INSURANCE IN SPORT – ARE YOU PROTECTED?
1. There are many reasons why participation in sport and recreation can attract claims for personal injury or loss. Most claimants, if not all, will allege a breach of common law duty, namely negligence.
For negligence to be proved, when a person has suffered a loss, there are four elements that must be considered:-
· A legal duty of care responsibility must exist between the person alleged to have caused the loss and the person who suffered the loss,
· That duty of care must have been breached,
· The loss suffered must have been caused by the breach of the duty of care,
· It must be foreseeable that the breach of the duty of care would result in the loss being suffered.
2. In this culture of litigation, particularly in sport and recreation, the number of negligence claims is increasing all the time. The ways in which an individual can claim injury or loss are also increasing, now even including such things as ‘hurt feeling’.
3. Insurance is a risk transfer mechanism. Organisations and individuals purchase insurance to protect themselves from the potential consequences of a large loss for which they might be held responsible. The large unknown financial risk, for example, of injuring another person and having to pay extensive damages and legal fees, is transferred to an insurer in return for a much smaller and certain cost of a premium payment.
4. There are many different types of liability insurance policy. Each one serves to protect different members of the community and different circumstances. The most commonly used policies are:-
Type of Insurance and definition:
Public Liability: Injury to a third party of damage to a third party property.
Professional Indemnity: Loss, financial or otherwise, arising out of errors and omissions (eg bad advice or failure to act).
Directors and Officers Liability: Professional legal protection in respect of mismanagement, including employment and wrongful acts.
Libel and Slander: Damage to a persons name or reputation as a consequence of insulting words (written or spoken).
5. No one conventional insurance policy meets the specific needs of sport and recreation organisations or their constituents:-
Public Liability will generally protect participants, if they cause injury to another person or damage to property.
Professional Indemnity will generally protect coaches and instructors, or referees and officials, in respect of alleged poor instruction or mistakes made.
Directors and Officers Liability will generally protect managers and administrators in respect of their executive responsibilities.
However these policies were not designed for sport and recreation activity and as such there will inevitably always be gaps in cover.
6. To help sport, Perkins Slade has created a unique Civil Liability Policy. Civil Liability includes, in a single policy wording:-
· Public Liability
· Professional Indemnity
· Directors and Officers
· Libel and Slander
However, Civil Liability provides even more protection than that! The operative clause states that the policy will pay damages (due to negligence) “in respect of any claim”. It is far greater than the sum of its parts.
7. Civil Liability is the intellectual property of Perkins Slade. It is underwritten, exclusively for us, by insurers Royal & Sun Alliance and Zurich.
We are not aware of any other insurer that is able, or prepared, to write the Civil Liability.
Other brokers have attempted to replicate the Civil Liability by piecing together different insurance policies. However, cover is not the same.
8. Civil Liability is written on a claims made basis, which means the policy that will respond is the one that is in place when a claim is made. (The alternative is a policy written on a claims occurred basis. In this case the policy that will respond is the one that was in place when an incident occurred, giving rise to a subsequent claim).
In our view the merits of a Civil Liability policy, written on a claims made basis, outweigh any arguments against, on the basis:-
·Your most recent policy is the only relevant one and allows you to arrange protection NOW, based on your requirements NOW, to protect your organisation against the threats that it faces NOW.
·The Limit of Indemnity is up to date and can ‘retrospectively’ be increased.
·Gradually occurring injuries, that might give rise to a claim, are covered by a single policy.
9. A key consideration in the purchase of a liability insurance policy is the Limit of Indemnity and the policy excess.
Civil Liability has no policy excesses – unless they are specifically requested by our clients.
The Limit of Indemnity is particularly important in two areas – namely Public Liability and Professional Indemnity (PI). In both cases the Limit of Indemnity starts at £5m per occurrence, although we recommend a Limit of Indemnity of £10m or higher.
Most PI policies are written on an ‘aggregate’ basis. Even if the Limit of Indemnity was £10m in the aggregate, we believe it would not be sufficient to meet the needs of sport and recreation.
10. Civil Liability is the most robust and comprehensive insurance protection in sport and recreation. The questionnaire (see download box)
For more information on Perkins Slade, sports specialist insurers and their range of services please click the links in the download box.