My earlier post, What Does Your Exhibitor Contract Say? Protect Yourself, discussed how a hotel and convention center contract could hold an association responsible for anything that goes wrong, including the bad acts of exhibitors. Regardless of the terms of the facility contract, an exhibitor should have to protect the association from any harm caused by an exhibitor. The exhibitor contract should contain an indemnification and hold harmless agreement in favor of the association.
The protection provided by an indemnification provision is only as good as the offending party’s ability to pay for any harm they cause. If the exhibitor does not have the right insurance they won’t be able to meet their obligations nor protect the association. This is why having the right insurance is so important.
Very few contracts are written correctly from an insurance and risk management perspective. The hold harmless and indemnification provisions and insurance requirements are problematic. The contracts often contain incorrect insurance terms and do not require the exhibitor to submit proof of insurance.
If the contract has the exhibitor agreeing to indemnify and hold the association harmless, require the other party to have certain insurance coverages. You should also demand proof of insurance by requiring a Certificate of Insurance and/or Evidence of Property Insurance. Certificate handling is time and staff intensive especially for a large event. You have to train someone to receive, review and approve the certificates, follow-up if there is a problem, and file and retain the documents. This may seem like a lot of trouble but is invaluable if you avoid a large loss caused by an exhibitor.
The following is a general explanation of common insurance terms and coverages. Your policies may vary so do not rely upon this discussion. The terms and conditions of the actual policy determines coverage. Have your insurance agent or broker review all contracts before signing to make sure you have the required and appropriate coverages. Many contracts mandate terms contrary to insurance industry practices making compliance difficult or impossible. When drafting a contract or agreement have your insurance professional review it from an insurance and risk management perspective.
The most common errors arise from incorrect insurance terms. Almost universally contracts mandate “comprehensive general liability insurance” which no longer exists. Insurance companies stopped writing “comprehensive general liability insurance” in 1986 and some of the coverages under the comprehensive policy are no longer available. The correct term is “commercial general liability” although some use the terms of business or general liability. All insurance people understand the term “commercial general liability” and carriers’ policies are usually based on the Insurance Services Office’s Commercial General Liability policy.
Other terms not to use are:
- Personal Injury – Frequently, the exhibitor agrees to hold the association harmless for “personal injury” and damage to property. For attorneys, “personal injury” means or includes bodily injury. However in a commercial general liability policy, “personal injury” covers intentional torts such as libel, slander, defamation, false arrest, detention or imprisonment, malicious prosecution and wrongful eviction or entry into committed by or on behalf of the premises’ owner, landlord or lessor. Personal injury coverage excludes bodily injury, so the indemnification provision should use the term bodily injury. You can also require Personal and Advertising Injury which is Coverage B in the commercial general liability policy.
- Public liability – This was never an insurance coverage – no insurance person knows what it means.
- Broad form coverage – This was an endorsement added to a “comprehensive general liability” policy. The endorsement no longer exists and some of the coverages are no longer available.
- Blanket contractual liability – Another pre-1986 endorsement that is no longer available. Some insurance companies have a “blanket” endorsement for contractual liability but each form is different and may not give the intended coverage.
The contract may also require the exhibitors to include coverage for their independent contractors. No insurance company will provide coverage for the insured’s independent contractors – the exposure is too large and unknown. However you can require the exhibitor to pass your insurance requirements to their subcontractors.
The general liability policy grants contractual liability coverage as an exception to an exclusion. The insured has coverage for bodily injury or property damage liability assumed under a contract or agreement that is an “insured contract.” Not all contracts meet the policy’s definition of “insured contract.” The policy also has other restrictions on contractual liability coverage. Talk with your insurance professional to get a better understanding of this coverage.
The general liability policy is usually the only policy that provides some form of contractual liability coverage. Most other liability policies exclude liability assumed under a contract. Work with your insurance agent to decide which, if any, of your policies give this coverage when signing a contract requesting contractual liability
In most cases request the exhibitor to have the association added as an Additional Insured to its general liability policy. However there are many variations of the Additional Insured endorsement so specify the endorsement or wording you want. Request a copy of the additional insured endorsement to verify it is providing the right protection.
The exhibitor’s policy may have a “blanket” additional insured endorsement that adds any party requiring such status. However the blanket endorsement can have limitations or other problems so ask for a copy of the endorsement to verify coverage. Ask your insurance professional to check the form for compliance.
A contract may specify “all risk” or “fire and extended coverage” forms but these coverages no longer exist. Property coverage is now written on Cause of Loss – Basic, Broad or Special Form. The broadest coverage is the “Cause of Loss – Special Form” which usually does not include flood or earthquake.
Certificates of Insurance
A certificate of insurance documents the insurance policies in force as of the date of preparation; the coverage can change the next day. Regardless what the certificate displays, it does not amend the terms of any policy. The contract’s requirements such as adding the association as an additional insured may drive the need for an endorsement.
By requiring the exhibitors to have certain insurance coverages you are protecting your association from harm caused by others. Make sure your contracts are well-written and the exhibitors have to have the appropriate insurance policies.
Insurance is quite complex; so get help in drafting (and reviewing) your contracts and agreements. While attorneys address the legal aspects of a contract you also need the counsel of an insurance professional. Insurance with its own terminology and intricacies need the help of an insurance professional. Your survival may depend on it.