Posts Tagged ‘insurance requirements’

Sport injuries off the field

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

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).