Professional Liability
Exposures arising from the performance of duties by athletic trainers, physicians, and other professionals might be vicariously imputed to promoters, sponsors, events, or teams. To protect themselves, sponsors or teams should ensure these professionals have certificates of insurance, and should obtain their own professional liability coverage. As added protection, promoters, sponsors, or teams should have this cover added to their general liability coverage on an "incident" basis, in case they should be named in litigation or otherwise have a claim made against them.

Participant Liability
Participant liability insurance protects against responsibility for injury or property damage sustained by players, coaches, officials, or other participants in an activity. The exposure to a sponsor, promoter, or team can be significant, considering the number of people who are in the middle of "the action," or close to it, to sustain injury or damage to their property. This coverage, with limitations, can be endorsed onto the general liability policy. In most team sports, player versus player is excluded.

Spectator Liability
Injuries to spectators are among the most common type of loss faced in the sports field. Spectator liability insurance protects against responsibility for injury or property damage sustained by those who are observing the activity. Coverage is found in the general liability policy. Pre-event loss-control activities and on-site claim services, along with diligent contractual analysis, can be used to help control this exposure.

Loss Of Income
This insurance is designed to protect management companies' financial interest in an athlete/client against financial loss due to death or disability. Frequently, a sponsor, promoter, or team's fortunes are tied to a particular "superstar," without whom an activity may lose its appeal. This coverage is available to compensate the sponsor, promoter, or team when the loss is due to death or disability.

Sponsorship Liability
This protects against the vicarious liability of companies that sponsor sporting and entertainment events and activities. The practice of looking for potential "deep-pocket" defendants is common in civil litigation. As such, it is not unusual for a high-profile corporate sponsor to be brought into a claim for injury or damages simply because its name is associated with an event. In these cases,sponsorship liability insurance can protect the corporation's core insurance program or self-insured retention.

Satellite Interruption
Another specialized form of business interruption coverage, this product protects against loss due to transponder failure. There are many factors to be considered in arranging this coverage, including whether the equipment is owned or leased, and what type of redundancy exists for the equipment. A thorough analysis of all contracts involved and a clear understanding of responsibilities of the parties is essential.

Incentive Bonus
Incentive bonus coverage is common in sponsorship or endorsement and other contracts with professional athletes. If the athlete achieves certain goals in his/her sport, the promotional contract pays bonuses on a specified basis. These bonuses are large additional sums, so the potential contractual liabilities are significant. The incentive bonus policy offers a guaranteed cost and assumes the possible payout of the contract, reimbursing the insured for the sums they are obligated to pay. 

Prize/Promotional Indemnity
Games of chance where a prize can be awarded to a winner are commonly insured on a prize indemnity form. The policy "pays on behalf of" the named insured if an eligible individual or contestant wins. It can cover basketball shots, holes-in-one, random number games, or any other advertising promotion. The policy limits can range from $2,500 to well over $1,000.000, or the cost to purchase an annuity to pay out the prize over time. Note:  Prize indemnity is NOT intended for promotions with a guaranteed winner.

Over Redemption
Promotion or product managers have percentage estimates of what rebate or refund promotions will actually return. If the promotion is wildly successful, and the actual redemption level exceeds the budget, over redemption insurance provides a limit of liability selected by the insured, above an agreed redemption estimate. This gives the brand or product manager a fixed cost (premium) for the promotion budget and helps protect them from unexpected over-redemptions.

Cancellation Of Events
Events held off corporate premises are not generally covered by business interruption insurance. A cancellation of event policy provides coverage for net incurred expenses only, or gross revenue lost if an event is canceled or postponed for a reason beyond the insured's control.

Non-Appearance
Events that rely on the appearance of a single individual or group are subject to cancellation and lost expenses and/or revenue if that person or persons are unable to appear for reasons beyond their control. Non-appearance policies provide coverage for "all risk" of cancellation or postponement, including medical causes (subject to pre-approved medical report). This cover can be expanded to include revenue loss associated with post-regular season revenue streams, as well as contingent business income due to a player missing playing time.

Signal Interruption
Any "live" or one-time event that is broadcast is subject to a breakdown that prevents completion of the transmission. This can be over traditional media, such as network radio/television, or other non-traditional distribution methods, such as pay-per-view cable, direct broadcast satellite, and even the Internet. Signal interruption insurance covers rights payments, advertising revenue, and/or production costs lost if the signal is unable to be transmitted due to a malfunction.

Special Events Liability
Advertising, sports, and promotion events frequently include activities that are outside an organization's typical operations. Fairs, festivals, galas, rock concerts, and professional sporting events often require a short-term liability policy. This special event liability policy can cover an individual event or events, protect the corporate program's loss experience, "buy back" corporate program self-insured retentions and offer enhanced coverages for the events, such as participant's liability.

Contract Cancellation (Disability)
Insurance to protect the death and disability exposures of the non-guaranteed portions of a player's contract with a team or sponsor. If death or disability prevents completion of the scheduled activity, relief can be obtained with this coverage.

Contractual Analysis
Careful review of leases, vendor and supplier agreements, and any other documents to identify potential exposures that should be addressed from a risk management point of view. The use of "hold harmless" and "indemnification" language in contracts can be a means of controlling exposure to loss and, conversely, a source of potential liability not envisioned when the agreement was made. All contracts should be analyzed for a clear understanding of insurance responsibilities and exactly who will be responsible to whom and for what.

On-Site Loss Prevention And Claims Service
One of the unique services that Marsh's Sports Practice provides for event exposures is our on-site prevention and claims service program. The strategic use of trained claims professionals at the site of an event has proved to be a very effective way of reducing the frequency of spectator claims and mitigating the severity of those claims that are presented.

To be successful, the program requires close cooperation between the team and claim service provider. Where an insurer is involved, they also should be consulted. Some things to be agreed upon in advance are:

• Composition of on-site staff size and who is in charge;
• How much will this program cost and who will pay for it?
• How the staff will be deployed and for how long;
• How communications will flow - two way radios, in-house telephone system;
• What reports are expected, by whom, to whom, and when.

The event day activities of the on-site staff are critical to the success of the program. Some methods and procedures that have proved beneficial are:

• Inspecting the pre-event facility for any obvious hazards, such as wet floors, broken railings, housekeeping problems around concessions, or other areas in the facility, and anything else that might cause injury or damage to a spectator.
• Having access to communication systems used by facility security, so they can immediately respond to incidents that might produce claims.
• Photographing incident sites and obtaining names and statements of witnesses.
• Positioning a staff member in the first aid facility to promptly establish contact with potential claimants. In conjunction with the medical staff, be sure any evidence of impairment (alcohol/drugs) is noted.
• Assigning staff to areas of known problems. The actions of facility security personnel can be a source of potential claims against the athlete or team. By monitoring their activities, exposure may be eliminated.
• Arranging for in-house video to be retained if an event of significance (fight in the stands, spectator on the field, etc.) was recorded.
• Initiating prompt follow-up contact with potential claimants. If there is liability against the athlete or team, a timely settlement may be the economical way to promote customer relations.

As with any program involving multiple parties, close cooperation and timely communication are a must. The suggestions above are not intended to be all-inclusive. Each situation requires analysis as to what will work. As the program evolves, changes may be necessary.

Other Non-traditional Products and Coverages

• Weather insurance
• Income stabilization
• Publishers liability
• Advertising
• Broadcasters liability
• Contingent Liquor liability
• Skybox liability
• Trainer malpractice
• Business interruption worksheet

CONTACT:

Dennis Donovan
Philadelphia
215-246-1235

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