1. Am I buying the right policy?
As a minimum, a sports organization should purchase three different insurance policies or a package containing all. Some sports organizations may also need additional policies such as Property, Auto, or Workers’ Compensation.
- Accident Insurance – Pays for medical bills on behalf of injured participants. This policy assures that your participants and volunteers will receive proper medical treatment. Also, most lawsuits filed by injured participants are because the medical bills are not covered by the sports organization because of inadequate insurance.
- General Liability Insurance – Defends your organization against law suite arising from a spectator or player that has suffered bodily injury or property damage due to the negligence. Covered persons should include the sports organization itself, directors, officers, and volunteers. Lawsuits are filed regularly for injuries that occur at games/practices and during off premises non-sport activities. Even if you were not negligent, you must defend yourself in court.
- Directors & Officers Liability – Covers the sports organization itself, directors, officers, and volunteers, against a class of lawsuit, which is not covered by the General Liability policy, alleging that your sports organization’s negligence has resulted in economic injury to another party or that another party’s rights under state, provincial or federal law have been violated. These types of lawsuit include discrimination, wrongful termination or suspension of personnel or players, or failure to follow rules or bylaws. This policy also pays for your defense and all related costs including cost of settlement or jury verdict.
- Maximum Medical Limit – Avoid any policy with a limit less than $10,000 as it won’t be enough to pay the medical bills for a moderate to serious injury. You may also want to consider raising your limit to $100,000 or more
- Internal Payout Schedules – Avoid any policy that limits surgeon’s fees, hospital room and board, doctor’s visits, etc. under a separate schedule as they often result in an underpayment of medical bills and lead to dissatisfaction and frustration on the part of parents and league administrators.
- Excess vs. Primary – Primary Insurance pays whether or not there is any existing coverage (such as parent’s health insurance) and may even allow a double recovery. On the other hand, Excess Insurance only pays what medical bills aren’t already covered by existing coverage (such as parent’s health insurance). When there is no existing insurance in force, Excess Insurance becomes Primary and pays up to the policy limit. If there is existing insurance in force that does not pay for all of the bills due to its own deductible or coinsurance, Excess Insurance will fill in the gaps and pay for such deductible or coinsurance. Excess insurance is better because it allows a league to purchase affordable coverage with a limit high enough to cover a moderate to serious injury. Primary insurance is so expensive that it results in a Maximum Medical Limit that is either too low or that is eroded by restrictive Internal Payout Schedules — see above.
- Deductible – A deductible is the amount that the injured person pays out of pocket before the insurance comes into effect. In other words, if there is a $250 deductible and $1,000 in medical bills, the injured party (or parent) pays $250 and the insurance company pays $750. In amateur sports, deductibles commonly range from $0 to $250 per claim and can result in substantial premium reductions. A “Corridor Deductible” applies both when there is existing insurance in force (parent’s health coverage) and when there is no existing insurance. On the other hand, a “Disappearing Deductible” only applies when there is no existing insurance in force.
- Covered Persons – Your policy should cover all athletes, coaches, managers, league officials and volunteers. Avoid policies that limit coverage to players and coaches only as there are other volunteers and league officials that deserve this important protection.
- Covers While – Your policy should cover while participating in all sports organization authorized activities under adult supervision including games, practice, tournaments, non-sport activities, and group travel to and from. Avoid policies that limit coverage to games and practice only as most amateur teams engage in group travel and numerous other non-sport activities such as awards banquets, picnics, cookouts, attendance at professional ballgames, etc.
2. Why do I need to buy insurance?
“I’ll take my chances and not buy insurance because…”:
Excuse #1: We’ve never had a serious injury or lawsuit in our sports organization. Besides, we’re extremely safety conscious.
Reality #1: Such a shortsighted attitude is dangerous — serious injuries and lawsuits can happen in any sports organization. It’s impossible to predict the future and the risks of being wrong are just too high.
Excuse #2: Our volunteers are “bullet proof” against lawsuits because our state has recently passed a law that provides immunity for volunteers.
Reality #2: While definitely a step in the right direction, most state immunity laws don’t prevent the lawsuits from being filed and it may cost over $10,000 in legal fees to attempt to prove that you are protected.
Excuse #3: Our sports organization is protected against lawsuits because we require our players and their parents to sign waiver/release forms.
Reality #3: It is not legally binding in any of the 50 states for a minor under the age of 18 to sign away (or have his parent sign away) his right to file a lawsuit. Therefore, waiver/release agreements won’t prevent a lawsuit and do not take the place of General Liability insurance. Nevertheless, we recommend their use anyway as waiver/releases may have a psychological impact and actually deter some parents from filing lawsuits. Also, they may have a psychological impact on some juries when it comes to deciding the amount of damages.
Excuse #4: Our sports organization doesn’t need to buy a General Liability policy to protect against lawsuits because each volunteer can provide his/her own protection through Homeowner’s Liability, Personal Umbrella Policy, or a Coach Certification Policy.
Reality #4: Many Homeowner’s Liability and Personal Umbrella Policies don’t cover lawsuits arising out of your actions as a sports volunteer. Most Coach Certification policies only protect the coach while undertaking coaching duties — this can still leave the coach exposed to lawsuits arising out of injuries to spectators and to players while on non-sport team outings. Also, even if these policies were to provide total protection for the individual, not all volunteers will carry one! Further more, none of these policies protect the league itself.
Excuse #5: Our sports organization and our directors, officers, and volunteers are automatically covered through the insurance offered by the recreation department or municipality.
Reality #5: The standard General Liability policy carried by a recreation dept. or municipality only covers the rec. dept. and its directors, officers, and employees. However, individual leagues using the facilities are a different story. In order for the leagues and their personnel to be covered, the rec. dept.’s General Liability policy must have a special rider or endorsement adding such leagues and their respective directors, officers, employees, and volunteers as named insureds. Incredibly, over 50% of the rec. dept. policies that we review leave their leagues and their hard working personnel out in the cold. Even more incredible is the fact that most rec. depts. and leagues aren’t even aware of this.
Excuse #6: Our sports organization doesn’t need to buy Accident Insurance to pay for medical bills on its participants since they are all already covered under their parent’s health insurance.
Reality #6: National statistics indicate that up to 25% of all children in the U.S. aren’t covered by health insurance. Most of these uninsured children come from middle class backgrounds where their parents are self employed and don’t have access to affordable group plans. Even in affluent neighborhoods, parent’s health policies are subject to cancellation due to layoffs. Even if health insurance is in force, it may be subject to large deductibles of up to $2,500 and coinsurance penalties that require payment of up to 40% of all medical bills. Unpaid medical bills often result in a lawsuit being filed by the injured participant.
3. What are the most common ways sports volunteers can be sued?
- Slip/trip/fall around playing field due to hazards such as holes, slippery surfaces, or uneven surfaces.
- Slip/trip/fall off of bleachers.
- Contact with ball caused by lack of barriers or defective barriers. Also, caused by improper positioning of players during warm ups.
- Failure of supervisor to stop participant rowdiness.
- Failure of supervisor to be located closely enough to activities in order to prevent injuries.
- Improper ratio of supervisors to participants.
- Supervisor incompetence or lack of training (certification) that results in participant injury.
- Improper instruction of participants on sport specific techniques and skills, game rules, and safety rules.
- Improper layout and design of the playing facility.
- Lack of facility maintenance and repair that leads to injuries caused by holes, depressions, or slippery spots.
- Improper decision to play under inclement weather conditions.
- Lack of emergency planning and coordination with local medical care providers and ambulance services.
- Failure to select, properly fit, and inspect quality equipment that is to be used for its intended purpose as prescribed by the manufacturer.
- Failure to engage in pre-participation screening for medical risks.
- Failure to warn participants/parents of the dangers inherent in sports participation (Waiver/Release Form)
4. How can we save money on sports insurance?
Sports insurance is a highly specialized field where very few agents have the buying power to negotiate the prices that you must have! Your agent/broker may not have access to the larger insurers.
Buy From A Sports Insurance Specialist. Insurance is a huge industry. There’s insurance for everything. Anything you can have, do, own, manage or whatever — there’s insurance for it. And nobody can specialize in all of it. In fact, a professional insurance agent can only specialize in a few niches — and really understand them. If someone specializes in insuring homes, auto, and retail stores, it doesn’t mean that they know anything about sports leagues. The sports insurance marketplace is so secretive and hard to access that only a sports insurance specialist will know where to go in order to satisfy the specific needs of a particular league. This specialized knowledge results in knowing which program or insurance company is offering the most competitive rates for a particular type of league. This knowledge can result in big savings!
Tap Into Group Purchasing Power. Only the very largest sports organizations or leagues that operate on a state/province wide, regional, or national basis have the buying power to establish their own programs with their own special rates. On the other hand, the average sports league will never have that ability. The solution for the average sports organization is to join forces with other organizations in order to form a buying cooperative that can have enough clout to get the attention of the insurance carriers. These buying cooperatives are know as “Risk Purchasing Groups” and allow for significant rate reduction. Larger groups can negotiate lower prices because many administrative expenses are fixed and can be easily spread over many members.
Raise Your Deductible On Your Accident Policy. Your “deductible” is the amount that you pay when you make a claim before your insurance “kicks in”. In other words, if you have a $1,000 claim and a $100 deductible, you pay the first $100 and your insurance company pays the next $900. The disadvantage of raising your deductible is that when you do have a claim you will pay more. The advantage of raising your deductible is that your premium will go down, sometimes by as much as 25%.
Buy All Your Policies From The Same Insurance Company. Many insurance companies offer built-in discounts for sports organizations that purchase both Accident and General Liability policies from the same company.
Don’t Get Nickel and Dimed To Death. Avoid insurance carriers that make additional charges for providing coverage for special non-sport activities, volunteers such as coaches and umpires, and adding field owners and sponsors as additional insureds.
5. Am I buying inadequate General Liability Insurance?
Our Minimum Recommendations
- Limits – Avoid policies that don’t contain all of the component coverages that are outlined below for bodily injury and property damage liability:
- Premises/Operations (Combined Single Limits) – $1,000,000
- Products/Completed Operations – Included
- Personal/Advertising Injury – Included
- Contractual Liability – Included
- Independent Contractors – Included
- Participant Legal Liability – $1,000,000
- Fire Damage Legal Liability – $50,000
- Premises Medical Payments (Spectators Only) – $5,000
- Occurrence vs. Claims Made – The distinction is important because in youth sports, it is possible that a child who is injured at age 6 could wait until age 20 before filing a lawsuit. If your league purchased an “Occurrence” policy during the year of the injury, you would have protection even if the policy is not renewed in later years. On the other hand, avoid a “Claims Made” policy which may only protect if the same policy (or a renewal thereof) was in force both when the injury occurred and when the claim or lawsuit was filed (which could be 14 years later). Obviously, “Claims Made” coverage is extremely risky as it is highly unlikely that a league would renew a policy with the exact same insurance company for 14 years in a row.
- Participant Injury Liability – Avoid policies that don’t cover lawsuits arising out of injury to your sports participants. Believe it or not, some policies only cover lawsuits arising out of injuries to spectators.
- Punitive Damages – Almost every lawsuit that is ever filed will allege that your volunteers have engaged in “grossly negligent behavior that is willful, wanton, and reckless” and will ask for punitive damages in order to provide extra punishment (not to mention extra fees for the plaintiff’s attorney).
- Abuse/Molestation – The vast majority of Sports Liability Policies now exclude Abuse/Molestation, you should buy this coverage back for an additional charge if it is available. These types of lawsuits usually result in jury verdicts in excess of $300,000. Even the innocent board members are usually sued for failure to screen out sexual offenders with a criminal background.
- Covered Persons – Your policy should cover your sports organization, its directors, officers, employees, and all volunteers. Also, you should be able to provide coverage for field owners and sponsors in the event that they request it. Avoid policies that don’t cover all persons and entities mentioned above.
- Special Coverage For Sports Organizations That Own Their Own Facilities Or Are Under A Long Term Lease – Sports Organizations that fall under this situation are responsible for what happens on their fields/facilities 24 hours a day, 365 days a year. Unfortunately, most General Liability policies only cover lawsuits arising out of sanctioned and supervised activities. Such policies would not cover lawsuits arising out of injuries that occur on your premises after hours or during the off season. This loophole should be closed by paying an additional charge to have this coverage added to your policy.