The Independent Contractor or Subcontractor Limitation
Services such as concessions umpires, security, field maintenance and janitorial are typically outsourced by sport and recreation organizations as independent contractors or subcontractors.
The Independent Contractor or Subcontractor Limitation endorsement on a General Liability policy can have adverse consequences for sports and recreation organizations.
Don’t play around with independent contractors
The negligent actions of these independent contractors or subcontractors can result in the sports organization being shot gunned into a lawsuit.
The Independent Contractor or Subcontractor Limitation endorsement will preclude coverage unless the independent contractor or subcontractor maintains a General Liability policy at the time of injury, with limits equal to the sports organization while naming such sports organization as “Additional Insured.”
Protecting the organization
It is highly recommended that sports organizations require all independent contractors and subcontractors to provide evidence of General Liability insurance with limits of at least $1,000,000 combined single limits. Such policies should name the sports organization as “additional insured.”
However, General Liability coverage of the sports organization being contingent on the insurance requirement of the independent contractor or subcontractor is a risky proposition. If the sports organization is diligent about administrative duties, an uninsured independent contractor or subcontractor could easily slip between the cracks. In addition, a certificate of insurance is only an indication of coverage status as of the date of its issuance. Coverage could later be canceled due to nonpayment of premium with no absolute notification requirement to certificate holders.
For the reasons outlined above, it is not acceptable to allow the existence of the Independent Contractor and Subcontractor Limitation endorsement on the General Liability policy for a sports organization.
Source: John Sadler