Beware of hidden exclusions
One of the most common coverage problems in the sports and recreation industry is the existence of the Athletic or Sports Participants Exclusion on General Liability policies. This exclusion is all too common and can have a devastating impact on an insured organization and others who rely on the coverage if they are not aware of its existence.
The dangerous Athletic or Sports Participants Exclusion (excludes lawsuits arising out of injuries to athletic participants) can be hidden deep in the policy exclusions with no disclosure requirement on a certificate of insurance. Some insurance carriers specializing in sports and recreation risks choose to distinguish themselves from the competition by adding an affirmative grant of coverage called Participants Legal Liability (covers lawsuits arising out of injuries to sports participants). This grant of coverage allows the carrier to show the existence of such coverage on a certificate of insurance that provides evidence that the Athletic or Sports Participants Exclusion does not exist.
Participants are generally defined under a Participants Legal Liability Endorsement. This refers to people who are granted access to restricted areas of the sports facility that are generally off limits to the general public. These could be athletes, coaches, managers, umpires, etc.
However, a General Liability policy that is silent on the issue automatically includes coverage for Participants Legal Liability, even without affirmatively showing a limit.. The endorsement that grants coverage for Participants Legal Liability may actually include some exclusions that restrict coverage (ex: Participant vs. Participant, Player vs. Player, Warranty of Waiver/Release) that may not be found on a policy without a separate endorsement for Participants Legal Liability. Therefore, the existence of a Participants Legal Liability limit and corresponding endorsement may not necessarily be advantageous if these other exclusions are found within the endorsement.
An advantage to having a separate limit for Participants Legal Liability includes injury scenarios such as lightning strikes, where multiple spectators and participants may be injured at the same time. Such situations are considered to be a single occurrence and as such the Each Occurrence limit may be exhausted. However, the Participants Legal Liability limit allows coverage for injury to participants to be segregated under a separate limit that frees up the Each Occurrence limit to be allocated to spectators.