Liability Insurance
 

 

Auto Insurance

 

 

Weather Insurance

 

 

Cancellation Insurance

 

 

Accident Medical Insurance

 

 

Other

 

 

Q
Is property covered under a general liability policy?
A

Generally, no. The general liability policy excludes property that you own, rent, borrow, or property that is in your care. This exclusion exists because if you do have property that fits this description, there are separate property policies that are available to insure such exposures.

What type of property does the general liability cover? An example would be a patron whose clothes are damaged when he trips and falls over an exposed sound cable you have improperly laid for your event. Because this property (his clothing) was not owned, rented, or borrowed by you, or in your care at the time of the damage, the general liability policy would pay for the damages to these items.

An exception to this exclusion is Fire Damage Legal Liability which is included in most, but not all, general liability policies.

 

Q
Do I need liquor liability insurance?
A

You do if you are selling, serving, manufacturing, furnishing or distributing beer, wine, spirits or alcohol at your events.

The standard general liability policy excludes liquor related claims if you are in the business of selling, serving, manufacturing, furnishing or distributing liquor (alcohol, beer, wine, spirits, etc.). This exclusion applies even if you are "in the business" temporarily (example a 1 day event where liquor is served), and it applies even if you don't make a profit from the sale of liquor.

Charging an entry fee to an "open bar" event is considered being in the business of selling liquor.

Many, but not all, general liability policies include Host Liquor Liability. Host Liquor applies when hosts of a business or social functions serve alcohol without a charge.

Check out our article: 10 Steps To Safely Selling Alcohol At Events.

 

Q
What is contractual liability?
A

Usually included as part of the general liability coverage, contractual liability insurance protects you in the event a loss occurs where you have assumed liability under a written contract. For example, under most facility rental agreements, you agree to "hold the facility harmless" for any accidents arising out of your rental of the location. Contractual Liability Insurance would protect you from a claim in which the facility would be liable in connection with your rental.

 

Q
What does "This insurance is primary and noncontributory" really mean?
A

This statement may be required by facilities to achieve the assurance that the policy you are providing is a primary vs. excess policy, and that your policy has no significant deductible or self-insured retention that you would be responsible for in the event of a claim.

Unless otherwise noted in your quote, all of our liability policies are primary and noncontributory except for a nominal deductible ($250-$500) on a few of our products.

Sometimes, the facility rental agreement broadens this definition and will require that your policy be primary and noncontributory with any other insurance coverage that the facility has. The intent here is clear; the facility is attempting to make your insurance pay entirely for any claim, whether it is the fault of the facility or not. This significantly increases your risk of a claim and many insurance companies will not agree to such wording. Those that do often charge extra premium for the increased risk.

 

Q
What is a waiver of subrogation?
A

Losses typically happen through someone's negligence. In general, the negligent party should be liable for such negligence.

Your insurance company could choose to sue a third party to recover the amount of a claim they paid if the loss was caused by that third party. This is called subrogation.

Some contractual agreements, including some facility rental agreements, require you to waive your right of subrogation (and therefore your insurance company's rights) against them in the event of a claim.

Many, but not all, general liability policies allow you to waive your rights of subrogation as long as it is done in writing and prior to a loss.

The implementation of waivers of subrogation can be an excellent risk management technique, but the following rules should be followed:

  • Rights of subrogation should be waived only to the extent of your available insurance recovery. (You don't want to be faced with waiving your rights of recovery, then having a $2,000,000 loss when your insurance policy limit is only $1,000,000).
  • Waivers should be mutual. If you are waiving your rights of subrogation, the other parties of the contract should waive their rights against you as well.

 

Q
If I name someone on my policy as an Additional Insured, does it mean they don't need their own separate insurance?
A

No, they would still need their own insurance in order to be properly protected.

A common misconception with additional insureds is the belief that if they are named as additional insured on a policy, they don't have to worry about buying their own insurance. However, an additional insured only has protection under your policy if they are not responsible for the claim. They would not be protected under your policy if they were at fault for a claim.

The reasoning behind this is simple. If you are responsible for a claim, your own insurance should provide protection, including providing protection for the additional insureds. If an additional insured is responsible, their own insurance would have to provide them coverage. If you are both equally or partially responsible for the same claim, then each would rely on their own insurance for protection.

Example 1: You are promoting a festival and name Great Beer Company on your policy as an additional insured as required in your sponsorship agreement. Through no fault of Great Beer, a patron slips and falls and brings suit against you and Great Beer. Your policy would provide coverage for Great Beer.

Example 2: Same scenario as above. But instead of a slip and fall, a patron becomes ill from drinking a bad batch of beer manufactured by Great Beer and sues both you and Great Beer. Your policy would protect you, but would not provide protection for Great Beer. They would have to rely on their own insurance.

For additional information, see our published article entitled Additional Insureds - Are they worth the money? in our News & Articles section.

 

Q
Why do I need to purchase accident medical insurance if I am buying sports participant liability?
A

Many liability insurance companies believe if a participant has accident medical insurance to take care of their immediate medical bills in case of an accident, that they are less likely to sue you for an injury. So the liability insurance companies require that separate accident medical insurance is in force. That's why all of our sports policies that have participant liability included also includes separate accident medical insurance.

Accident medical insurance, unlike participant liability insurance, is payable without regard to fault and is intended to "make whole" the participant for out of pocket medical costs in the event of an accident. Participant liability insurance, like all liability policies, would provide relief to the injured person only if you were somehow responsible for the accident.

 

Q
Is an Accident Waiver & Release of Liability required on sports participant liability policies?
A

Although not required on all (see your quote for details) of our sports policies, a waiver is always recommended. Waivers have helped reduce or eliminate potential liability of the organizer for injuries, especially those type of injuries that are expected for the sport the participant is involved in.

Why should you bother with having participants sign a waiver since you are purchasing insurance? Because a waiver could protect you from 1) a claim that may exceed your policy limit and 2) the hassle of attending court hearings and trial in a civil lawsuit.

Here is a copy of our sports waiver. We suggest you talk to your legal counsel prior to utilizing any legal document such as this waiver.

 

Q
What are Occurrence & Aggregate Limits?
A

 

The Occurrence limit is the maximum amount the insurance company will pay per incident, regardless of the number of persons injured (claimants).

An Aggregate means the same as a cap. It's the total amount, regardless of the number of separate incidents, the insurance company will pay out for all claims during the term of your policy.

Example: Your policy has a $1,000,000 Aggregate limit. During the term of your policy you have 3 claims that are awarded against you. $250,000 was awarded on one claim, $500,000 was awarded on the second claim and $300,000 was awarded on the third claim. Total amount awarded: $1,050,000. The insurance company would pay a total of $1,000,000 (Aggregate max policy limit). You would be responsible for the balance of $50,000.

 

Q
What is Products Liability Insurance?
A

Products liability (including completed operations) insurance provides protection for you against injury to members of the public caused by a defective product you either manufacturer, sell, or give away.

Most, but not all, general liability policies automatically provide products liability / completed operations coverage. Sometimes, we are unable to provide this coverage if your products are considered hazardous; for example tobacco, cosmetics, motorized vehicles, etc.

Here are a few examples of product liability claims:

Example 1: A jewelry craftsman sells a pair of earrings at a local arts and craft fair. The buyer develops an infection after wearing the jewelry resulting in medical bills and lost time at work. Products liability insurance would provide coverage to the craftsman for any resulting claims.

Example 2: A spectator purchases a souvenir t-shirt sold by the promoter at a concert. The shirt was improperly labeled and contained fabric the spectator was allergic to. Products liability insurance would provide coverage to the promoter for any resulting claims.

Example 3: A food vendor, selling chicken dishes. improperly prepares the food causing a bacteria to develop. As a result, some customers get food poisoning. Products liability insurance would provide coverage to the food vendor for any resulting claims.

 

 

Q
What is Fire Damage Legal Liability?
A

Fire Damage Legal Liability is included in most, but not all general liability policies, and provides you coverage if you're legally responsible for any fire damage to a building you lease, rent, or borrow.

Example: You rent a Hotel Ballroom for a birthday party. While lighting the candles on the birthday cake, you accidentally set fire to the drapes causing scorch and smoke damage to the wall and ceiling. Fire Damage Legal Liability would cover you for the costs to repair the damage.

 

Q
What is Non-Owned and Hired Auto Insurance?
A

See the following article.

 

Q
How much rain should I insure against?
A

As a general rule, the descriptions below illustrate the effects of various amounts of rainfall. Use these as general guide only. Many variables such as terrain, temperature and intensity can modify the descriptions.

1/100th of an inch - The least amount measurable by the National Weather Service. This amount would not leave puddles on the ground and would slightly wet the surface. Example: A light shower for 2-5 minutes or drizzle for 2 hours. Rarely does this amount of rainfall cause cancellation of an event, although it may affect attendance.

1/10 of an inch - A light rain for 30-40 minutes, moderate rain for 10 minutes or heavy rain for 5 minutes. Small puddles would form but usually disappear after a short period of time.

1/4th of an inch - A light rain for 2-3 hours, moderate rain for 30-60 minutes or heavy rain for 15 minutes. Many puddles on the ground that do not disappear quickly.

1/2 of an inch - A light rain never reaches this amount, moderate rain for 1-2 hours or heavy rain for 30-45 minutes. Deep standing water for long periods of time.

 

Q
Should the coverage times for my rain policy be the same times as my event?
A

No, rarely should the times be the same. Here are some examples:

A concert that starts at 8pm and ends at 11pm. You would probably want coverage to start earlier than 8pm because if it is raining at the time patrons are about to come to the concert (say 6pm), they may decide then not to attend. It would be safe to end coverage at a time when you would not be obligated to refund ticket money if it did rain. This might be an hour after the headliner is scheduled to be on stage. In this example a rain policy that started at 6pm and ended at 9 or 10pm would be appropriate.

A family arts, craft & food festival that starts at 10am and ends at 8pm. Generally, the peak time for this type of event is early afternoon to early evening. Unlike the strict scheduling of the concert example above, if it's raining earlier in the morning, patrons can still attend later in the afternoon if the weather clears, thereby preserving your ticket sales, parking revenue and concessions income potential. Therefore it's important that the rain policy cover your peak attendance times. It would be safe to end coverage at a time when anyone who is coming to your event is already there! In this example a rain policy that started at 1pm and ended at 6 or 7pm would be appropriate.

A film shoot that starts at 8am and ends at 8pm. Because of the ability of film productions to improvise and adapt to weather conditions, it is usually not necessary to insure the full 12 hours of a production against rain. In this example, the shoot may only need 6 hours of good weather out of the entire 12 for actual filming. (The balance of the hours used for prep which can be accomplished in the rain). Therefore, a rain policy that guaranteed no rain for any 6 out of the 12 hours would be recommended.

 

Q
How do I know how much rain occurred at my event?
A

Unless you specify otherwise, we use the closest National Weather Service Office for hourly readings. (See your quote for the nearest office to your event according to the information the insurance company has on file.) However, if the closest office is some distance from your event, weather patterns may not be the same. (It could rain at your event and not rain at the weather reading station.)

You have the option of using a qualified weather observer who will be present at your event and take rain readings. The average cost to hire an observer, which would be your responsibility, is $25.00 per hour. You would also assume parking & admission fees (if any) for the observer and their assistant.

Many television and radio stations have qualified observers. Other qualified observers include: a) An active or retired member of the federal government who has been qualified for the purpose of taking weather observations. b) Any member of the American Meteorological Society or any member of a Professional Meteorological Society with observational experience. c) An academic in Atmospheric Sciences program with observational experience. And d) Any observer pre-qualified by the Insurance Company. (Resumes or Certificate to take Weather Observations required.)

We can also help you in locating one in your area.

 

Q
What are the main differences between rain insurance and event cancellation insurance?
A

Rain Insurance

Event Cancellation Insurance
Covers you only if it rains. Can cover you for rain (bad weather) as well as a lot of other mishaps such as power outages, unavoidable travel delays (aircraft or other modes of transportation), floods, equipment delays, earthquakes, mechanical breakdown, hurricanes, damage to your event location, non-appearance of the featured guest, etc.
Your event does not have to be cancelled in order for the policy to pay out. It simply has to rain the amount you insured against. Therefore rain insurance is an excellent way to insure loss of "walk up revenue" due to rain, even if your event is not cancelled.

Your event has to be cancelled or cut short for the policy to pay.

You don't have to prove how much money you lost due to rain. If it rains the amount you insured against during the times you picked, you are paid the policy limit. You must prove (with receipts, contracts, etc.) how much money you lost.

 

Q
Why should I purchase Accident Medical Insurance if I have General Liability Insurance?
A

Accident Medical insurance, unlike General Liability insurance, is payable without regard to fault and is intended to "make whole" the participant for out of pocket medical costs in the event of an accident. You don’t have to be responsible for the accident in order for coverage to kick in. We call it “goodwill insurance”.

General Liability insurance, like all liability policies, would provide relief to the injured person only if you were somehow responsible for the accident.

General liability is the more important of the two policies. Most venues/locations will require general liability, not accident medical.

 

Q
What is a Surplus Lines Carrier (Non-Admitted insurer)?
A

A surplus lines carrier is an insurer who chooses not to be licensed directly by a particular state, although they are still approved to write insurance in that state.

The types of risks insured by surplus lines insurers are unique and sometimes difficult to rate. The advantage of a surplus lines insurer is they can be more flexible with their rates and policy terms. (Licensed insurers must have their rates and terms pre-approved by the insurance department).

The disadvantage is, in case of insolvency of a surplus lines insurer, a policyholder is not eligible to participate in a state's insolvency fund. An insolvency fund is a reserve maintained by the state to assist in the payment of claims in case of an insurer insolvency. Only policyholders insured through licensed insurers are eligible.

However, if you are concerned about the financial strength of your insurer, you can check their Best's financial rating. Unless otherwise noted on our quote, we try to use insurers with a Best's rating of A (Excellent) or better.

Last Updated: March 31, 2009