Directors & Officers Liability Insurance for Sports & Recreation Organizations
Directors & Officers Liability (D&O) can be purchased in three ways: as a stand alone D&O policy, as a combined D&O/Employment Practices Liability (EPLI) policy, or as part of a modular Management Liability policy which may include D&O, EPLI, Cyber Risk, Fiduciary Liability, and Crime.
Most of the D&O/EPLI claims filed against small, local sports and recreation organizations are for allegations such as discrimination based on race or handicap under ADA; wrongful suspension or termination of personnel or participants; or failure to follow own rules and bylaws as regards player eligibility issues.
Most of the lawsuits filed against larger associations such as statewide, regional, or national sanctioning bodies are for wrongful termination of board members or officers, antitrust, breach of contract, or for player eligibility disputes.
D&O/EPLI vs. General Liability
Directors and officers need protection under both General Liability and D&O/EPLI Liability policies. Both policies cover the same insureds: the entity, directors, officers, employees, and volunteers. However, they cover the same insureds against different types of lawsuits.
General Liability protects against certain lawsuits that allege bodily injury, property damage, personal injury (slander, libel), and advertising injury (mistake in advertisement or disparagement of a competitor program in advertisement). The most common types of lawsuits filed against sports organizations arise from bodily injury to a spectator or to a participant. And individual directors and officers are typically named in these lawsuits as defendants under the theory that the directors and officers failed to provide adequate general supervision. Therefore, a General Liability policy is essential to protect directors and officers because a D&O/EPLI policy does not cover lawsuits that allege bodily injury.
On the other hand, a D&O/EPLI policy covers certain lawsuits alleging discrimination based on race, sex, age, or handicap; wrongful termination, discipline, or suspension of personnel or participants; or failure to follow your own rules or bylaws when making an administrative decision. Individual directors and officers need a D&O/EPLI policy to protect against these types of lawsuits because they are not covered under a General Liability policy.
Common D&O/EPLI Policy Provisions
- Each Claim Limit: Policy limits commonly range from $1,000,000 to $2,000,000 or even higher.
- Defense Outside Limits: Some policy forms provide defense inside of the limits whereas other forms provide unlimited legal defense outside of limits.
- Claims Made: D&O/EPLI policies are claims made policies which means that they will only respond to claims which occur both while the policy (or a continuous renewal of such policy) is in force and when the claim is filed.
- Retro Date: A retro date is the date of first binding of a policy prior to which no claims will be paid. Retro dates are also commonly called Prior and Pending Dates.
- Retention: D&O/EPLI policies are usually subject to a retention which works similar to a deductible. Retentions can range from $0 to $5,000 and higher.
- Some policies include enhancements to extend coverage to electronic media liability and cyber privacy/client identity theft.
Common D&O/EPLI Exclusions
Gaining personal profit to which insured not legally entitled; fraudulent or dishonest acts as determined by final adjudication; willful violation of statue or ordinance; bodily injury; property damage; sex abuse / molestation; liability under contract or agreement; prior / pending litigation before retro date; insured versus insured lawsuits; claims brought by or on behalf of the insured organization; non monetary damages such as claims for injunctive relief, infringement of patent or intellectual property infringement; ERISA; Fair Labor Standards Act; and OSHA.
Problem Exclusions that You Should Attempt to Negotiate Away
- Legal Defense for Breach Of Contract
- Legal Defense for Non Monetary Damage Claims (ex. injunctive relief)
- Anti-trust and similar
- Peer Review, Credentialing, and Accreditation
Cost Of D&O/EPLI Policies
Smaller local sports and recreation organizations can often buy a policy with a $1,000,000 limit for as little as $300.
Larger sanctioning and governing bodies often pay in the range of $2,500 to $7,500 assuming that they have a clean loss history.
For-profit organization pay a much higher premium than Not For Profit due to the additional risks posed by For Profit such as shareholder claims for financial mismanagement or security law violations.
D&O Carriers Represented by Sadler Sports & Recreation Insurance
- Chubb/Executive Risk
- Great American
- and many more
How to Get a D&O Quote
Local sports & recreation organizations may qualify for our instant online D&O quote and purchase when also buying Accident and General Liability. Visit our home page and find the program that best describes your operations.
If you are a sports sanctioning or governing body interested in a quote, complete the Contact Us form or call us at 800-622-7370.