Posts Tagged ‘insurance’

$8 Million Dollar Verdict against NCYSA Highlights Need for Risk Management

Written by PC News on . Posted in Governing Bodies, Insurance, Litigation

A jury has found the North Carolina Youth Soccer Association negligent in the death of two young soccer players in a 2004 bus accident in France.  The jury awarded about $8.3 million in compensatory damages to be divided between the parents of two Olympic Development Program (“ODP”) players killed during a European tour.  In 2004, the North Carolina 1990 boys ODP team went on a tour of France.  During bad weather, the bus they were traveling in overturned in a ditch.  Two players died and several others were injured.  Suit was filed in North Carolina against the state association.  After many delays, the case went to trial and a verdict against the state association was returned, totaling $8.3 million.  (See full story here). The suit accused the N.C. Youth Soccer Association of failing to look into the safety record of the bus company used on the trip.  The lawyer for the families was quoted as saying “On this trip, all the emphasis was on soccer.  It wasn’t on safety.”

While the deaths are certainly tragic, such a verdict can leave association executives shaking their heads.  How can such liability be placed on the state association for an accident in a foreign country when transportation had been contracted out to properly certificated companies.  If this verdict can be rendered, how can a state association (or a local club with teams that travel) possibly protect itself?  Risk management planning is one approach to avoiding these situations.

One component of a risk management program is the evaluation of insurance coverages.  Using the South Texas YSA coverage as an example, the standard policy provides $1,000,000 in liability coverage with a $4,000,000 excess layer of coverage.  Obviously an $8 million verdict exceeds this coverage.  As day to day coverage goes, a $1M/$4M primary/excess liability policy is usually sufficient and prudent.  If a club or association undertakes a special event or program, however, the club should examine the possibility of obtaining an additional layer of excess insurance coverage.  Excess coverage is usually fairly inexpensive because it is only triggered if all the underlying policies are exhausted.  Moreover, excess insurers do not have the expense of defending lawsuits.  The primary carrier undertakes the defense.  For that reason, millions of dollars in excess coverage can be obtained at very reasonable rates.

A second consideration in a tour like this is the use of additional insured status and indemnity agreements to provide protection to the association.  A trip like this should not be booked or logistically planned by the association.  A professional travel planner should be engaged.  The engagement agreement should require the travel planner to undertake all due diligence for all vendors used on the trip.  Moreover, the travel planner should be required to indemnify the association for any claims of negligence in the planning of the trip and to name the association as an additional insured on its liability policies.  If the trip is domestic, all vendors should likewise indemnify the association and provide an additional insured status to make coverage available to the association.  At Placek Consulting, we use a standard vendor clause in our risk management plans to assure that the association is protected by the vendors it uses.

Despite best efforts, tragedies can happen.  In that instance, your risk management planning will be put to the test.  With sound planning, the chances of long term risk to the financial viability of the association can be minimized.  Hope for the best but plan for the worst is more than an old adage.  The verdict in North Carolina should remind us all of the very real risk that litigation poses to the ongoing survival of our organization.  If we can assist you in reviewing your coverages or risk management program, contact us at info ‘at’ or through the website.


Fire Risk: Don’t Get Burned!

Written by PC News on . Posted in Insurance, News

For many associations, insurance purchasing is not on the top of the agenda.  Liability, secondary medical and Directors and Officers coverage is usually provided by the governing body that registers the players.  However, in most cases that coverage does not address potential loss to the equipment or buildings used by the association.  A fire in an equipment shed could destroy not only the building, but all of the necessary equipment contained inside.  One Central Texas association lost its concession stand to fire and years later it has still not been replaced.  In the Dallas area, a baseball league is just now completing the rebuilding of a concession stand that burned in 2010 (See story here).

Sound risk management includes a regular review of the insurance coverages available to the league.  An association should not rely upon their governing body’s coverage for all needs.  A risk management plan can lay out the parameters for potential insurance coverages.  However, even after enacting such a plan, regular review of the coverage is advisable.  The insurance needs and coverage available to an association can change over time, and a regular insurance audit is the best way to address this concern.

While your agent can be a good source of information about new coverages, an insurance attorney can also analyze your exposure.  There are two advantages to using an independent source to evaluate your coverage.  First, an independent evaluator has no financial stake in your purchase of new coverage.  Second, you can ask the independent evaluator to assess both the league coverage and the coverage provided through your governing body to make sure there are no gaps.  We recommend that all coverages be reviewed against the league’s operations at least every two years.