Posts Tagged ‘Athletic Participant Exclusion’

The Athletic Participant Exclusion

Difficult to understand in context of special events or competitions

General Liability policies often include an Athletic or Sports Participants to exclude exposure for sports activities that may occur at special events for nonprofit associations and corporate picnics. However, the wording in this exclusion is unclear and can lead to surprising results when interpreted by claims departments and courts.

The exclusion states that the insurance policy does not cover “bodily injury to any person while practicing for or participating in any contest or exhibition of an athletic or sports nature sponsored by the named insured.” The two most common issues are determining whether a particular activity is an athletic or sports contest and what is meant by Athletic Participant Exclusion“practicing for or participating in.”

Unfortunately, most policy versions of this exclusion do not define these terms, and court decisions are all over the board in rulings. Here are examples of how various courts have ruled:

  •  A rodeo event where participants attempted to remove ribbons from a bull’s horn was found to qualify as a contest of an athletic or sports nature since the participants were engaged in physical activity for pleasure. The Oklahoma court instructed that the word “contest” means a competition or struggle for victory and “sports” is defined as physical activity engaged in for pleasure.
  • The Louisiana Supreme Court ruled that cheerleading activities during a football game did not constitute a sports contest since cheerleading was ancillary to the real sporting event – the football game.
  • A New Mexico court ruled that a jockey was not practicing for a horse race while exercising a racehorse. The court reasoned that “practicing” means the same act or acts required for success in the sport in question or at least so similar as to develop the particular capabilities and skills essential to success. Furthermore, the risks accompanying practice must be the same as those faced by a participant in an actual competition.
  • A Louisiana court ruled that a football team’s school-supervised, off-season weight-lifting program was not practicing football since practicing for football involved running of plays, passing, blocking, tackling, etc.
  • A Michigan court ruled that a referee was not a participant in a hockey game because a participant is “actively involved in the contest either individually or jointly with team members, but the referee has “an uninvolved role and is responsible for the application of the rules to the contest.”

Where the exclusion is present, what would the claims department of the insurance carrier or the courts decide in the event of an injury at a company sponsored fishing tournament? This question was recently posted to the Big I University faculty in their April, 2012 online publication. The faculty members were divided on the predicted outcome.

Based on the lack of definitions in the Athletic or Sports Participants Exclusion and the unpredictability of the above rulings, policyholders should always assume that the exclusion removes all coverage for anything similar to an athletic event or practice unless written clarification has been received from the underwriter or claims department of the carrier.

 Source: A Closer Look at Tricky Coverage Issues; Robert Redfearn, Jr.; Insurance Journal; Sept. 3, 2007

Beware the Athletic Participant Exclusion

It renders many sports and recreation policies next to useless

The existence of the exclusion of “Athletic or Sports Participants” is by far the most troubling exclusion that is commonly found in General Liability policies of sports and recreation organizations. The applicable language of this exclusion reads: “With respect to any operations shown in the schedule, this insurance does not apply to “bodily injury” to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.”

Obviously, sports and recreation organizations frequently face these types of lawsuit risks and the damages tend to be severe in nature. Therefore, it is unconscionable for this type of exclusion to appear in the General Liability policy of a sports organization if such coverage is readily available in the market place. In the current market, such coverage is readily available and with the exception of certain semi-pro adult sports or high risk sports.

Sports and recreation organizations that have the Athletic Participant Exclusion have their coverage reduced to nothing more than a policy that covers lawsuits arising out of spectator injuries.

If the General Liability policy makes no mention of the Athletic Participant Exclusion, it can be safely assumed that coverage automatically exists, even if it is not expressly stated. However, some carriers provide an affirmative coverage grant by creating a coverage called Participant Legal Liability (even though this is not necessary and is primarily a marketing ploy). It is important to note that most carriers that specialize in writing General Liability for sports and recreation organizations do provide the affirmative coverage grant of Participant Legal Liability on a special endorsement. But, the special endorsement may actually introduce certain new exclusions, such as Player vs Player or Participant vs Participant, which would not be found if the policy were silent.

It’s amazing how many sports and recreation organizations are apparently unaware of the Athletic Participant Exclusion on their policy even though they presumably have knowledgeable insurance agents and risk managers looking after their interests. I teach classes to recreation department administrators and I have found that the Athletic Participant Exclusion exists on roughly 25% of the General Liability policies brought to class to be reviewed.

Read our other article on this topic related to special events an competitions.