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Special Event Insurance Policies Add to General Liability Insurance Coverage, but Watch Out for Those Participant Exclusions

So you have your tickets for Beyoncé’s “I AM…” concert. Or maybe you are planning to see Jimmy Buffett and the Coral Reefer Band when they come to your favorite venue. Concert music not your gig? How about taking your kids to see Walking with Dinosaurs - the Arena Spectacular or The Wiggles Go Bananas! And your spouse is pressing you to get tickets for WWE Smackdown or PBR: Professional Bull Riders. You may spend 50 hours a week reviewing interrogatories in denial of coverage insurance litigation, but have you ever considered the insurance implications of such special events?
 
General liability insurance (GLI) will not cover many of the claims that might occur during special events, so special event policies are issued. GLI policies often exclude coverage for: assault and battery, fireworks displays, amusement rides, sporting participants, claims involving alcohol, activities that include horses (or other large animals), daredevil actions, music activities that encourage crowd participation, temporary seating structures, martial arts, auto racing, etc.
 
Coverage for such events is available, but insurers want to evaluate the increased risks and charge additional premiums accordingly. Thus, such coverage is generally only provided by insurers with the experience and tools to properly rate such risks. Participants and spectators may be more than just average customers at many such events.
 
Special event policies are generally purchased by the event sponsor or organizer. The contract between the event sponsor and the owner of the facility will normally require the event sponsor to indemnify the facility owner for any claims that are brought, and many contracts require the event sponsor to show proof of special event insurance, with the facility owner named as an additional insured in order to prove the sponsor’s ability to indemnify the facility owner. In addition, individual vendors and performers may be required to procure their own special event insurance and include the event sponsor as an additional insured.
 
Special rules may apply to event participants. Special event policies, while providing coverage for claims by spectators, will often, through a Special Event Participation Exclusion, exclude coverage for claims by sports and similar participants. Thus, an additional athletic participation policy will be required, in which the insurer has specifically rated the risks that are inherent to the sport that is involved. For instance, premiums for athletic participation insurance for hockey or tackle football players will be higher than premiums for tennis or golf participants.
 
A special event policy will generally be date specific – it will apply to claims that only occur during the dates specified in the policy. If the date of an event is changed, such as a date change because of weather, the policy will need to be amended to reflect the new date of the event. If the date of the event is not changed in the policy, the insurer may be able to resist paying claims on the basis that the claims have not occurred within the policy period.
 
There is little recent reported caselaw on the use and interpretation of special event insurance policies and exclusions. In an unpublished California case, Scottsdale Ins. Co. v. Chinese Consol. Benevolent Ass'n, 2006 Cal. App. Unpub. LEXIS 11701 (Cal. App. 1st Dist. 2006), an association purchased a short-term policy to cover a parade and other activities of the association. The plaintiffs were injured while participating as drummers and dancers in a group of Chinese lion dancers. The trial court found that the insurer was not responsible for their injuries because the policy “included a ‘Special Event Participant Exclusion’ that excluded liability coverage for '”bodily injury”, “property damage,” or “personal injury” to any “participant” arising out of . . . [t]he practicing for or participation of any person in any athletic event, contest game, demonstration, exhibition, race or show covered by this policy . . . .’”
 
The court of appeal found that such an exclusion was not unusual and was not ambiguous. The court held the parade was a demonstration or exhibition as excluded by the policy and thus the claims of the plaintiffs were not covered.
 
In Nautilus Ins. Co. v. Jesse James Festival, Inc., 269 S.W.3d 442 (Mo. Ct. App. 2008), the plaintiff attended a rodeo on two successive days that was sponsored by the Jesse James Festival. The plaintiff participated in what the court described as “an event called the ‘Circle of Fear,’ in which members of the audience were given the opportunity to don a flak jacket, sign a release, and enter a circle chalked in the rodeo arena whereupon a rodeo bull was released into the arena.” On the first day, the plaintiff won a $100 prize, but on the second day, he “was ‘butted, kicked and thrown twenty feet’ by the bull” and received serious physical injuries.
 
The Special Events Liability Endorsement insurance policy that was obtained by the event sponsor contained an athletic or sports exclusion for bodily injury to any person while practicing for or participating in any sports or athletic contest or exhibition, and an unscheduled activities and events exclusion for bodily injury for activities or events of the event sponsor that were not scheduled by an endorsement or shown in the declarations of the policy.
 
First, the court pointed out that the Special Events Liability Endorsement specified that it was only for a rodeo that was to be held one week after the rodeo that the plaintiff had participated in. Thus, the Endorsement was not applicable to the rodeo at which the plaintiff was injured. Secondly, the court held that the plaintiff had been engaged in a sports contest or exhibition, and thus the sports exclusion applied.
 
Even if your practice does not require you to interpret general liability insurance policies, you should be aware of the coverage and limitations of special event policies. As attorneys, we are frequently expected to participate in a myriad of outside community and professional activities. Thus, even outside of the office, we may come into contact with special event policies, and our family, friends, neighbors, and members of organizations that we belong to will look to us for advice and assistance on what insurance should be purchased for special events.