Sports Liability Insurance: From Afterthought to Foresight

It was a breezy day on the West Coast: perfect conditions for a beach volleyball tournament. The organizers, not wanting any stray balls to bother other beach-goers, erected a tarp around the court. But the breeze picked up, and while the ball itself didn’t turn out to be a big risk, the tarp suddenly went from protection to hazard. It came loose from its pegs and flew right into the path of an elderly woman on her electric wheel-chair—not even a spectator, just a passerby. The tarp hit her in the face, knocking her off the wheelchair.

Her son is a lawyer.

“These are the legal risks: the wild ones that you just don’t even realize would be possible,” says Gina Bennett, vice-president at All Sport Insurance Marketing.

It may be less exciting than the first face-off, and less fun than the first aftergame pub night, but liability insurance is no less important to the national game. But try telling that to the people who run the hundreds of recreational leagues across Canada.

“These coaches… they’ll try to get on the ice and the rink will go, ‘Hey! You know what? You forget to get some insurance and we’re not gonna let you out there,’” says Susan Ewart, general manager of Canadian Sports Insurance Brokers.

“We’re an afterthought… We’re trying to change that.”

It’s not for lack of risk. From a provincial sports organization’s board of directors to parents coaching a children’s team, everyone involved in amateur sports has a broad range of exposures. But with many still in the dark about the risks they face— and just exactly when they assume those risks—there’s an opportunity for brokers to help them get the right coverage and advise them on how to prevent claims from arising in the first place.

The International Ice Hockey Federation says the country has more than 7,600 rinks and more than 720,000 people who play on them. (Stats Can puts the number much higher, at 1.2 million.) About 518,000 of those rink rats are minors, and hockey isn’t even the most accessible sport for kids: a recent study found that a mere 22 percent of the country’s young athletes play hockey, while 42 percent play soccer.

Minor leagues, whether for hockey, soccer or any other sport, are the most likely to have coverage, according to Bennett and Murray Morrison, president of All Sport. The company writes insurance for provincial sports organizations, covering up to 150 groups from municipalities to school boards. “But if you’re not a member of those groups, that’s when you have the last-minute panic,” says Morrison. To Bennett they’re weekend warriors: groups who play for bragging rights, rather than provincial titles. Like Ewart, Morrison says it’s an awareness problem; these warriors “do not think of insurance because no one even told them about it.”

Ewart says the problem is especially acute for more recreational, less competitive sports. She’s had a few inquiries about pickleball, a racquet sport that’s popular with seniors. “So they figure, well, they’re just this loosely formed organization, what could possibly happen? And that’s when something really does happen.”

Whether it’s a pickleball court or a hockey rink, most sports facilities are owned and operated by the local municipality. But the municipality doesn’t want to be on the hook for anything, so as soon as your client signs the rental form, it’s their responsibility. A typical form will include a waiver in which the renter assumes responsibility for, in the words of the City of Toronto, “all claims, demands, losses, damages, costs, actions and other proceedings whatsoever” and agrees to indemnify the owner against any liability, unless they can prove that whatever damage—be it a torn ACL or shattered plexiglass—is the owner’s fault.

Ewart says that some provinces, like B.C. and Ontario, have done a good job of ensuring that the risk transfer, from owner to user, goes smoothly. But in smaller towns in other provinces, some owners are a bit more laid back about their exposure. She says the attitude is, “‘Oh yeah, I know that guy, yeah, he’s good, get him out there—Little Johnny.’ And then Little Johnny’s team, what do they do? Trash the dressing room.”

Even though it’s after a game, the trashed dressing room is the coach’s problem. Organizers need to recognize that their responsibility doesn’t begin and end with the whistle. “Lots of our policies will extend to cover things like dry land training or exhibition games, or tryouts,” Ewart says. “So your description of operations will really tell you… the extent of what that policy will cover.”

Whether it’s for a game or a practice session, sports organizers need to carefully inspect whatever surface they’re using, because some property damage can lead to personal injuries. Even if a previous user caused the damage, the burden is on the person using the rink, court or pitch to spot it before it causes problems.

“Prior to any practice, prior to any game, walk the field,” Morrison says. A bigger-than-usual hole in the ground could quickly become a money pit: the person playing left field trips, breaks their ankle and can’t work for a few weeks. Now, they could be coming to the organizer for lost wages. “You don’t have the find the hole, but you have to look for it… You have to check the facility and make sure it’s safe and mark areas that aren’t.”

Brokers don’t need to know a rink’s blueprints for their clients, but they do need to know the blue line. Hockey Canada’s risk management guidelines outline what a coach or organizer should be looking for when they do a spot check: a smooth ice surface, proper lighting, no dangerous “protrusions from the glass, boards, net or ice surface,” and even a clean floor in the dressing room (“no debris… that may become stuck on the blades of skates or damage skate blades.”)

The site check is just one small part of a team or coach’s responsibility when it comes to play. According to All Sport’s outline of risk management responsibilities, organizers also need to make sure that the facility it’s renting has adequate medical supplies on-site, and that there is somebody around who knows what to do in case of an emergency.

All these risk management procedures don’t benefit only the players; they also cut down on an organizer’s exposure to claims from spectators, and even passersby. A hockey fan recently filed a lawsuit against the owners of Chicago’s United Center because a puck hit her during a playoff game in 2013. (Safety netting above the glass at both ends of the rink has been mandatory since 2002, when a puck struck and killed a young fan at a Columbus Blue Jackets game.)

Wavering Waivers

Not every accident needs to end up in court. All Sport recommends that if a client can get both accident and liability insurance, it should, because the first can sometimes mitigate the second. This is why many organizations that offer their own insurance programs, like Hockey Canada and the Ontario Soccer Association, include accident and liability coverage by default. (According to Hockey Canada, liability coverage is by far the most expensive part, eating up 55 percent of the premium.)

And there are waivers in which a participant acknowledges the risks they could face when they play. But waivers are far from bulletproof: Morrison says that if it’s “on the back of the softball registration form, it is truly useless… Courts will not uphold a waiver that hasn’t been properly presented to the person.”

Nor will it help much in catastrophic injuries. Morrison says a waiver is good for fending off nuisance claims, but it’s “not going to carry any merit for anybody if they’re quadriplegic. They’re suing, no matter what.” Along the same lines, having accident insurance won’t prevent a lawsuit in the case of a particularly nasty injury, like a broken back, where medical bills and other expenses could skyrocket.

Disputes over the high cost of catastrophic injuries are now clogging up the courts. In the U.S., several major sports leagues are facing lawsuits, either from athletes, insurers or both (see sidebar). Last year, the NFL settled a class action suit with several thousand retired players who claim the league covered up information about the dangers of concussions. But some players have pushed back against the settlement, which totals at least $765-million, and some of the league’s insurers (it has more than a few) are now taking it to court, arguing that they only covered its merchandising arm and have no duty to defend.

In addition to the technicalities over which part of the league was insured and when, some insurers now insist that concussions aren’t covered because they’re part of the game. A 2012 court filing by TIG Insurance reads, “The policies do not provide coverage for intentional wrongdoing or any bodily injury expected or intended by NFL and NFL Properties.”

TIG has made the same argument in a filing in which it asked a judge to clear it of any duty to defend or indemnify the NHL, which is facing class action suits over concussions.

The question of what a player can expect trickles all the way down to recreational leagues. Someone playing touch football could reasonably sue for a smaller injury, while someone playing full-contact hockey might have a hard time fighting for his dental bill after an accidental high-stick knocked out a tooth. These various risk profiles can be seen in All Sport’s classification of insurable sports, from “Class C”—hockey, lacrosse and others where “catastrophic risk” is high—to “Class A”: horseshoes, badminton and the like. “I don’t think you’re going to get seriously injured playing badminton,” Morrison says. “You could lose an eye, but you’re not going to [become] a paraplegic.”

The necessity of liability insurance isn’t necessarily due to a sudden rise in sports injuries, but because we’re becoming more litigious, argues Morrison. People whose bodies or feelings get hurt, or whose kids’ bodies or feelings get hurt, are more likely than ever to sue, “Fifteen years ago, a parent said, ‘I don’t like your answer and I quit.’ Nowadays, they say, ‘I don’t like your answer and you’ll be hearing from my lawyer.’”

A well-organized league or governing body will have a complaints procedure in place, but bigger cases often go beyond an internal process. They don’t always go to a traditional courtroom either, but there is an alternative venue for questions of fairness: human rights tribunals.

Just last month, Hockey Canada announced that it would allow athletes to choose a dressing room based on their self-identified gender. The decision stems from a human rights complaint from a transgender player in Oshawa who had been forced to use a different change room from his teammates. In a statement, Jesse Thompson said, “I just want to be that guy who’s really good at hockey and hope my actions mean other kids don’t go through the same pain.”

As part of the settlement, the national hockey organization will also “provide training to all its Ontario-based trainers and coaches on gender identity and gender expression, including training on discrimination and harassment.” That kind of sensitivity training should protect Hockey Canada and its component parts from similar human rights issues in the future; Steve Indig, managing partner with the Sport Law and Strategy Group, says many cases revolve around insensitive adults. “It’s coaches making certain stupid comments, or segregating people… Instead of just saying, ‘You’re a B athlete,’ they say, ‘You’re too old be an A,’ [or] ‘You’re not as advanced as the other 12-year-olds.’”

“Are we covered? Are we covered? Are we covered?”

There’s a significant burden on the organization or league to ensure that all its officials—managers, trainers, coaches, referees—are well-trained to avoid making provocative, damaging remarks, but their broker also has to make sure that, if they’re subject to a human rights complaint, they’re properly covered.

Indig says that many liability policies don’t cover tribunal hearings by default, which he calls “a big hole in the coverage, because it’s just as expensive to cover a claim in human rights; they’re awarding damages in the tens of thousands of dollars.” He jokes that what a liability policy covers is a common misconception: “I sit in a lot of educational sessions with an insurance broker, and one of the biggest questions… from the audience is, ‘Are we covered? Are we covered? Are we covered?’ And a lot of their response is ‘Yes, yes, yes’ until the underwriter says, ‘No, no, no.’” All Sport, for one, offers legal defense expense coverage, with a limit of $25,000 per occurrence, which it says “would cover most legal costs.”

Though provincial organizations are usually better at making sure they are fully covered, they also deal with high-level issues that rec leagues would probably never encounter. Indig says the sponsoring (or “carding”) of athletes has now come under fire. Governments often provide high-level athletes with a stipend, which some say are meant as a stepping stone before receiving similar funding from the federal Athlete Assistance Program. “Several athletes have brought forward age discrimination claims because they’re in their 20s, and they’re not eligible for that provincial funding.” He says one such claim is before a human rights tribunal right now. (A national organization, the Sport Dispute Resolution Centre of Canada, also handles this kind of complaint.)

Then there’s preventing what might be the ultimate nightmare through the pre-screening of coaches and other officials who work with minors. Minor hockey leagues confronted the issue in the late ‘90s when WHL coach Graham James pled guilty to sexually abusing two former players. Today, it is nearly impossible to get a league started without proper screening and training procedures (and Hockey Canada’s liability insurance explicitly includes sexual misconduct liability). Morrison and Bennett from All Sport say any organization trying to get grants needs to show the government that they’ve got procedures in place for preventing harassment and abuse—and they need to show it to get insurance, too.

“To provide the abuse cover, we require that they have the abuse or harassment policies in place,” says Bennett. “We request a copy.” Morrison adds that far more organizations now require police background checks of coaches and anyone else who works with minors.

Police checks are just part of an organizers’ responsibility. If an insured wants to avoid getting named in a civil suit for medical bills, or in a human rights complaint because a coach lost his cool and mouthed off to a bantam player, then a broker needs to make sure they have solid training and procedures in place—and that they follow them. Often, Morrison says, “The manual’s covered in three inches of dust. They wrote it 10 years ago to get government funding. Are they aware of it?

“Actually, one of the issues we’ve had… is, ‘Oh yeah, they didn’t follow their own policies and procedures manual, because they thought it was out of date.’ And it probably is, in some cases.”

But there’s no excuse for not having that manual. Most provincial associations’ policies are publicly available, and Ewart says pointing organizers, leagues, teams and coaches in the right direction is a big part of broking in sports insurance.

“We don’t want to sell you just a policy. We want to help you put proper policies and procedures together so that you can reduce your risk and you can go out there and play those games and play safe.”

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Copyright 2014 Rogers Publishing Ltd. This article first appeared in the October 2014 edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.