as temporary bleachers or a stage that results in injury.

Most sports organizations don’t have a large Product/Completed operations exposure and as a result the minimum recommended limit for the Products/Completed Operations General Aggregate is $1 million.

Who’s Covered Under Sports Accident Insurance?

It depends on who is considered a participant

An Accident policy customized for sports and recreation organization should cover all players and staff, whether paid or volunteer.

Staff typically includes all head coaches, assistant coaches, managers, umpires, referees, concession workers, scorekeepers, field Youth football accident insurancemaintenance workers, and league officials such as directors and officers.  Our statistics indicate that approximately 6% of Accident claims occur to non-player staff.

Your General Liability carrier may require that Excess Accident insurance is carried on all “participants.” Otherwise, General Liability coverage may be voided in the event that the injured participant files a lawsuit.  The definition of participant must be included in the General Liability policy.  Typically, the definition will include all persons who are granted access to restricted areas where the public is normally not permitted.  Therefore, your Accident insurance policy must cover all players and staff.

Some may argue that paid staff should be covered by Workers’ Compensation. However, Workers’ Compensation laws vary from state to state and most state laws exempt certain employments where payment is less than a certain threshold.  In addition, very few private sports organizations carry Workers’ Compensation.