Resource Library

Steps to Verify Coverage for Vendors and Exhibitors at the Fair

Date: May 2021

An important part of the risk management process is placing the responsibility for negligent actions with the negligent party. Members should take four steps to verify coverage for vendors and exhibitors at the fair. This ensures that county fair/agricultural society vendors and exhibitors (a.k.a. independent contractors and service providers) not only accept responsibility for their acts, but are able to follow through with the ability to pay for any resulting damages.

Missing any of the steps to verify coverage for vendors and exhibitors may result in the fair/agricultural society being sued for the misdeeds of the vendor/exhibitor. This article explains each step, describing how fairs/agricultural societies can address and verify each so that vendors/exhibitors accept responsibility and fairs/agricultural societies can be reasonably confident in the ability of vendors/exhibitors to stand behind their promises. 

1. Hold Harmless and Indemnification: Accept Responsibility

Fair vendor/exhibitor agreements or contracts should be written and state that the outside party accepts responsibility for its negligent acts. Accepting responsibility is the first step and is accomplished through the use of an indemnification and hold harmless clause in the contract. Depending upon the relationship between the county and the fair/agricultural society, the agreement might include the county in the indemnification and hold harmless clause.

Example language: The [independent contractor] agrees to defend, indemnify and hold [organization’s name], its employees and officials harmless from any claims, demands, actions or causes of action, including reasonable attorney fees and expenses arising out of any act or omission on the part of the independent contractor or its subcontractors, partners or any of his or her agents or employees in the performance of or with relation to any of the work or services to be performed or furnished by the [independent contractor] or its subcontractors, partners or any of his or her agents or employees under the agreement.

Without the indemnification and hold harmless clause, the fair/agricultural society may find itself being sued along with the vendor/exhibitor. The clause spells out that the vendor/exhibitor not only accepts financial responsibility for its negligent acts, but will also defend the fair/agricultural society if named in a claim or suit.

MCIT Coverage Exclusions

There are certain types of liability that are excluded under MCIT’s coverage. These exclusions include, but are not limited to:

  • amusement rides
  • liquor liability
  • fireworks liability
  • racing
  • demolition derbies
  • rodeos

2. Obtain Insurance: Backing up the Promise

It is not enough to promise to take responsibility for one’s own acts. Each vendor, exhibitor, independent contractor and service provider must be able to pay for the potential damages caused by those negligent acts. In other words, the contractor must back up its promise.

Few individuals and small businesses have enough assets to cover a potential $1.5 million loss. To have adequate finances to cover a potential loss, the vendor/exhibitor should also agree to maintain sufficient insurance (see “3. Insurance Limits” for recommendations). If the vendor/exhibitor does not have enough insurance, the person that has sustained damage or injury may look to the fair/agricultural society for compensation.

Regardless of whether the fair board is ultimately found liable, it will likely be involved in a time-consuming and costly claim process. Therefore, vendor/exhibitor agreements should include insurance requirements.

Coverage Considerations

  • The contractor’s occurrence limit is often met with a combination of primary and excess/umbrella limits.
  • Possible lines of liability coverage include general, excess or umbrella, professional, employer’s, automobile and spectators.
  • Workers’ compensation coverage should also be considered. Minimum coverage should match statutory requirements.
  • For an in-depth explanation of MCIT’s recommendations, see the article Coverage(s) and Liability Limits for Independent Contractors.

3. Insurance Limits: Finance the Promise

Financing the promise is not completed simply through obtaining an insurance policy. MCIT recommends that fairs/agricultural societies require that vendors, service providers, independent contractors, promoters and exhibitors secure liability coverage with limits that, at a minimum, meet those for which a municipality (such as a fair/agricultural society) may be held liable. Minnesota Statutes, Chapter 466 provides some immunities and places caps on damages for certain tort liability claims. Fairs/agricultural societies organized under Minnesota Statutes, Chapter 38 are included in the definition of “municipality” for purposes of Minnesota Statutes, Chapter 466. The caps on damages are $500,000 per claimant and $1.5 million per occurrence or event.

MCIT recommends that members require the following minimum insurance limits:

  • $1.5 million each occurrence
  • $1.5 million personal injury and advertising injury
  • $3 million general aggregate (if there is an aggregate limit)
  • $3 million products and completed operations aggregate (if there is an aggregate limit)
  • $100,000 fire damage limit
  • $5,000 medical expense

4. Verify Financing: Certificate of Insurance

Members should require exhibitors/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 is issued by the insurance company and includes the name of the insured, insurance carrier, policy numbers, lines and limits of coverage issued to the contractor and the effective dates of coverage.

Fairs/agricultural societies should always verify that the events being held at the fair fall within the effective dates of coverage. For returning exhibitors/vendors, fairs should verify receipt of a current and valid certificate. Last year’s certificate will most likely have expired. Fairs/agricultural societies should be sure to check the effective dates shown on the certificate.

Fairs/agricultural societies should be included as an additional insured on liability policies. Professional liability and workers’ compensation are the exceptions. Additional insured status should be indicated on the certificate of insurance.

The certificate does not alter the insurance policy. Only an endorsement changes the contractor’s policy. Members should also obtain a copy of the additional insured endorsements to verify their status as additional insured.

For more about certificates, see Certificates of Insurance.

Risk Management Considerations

MCIT recommends certain minimum coverage limits (see step 3). It is important to note that each fair/agricultural society determines the amount of coverage it requires. MCIT has established recommended minimums because they relate back to the protections provided under the tort caps as provided in Minnesota Statutes, Chapter 466.

Of all MCIT members, perhaps nowhere else is there the diversity of vendors, independent contractors, service providers, performers and exhibitors as there are with fairs. A promoter bringing a snowmobile race to the fairgrounds does not pose the same risk as a local afterschool program displaying children’s artwork, or a group handing out brochures for a local nonprofit that helps developmentally delayed citizens.

A key risk management practice is to require vendors/exhibitors to have sufficient insurance to cover the exposure to loss. To determine appropriate or sufficient limits, the fair may classify vendors and exhibitors according to the exposures or risk of liability.

Upon careful review of the risks and exposures, the fair board may determine there are certain exhibitors for which lower (such as the above-mentioned nonprofit) or higher (the promoter of snowmobile races) liability limits may be acceptable or appropriate. Accepting lower limits may expose members to responsibility for damages as referenced in the second paragraph of step 2 above.

It is imperative that exhibitors’ classifications and the rules governing the determination of appropriate classifications be applied consistently to avoid potential allegations of discrimination. MCIT recommends that rules such as these be in writing, approved by the board and used uniformly for all vendors/exhibitors.

Managing the Process

Making sure that vendors/exhibitors accept responsibility for their own negligent acts is not easy. It requires a process, and each step to verify coverage for vendors and exhibitors is important. Skip one step—relieve a vendor/exhibitor of just one of these requirements —and the process can fall apart. Miss the certificate, and a fair/agricultural society would not know that insurance policies expire after the first day of the fair. Neglect to spell out lines and limits of coverage and a fair/agricultural society may find itself being sued for a third party’s negligence.

With each written agreement, fairs/agricultural societies should have vendors/exhibitors accept responsibility, require that they back up their promise, require lines and limits of insurance that adequately finance the promise, require a current certificate of insurance to verify the financial backing and a copy of the additional insured endorsement to confirm additional insured status.

Fairs/agricultural societies that have questions or concerns about this process, should contact their MCIT risk management consultant toll-free at 1.866.547.6516.

The information in this article 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 coverage with the appropriate legal counsel. The information contained in this document is intended for general information purposes only and does not constitute legal or coverage advice on any specific matter.