Date: May 2021
An important part of the risk management process is placing the responsibility for negligent actions with the negligent party. Fair vendor, exhibitor and promoter contracts should require a provision stating that the vendor/exhibitor/promoter accepts responsibility for its negligent acts and will “hold the fair board (its agents, employees, volunteers, directors, etc.) harmless” from liability in the event of an incident giving rise to a claim.
Depending on the relationship between the county and the fair, the contract might also protect the county by stating the vendor/exhibitor/promoter will “hold the fair board and the county harmless.”
To have sufficient financial resources to cover a potential loss, the vendor/exhibitor/promoter should also agree to maintain adequate insurance coverage with appropriate liability limits. The entity should provide proof of that coverage via a certificate of insurance to the fair board. This is a critically important piece because if the vendor/exhibitor/promoter does not have adequate insurance, the person who has sustained damage or injury may look to the fair board for compensation.
Regardless of whether the fair board is ultimately found liable, the fair will likely be involved in a time consuming and costly claim process. Therefore, the importance of obtaining, reviewing and managing certificates of insurance coverage cannot be overemphasized.
How Are Appropriate Coverage Limits Determined?
Agricultural societies organized pursuant to Minnesota Statutes, Chapter 38 are included within the definition of municipality for purposes of Minnesota Statutes, Chapter 466. This law provides municipalities with certain defenses in the form of immunities and places caps (or limitations) on damages for certain tort liability claims. The caps on damages are:
- $500,000 per claimant.
- $1.5 million for any number of claims arising out of a single occurrence.
MCIT recommends that members require vendors, service providers, independent contractors, performers, promoters and exhibitors to provide liability coverage with limits that at a minimum meet those for which a municipality may be held liable under Chapter 466. Because the insurance industry does not typically provide coverage limits as stated above, MCIT recommends the following minimum increments:
- $1.5 million each occurrence
- $1.5 million personal injury and advertising injury
- $3 million general aggregate
- $3 million products and completed operations aggregate
- $100,000 fire damage limit
- $ 5,000 medical expense
The occurrence limit is often met with a combination of primary and excess/umbrella limits.
For an in-depth explanation of MCIT’s recommendations, review Coverage(s) and Liability Limits for Independent Contractors.
Certain types of activities and liability are excluded under the member’s coverage with MCIT. Therefore, it is critical that vendors/exhibitors/promoters hold a member harmless and provide appropriate liability insurance. Exclusions include but are not limited to claims arising from:
- amusement rides.
- liquor liability.
- racing/demolition derby.
- communicable disease.
Risk Management Consideration
A key risk management practice is to require vendors/exhibitors/promoters to have sufficient insurance to cover their exposure to loss.
To determine appropriate or sufficient insurance limits, the fair may decide to classify vendors/exhibitors/promoters according to the exposures or risk of liability they present. Upon careful review of the risks and exposures, the fair board may determine that there are certain exhibitors for which lower coverage limits may be acceptable. Agreeing to lower limits may expose members to responsibility for damages as referenced above.
It is imperative that members consistently classify exhibitors/exhibitors/promoters to the same standards and rules to avoid potential allegations of discrimination.
The information offered here is for risk management consideration only and is not intended to be relied upon as legal advice. MCIT recommends reviewing questions regarding fair coverage and vendor/exhibitor/promoter coverage with appropriate legal counsel.
Members should contact their MCIT risk management consultant toll-free at 1.866.547.6516 to discuss any specific needs or concerns that they have regarding fair coverage or certificates of insurance.
Certificates of Insurance
What Is a Certificate of Insurance?
MCIT members should require exhibitors and vendors to provide verification of coverage in the form of a certificate of insurance.
A certificate of insurance provides written verification of insurance coverage. It includes the name of the insurance carrier, policy numbers, lines and limits of coverage issued to an individual or entity, and dates of coverage.
What Should Be Included in a Certificate of Insurance?
The MCIT member should be included as an additional insured on liability policies. Professional liability and employer’s liability/workers’ compensation are exceptions.
Members should obtain a copy of the additional insured endorsement to verify their status as an additional insured.
How Can MCIT Members Manage the Process?
MCIT members should state the insurance requirements and require a certificate of insurance in each contract, or vendor or exhibitor application. If it is a returning vendor from the previous year, it is imperative that the file always contain current insurance information.
Certificates of insurance should not be considered substitutes for the actual insurance policy. A certificate of insurance does not override the policy terms, conditions, limitations and exclusions.
For more about certificates, see Certificates of Insurance.