Kimberly A. Lowe

1. Advising the Board of a Recreational Youth Sports Organization: What You Need to Know About Insurance Kimberly A. Lowe * The law changes regularly. The information in this document is current as of the date listed.

2. Basic Insurance Tactics • Proactively identify the team’s insurance needs, and procure the right policies before the season even begins. • Put a process in place that allows the incoming parent board to review its insurance needs annually and ensure continuity of coverage from one season to the next.

3. The 5 Steps a Board Should Take in Considering Insurance: • Know your Organization’s Needs. • Know the Insurance on the Market and Identify Gaps in Coverage. • Don’t Assume Other Insurance Applies. • Shop for the Best Pricing and Terms. • Report All Claims.

4. 1. Know Your Organization’s Needs • Make an exhaustive list of everything the board and team are planning to do before, during, and after the season. This should include: • Registration activities, practices, games, tournaments, team-sponsored activities, fundraisers, etc.

5. 1. Know Your Organization’s Needs • Look at these activities on a granular level. • For example: • If there is online registration, does the registration packet request personal identifying information regarding the player? How is that information protected? Who is responsible for accounting and check-writing? • Are tryouts and practice sessions being held on the same fields as games? Will the team be travelling? How many coaches will there be? • What sports equipment does the team maintain? Where is it stored? • What fundraisers are planned? Will alcohol be served?

6. 2. Know the Insurance on the Market and Identify Gaps in Coverage • Accidental Medical Insurance • This policy pays the injured player’s or coach’s medical treatment for a sports related injury up to a certain amount. • It is limited to injuries sustained during team related activities and can be structured so that it either provides first-dollar primary coverage, or sits in excess of any other coverage.

7. 2. Know the Insurance on the Market and Identify Gaps in Coverage • Accidental Medical Insurance Concerns: • Some policies exclude coverage if the injured person has personal medical insurance. • Given the high price of medical care, $25,000 is the minimum limit you should accept. Some policies will also cap certain fees or services. • The higher the deductible, the lower the premium expense.

8. 2. Know the Insurance on the Market and Identify Gaps in Coverage • General Liability Insurance: • This policy covers lawsuits by third parties who claim injury due to the negligence of the organization or its affiliates. Coverage also applies to claims against the organization by host sports facilities, defense expenses, and indemnity for settlement or judgment up to a certain amount.

9. 2. Know the Insurance on the Market and Identify Gaps in Coverage • General Liability Insurance Concerns • Make sure that the definition of “insured” or “covered persons” is broad and includes more than just the coaches and players. • Pay attention to the policy exclusions. • Policies are written on an “occurrence” basis. Coverage attaches from the time of the injury, regardless of when the claim is actually made. • The minimum recommended limit of liability is $1 million per claim, $2 million in the aggregate.

10. 2. Know the Insurance on the Market and Identify Gaps in Coverage • Directors and Officers Liability (D&O) Insurance: • D&O policies cover the organization, its directors, officers, employees, and volunteers. These policies exclude liability for bodily injury claims and property damage, and are often limited to claims involving pure economic loss or claims arising from allegations of the violation of rights.

11. 2. Know the Insurance on the Market and Identify Gaps in Coverage • D&O Liability Insurance Concerns: • D&O policies are usually written on a “claims made” basis, which limits coverage to claims actually made and/or reported during the term of the policy. • Many D&O insurers will not agree to bind coverage unless the organization also has general liability insurance in place. • The minimum recommended limit of liability is $1 million per claim, $2 million in the aggregate.

12. 2. Know the Insurance on the Market and Identify Gaps in Coverage • Other Insurance Policies: • Crime Insurance • Equipment Insurance • Cyber Insurance • Why so many policies? • The waiver/release agreement does not apply to affirmative acts of gross negligence by the board or its volunteers; and • All it takes is one bad injury to wipe out a clean injury record.

13. 3. Don’t Assume Other Insurance Applies • In the economic downturn, many families do not have health insurance. Even if other insurance does apply, the deductible is often extremely high. • It is dangerous to make insurance decisions based on incomplete or anecdotal information.

14. 4. Shop for the Best Pricing and Terms • Pricing can be expensive, however there are measures an organization can take to control costs: • Put a risk management program in place. • Bundle multiple policies with the same insurer to get a discounted premium. • Partner with other organizations where possible to create a larger risk purchasing group. • Work with an insurance broker.

15. 5. Report All Claims • There are two clauses in most insurance contracts overlooked by parent boards: • Notice provisions require organizations to give notice of a claim within a specific period of time. • Cooperation clauses require the insured do not admit liability, enter into a settlement, or hire defense counsel without the insurer’s written consent.

16. Conclusion • During the first parent meeting with attorneys, the issue of insurance should be proactively discussed. An attorney should ask what steps the parent board has taken to ensure adequate insurance is in place. • Such an inquiry should lead to a discussion of the 5 steps a board can take to protect itself, its players, its coaches and its volunteers.