Special Events Coverage

Members occasionally approach MCIT with requests to provide liability coverage for special events they are hosting. Events include, but are not limited to, activities that involve amusement rides and racing or demolition derbies. Because of the inherent risks associated with these activities and the fact that not all members are involved in hosting special events, MCIT has chosen to exclude coverage for these exposures. The cost to provide coverage would be prohibitive because it is not possible to spread the risk among all members.

One of the many advantages of participating in a risk-sharing pool is the ability to share the cost or spread the risk of coverage for similar exposure to loss with other members. If the risk involves only one member or a small group of members, it is not possible to spread the cost effectively among a limited number of members that want the coverage. Therefore, exclusions are necessary and should be viewed as a way to protect the assets of MCIT and to maintain equity among its members.

Consider the MCIT Coverage Document relative to special events. Exclusions are generally applied when:

• the exposure to loss is limited to just one member or a few members, thereby mitigating the spread of risk;.
• providing coverage is not beneficial to all members.
• the cost of coverage would be prohibitive.
• the exposure has the potential to adversely affect reinsurance.
• providing coverage would be against public policy.
• the assets of MCIT would be at risk.

Exclusions

Following are examples of liability exclusions members should consider prior to hosting a special event. It is important to keep in mind that other exclusions may apply, depending on the activity.

Mechanical, Amusement or Carnival Type Rides Exclusion: Coverage does not apply to bodily injury or property damage arising out of the ownership, operation or use of mechanical, amusement or carnival type rides. This exclusion applies primarily to agricultural societies and county fairs. It does not apply to traditional member-owned playground equipment or swimming pools.

Racing/Demolition Derby Exclusion: Both the general liability and auto liability sections of the MCIT Coverage Document contain exclusions for claims arising out of mobile equipment or autos used in, or while in practice or preparation for, any prearranged racing, speed, demolition or stunting activity, including but not limited to tractor pulls, demolition derbies, monster truck events, motorcycle racing, and related entertainment events. This exclusion applies primarily to agricultural societies and county fairs, but activities of other members can also fall within the scope of this exclusion.

Rodeo Exclusion: Coverage does not apply to bodily injury or property damage arising out of animal racing or rodeo events of any kind. Events include, but are not limited to, racing, challenge or skills competitions and other judged or timed animal events.

Watercraft Racing/Stunting Exclusion: Like the racing/demolition derby exclusion for automobiles and mobile equipment, the MCIT Coverage Document contains a similar liability exclusion for watercraft. This exclusion applies to bodily injury or property damage arising out of the use of any watercraft in or while in practice for any prearranged racing, speed, demolition or stunting activity.

Liquor Liability Exclusion: This exclusion applies to organizations that are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. Although members are not in the liquor business, situations sometimes arise when alcohol is served as part of a member function. This exclusion applies if the member sells the alcohol and causes or contributes to the intoxication of any person. Coverage is generally provided when alcohol is served at a member-sponsored social gathering at no cost.

Communicable Disease Exclusion: There is no coverage for claims arising out of the transmission of a communicable disease. This exclusion highlights the importance of a comprehensive sanitation plan, including appropriate signage regarding hygiene. For example, the Minnesota Department of Health recommends washing hands with warm, soapy water for at least 20 seconds after contact with animals or their environment. Planning for, training on and diligent execution of the comprehensive sanitation plan is a best practice.

Risk Management Recommendations

Special Events Sponsored by the Member

Generally, special events coverage is necessary when a member sponsors an event or activity that is not covered, or excluded, under the MCIT Coverage Document. When exclusions apply, members are encouraged to weigh the risk. If a decision is made to host the event, members are encouraged to use their local insurance agent to access a specialty market that can provide special events coverage. For example, to secure coverage for fair or festival events, a local agent may be able to approach a broker such as K & K Insurance, Swett & Crawford, Burns & Wilcox or Kaliff Insurance.

For those activities that MCIT does provide coverage, there may be an additional charge. The cost of coverage depends on the type of activity and/or the number of attendees. An additional contribution may also be charged if the covered event is held on another party’s property and the owner requires the member to provide a certificate of liability coverage naming the owner as an additional covered party.

A waiver is an excellent tool to manage risks associated with hosting a special event. A waiver is an agreement that participants of the special event sign that excuses the member in advance for any fault for injuries or property damage sustained by the participants as a result of the activity. A waiver is also known as an exculpatory clause, release or hold harmless provision. There is risk involved with every activity, but a waiver may help to limit the liability.

Special Events Sponsored by Outside Groups

When members permit outside groups to hold events on their premises, MCIT recommends an agreement be executed transferring the liability exposure to the sponsoring group. The agreement should require the outside group to provide a certificate of insurance as evidence of liability coverage naming the member as an additional insured.

MCIT recommends a minimum limit of $1.5 million per occurrence with an aggregate limit of $3 million for bodily injury and property damage liability. The agreement should include a provision in which the outside group promises to defend, hold harmless and indemnify the member for all claims arising out of the event. From a risk management perspective, these steps transfer the risk for these events/activities to the sponsoring outside entity.

MCIT encourages members to contact their risk management consultant if they have questions regarding special events. This information is not intended to constitute coverage representations. The MCIT Coverage Document contains complete terms and conditions.