Edition 10/2001

Sports Snookered By Landlord's Insurance Demands

Previous editions of the IEA Sport Monthly Update have addressed the situation in regard to litigation, the availability of liability insurance, the cost of such cover when available and the difficulties these issues cause for the sport and recreation community.  Requirements by landlords, such as Councils, for tenants to have their public liability policies in joint names i.e. the insured is both the tenant and the landlord, is placing yet another burden on the sporting organisation - a burden that is impossible to bear.

There have been a number of legal actions that have resulted in landlords (e.g. Councils) being held liable for damages due to injury of participants whilst using their facilities.  As a means of avoiding the financial imposition of such awards some landlords are now demanding tenants have their public liability policy in the joint names of tenant and landlord.  In other words, if the landlord is found to be negligent due to a breach of duty of care, they want their tenant's insurance policy to respond by paying the damages awarded.

Good idea if you can get away with it - but insurance companies have other ideas.  An insurance policy is obviously a legally binding contract - the insurer is bound to provide protection in accordance with the terms and conditions of the policy.  The exposure of the insurer is dramatically different if insuring the ABC Cricket Club Inc. as compared to insuring the ABC Cricket Club Inc. and the XYZ City Council.  Landlords are insisting that policies be in joint names.  One assumes it is the landlord's intention for the policy to provide protection to them only in regard to activities involving the tenant on the landlords property, but the policy wording will determine to what extent protection is provided to the insured parties.

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How have insurance companies responded to these requests?  Administrators will be well aware that insurers generally are not enthusiastic in their acceptance of liability insurance for sport and recreation organisations.  You can imagine their response to providing cover for joint insureds.  Whilst it is possible insurance companies have issued policies with landlord and tenant as joint insureds, I have been unable to find an insurer who will contemplate such cover, let alone be prepared to quote a premium.  As their exposure would be increased dramatically I believe their attitude is understandable.

As stated, one assumes that it is not the intention of the landlord to seek this broad cover that applies outside the specific activities associated with the tenant and the particular facility, and what they are aiming to achieve is for the liability insurance paid for by the tenant to protect the landlord if they are found to be in breach of their duty of care in regard to the facilities used by the tenant.  If we relate it to the normal landlord/tenant relationship when renting a home, the intention would be that if the roof falls in due to a lack of maintenance by the landlord and people are killed or injured, any liability of the landlord would be met by the tenant's liability insurance.

Is that an appropriate way of dealing with liability exposure?  As members of society we all have a duty of care and need to take all measures we can to ensure that duty is not breached - a significant responsibility.  But is it reasonable to then put the onus on others to provide and pay for insurance to cover us if the legal system decides we have breached our duty of care?  Be it a private citizen, a commercial business or a council whose role is to look after the well being of the community, I would have thought not. 

  Continued ....