Frequently Asked Questions
This endorsement may be required by facilities, and others, to guarantee that your policy pays first on a claim before theirs do (primary) and that their policy will not contribute towards the payment of a claim at all (noncontributory).
This significantly increases your risk of a larger claim and insurance companies charge extra premium for the increased risk.
While a Primary & Noncontributory endorsement seems similar to, or overlap, coverage provided by Waiver of Subrogation endorsements, primary and noncontributory protect the additional insured’s insurance policy from contributing toward the payment of a claim during the claims process; while the waiver of subrogation is intended to provide protection from having to reimburse all or some of the payout after the claim is closed and the insurance company looks to sue other responsible parties for reimbursement.
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 required by written contract.
There is additional cost to have the endorsement added to your policy.
When you have negotiating power when drawing up contracts (with sponsors, co-promoters, subcontractors, vendors and perhaps even facilities, etc.) you should try to implement prudent risk management techniques by following these guidelines:
- 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. You probably won’t get this with a facility/venue contract. But you should try to get it on every contract you sign.
While Waivers of Subrogation seems similar to, or overlap, coverage provided by Primary & Noncontributory endorsements, primary and noncontributory protect the additional insured’s insurance policy from contributing toward the payment of a claim during the claims process; while the waiver of subrogation is intended to provide protection from having to reimburse all or some of the payout after the claim is closed and the insurance company looks to sue other responsible parties for reimbursement.
No, they would still need their own insurance 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.
You do if you are selling, serving, manufacturing, furnishing or distributing beer, wine, spirits or alcohol at your events, or if someone is paying you a cut of alcohol sales.
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.
Nonprofit corporations are not exempt. They would need liquor liability insurance just like a for profit corporation or individual would.
Charging an admission fee to an “open bar” event is considered being in the business of selling liquor.
Receiving a percentage of liquor sales from someone else (like the bar, or the promoter) is considered being in the business of selling liquor even though you do not directly sell or serve.
Having a liquor license in your name is considered being in the business of selling liquor. Even if others are doing the selling or serving for you.
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 or admission fee.
Non-Owned & Hired auto liability covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by, and usually driven by, others, including vehicles owned by your employees).
It does not pay for physical damage to the vehicle itself; that’s covered by the owner’s insurance. Although this option is sometimes available.
Whether you realize it or not, as a business owner, you at least occasionally find yourself in situations where this coverage is needed. Errands and rental situations always come up.
- You hire a runner for your event.
- You send an employee to pick up lunch.
- While on a business trip, you rent a car.
- To impress a visiting client, you send a limo to have him picked up.
- An employee runs to pick up office supplies.
Coverage kicks in if there is an auto accident and you are sued.
You don’t have to own a business vehicle to have this coverage. In most situations, coverage can be added to your general liability policy.
A bonus: If you rent cars occasionally, having hired and non-owned auto liability insurance may save you money because you can avoid buying the liability coverage from the rental company. However, we always suggest you purchase collision damage waiver (CDW) protection from them.
No, it does not. Although sometimes physical damage is optional.
There are several ways to cover yourself for possible damage to your rented vehicle. Many people rely on their business automobile policy. While others use a credit card that covers such mishaps. And, of course, you can always buy collision damage waiver coverage from the rental company.
Despite its seemingly outrageous costs, there are reasons why, at least on shorter term rentals, you should buy the collision damage waiver (CDW, also known as loss damage waiver-LDW) from the rental car company:
1. Loss Valuation
Most rental agreements require you to reimburse them for the “full value” of the vehicle. However, if you are relying on your auto policy for protection, it covers vehicles for their “actual cash value”. You see where we’re going here. A rental company’s ideal of “full value” can be very different from an insurance company’s idea of “actual cash value”.
2. Loss Payment
The rental agreement may require immediate reimbursement for damages and it is not uncommon for the rental company to immediately charge your credit card. This can create a significant debt, “max” out the card’s credit limit, and perhaps impact the success of your event.
3. Loss of Use
Yo would most likely be responsible for the rental company’s loss of rental income on the damaged vehicle until it was repaired or replaced. Would your credit card or business auto policy pick up this expense?
If you rely on your business auto policy, you will certainly have a deductible ranging from $250 to $1,000, or higher. There is no deductible with CDW/LDW.
5. Excluded Vehicles
If you are renting a vehicle other than a standard automobile, will your business auto policy or credit card coverage cover it? Motorhomes, pickup trucks, motorcycles?
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.
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.
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.)
If you feel this verification station is too far from your event, you have the option of:
1. Using an independent weather observer who will take readings on-site. Or
2. Using Doplar Radar readings for your specific location.
There are costs involved in both of these options. There is no additional cost to use the closest National Weather Service Office.
Event Cancellation Insurance
1. Covers you only if it rains.
2. Your event does not have to be cancelled for the policy to pay. It simply has to rain the amount you insured against. That makes rain insurance an excellent way to insure loss of walk-up revenue even if your event is not cancelled.
3. You don’t have to prove how much money you lost due to rain. If it rains the amount you insured against, you are simply paid the full policy limit.
Event Cancellation Insurance
1. Covers you for multiple mishaps, including rain. Non-Appearance of a performer, venue fire/damage, power outages, floods, earthquakes, & hurricanes are all example of mishaps that can be covered.
2. Your event has to be cancelled or cut short for the policy to pay.
3. You must prove (with receipts, contracts, etc.) how much money you lost to receive reimbursement.
Equipment & Property Insurance
Because they don’t know what other equipment you might be renting from other places which you may or may not have insurance for. They want to make sure you have enough insurance to make them completely whole in the event of a claim.
If there is a major difference between the value of the equipment you are renting and the policy limit the rental house wants you to carry, talk to them. (We’ve seen some rental companies require a $1,000,000 policy limit on equipment valued as low as $50,000.) Once you’ve provided them full details of your equipment, they will usually become more reasonable.
A surplus lines carrier is an insurer who chooses not to be licensed directly by a particular state, although they are still investigated by, and 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, ask us and we can provide you with financial ratings data from A. M. Best Rating Services. Unless otherwise noted on our quote, we use insurers with a Best’s rating of A (Excellent) or better.