Reviewing insurance needs for sporting events, sites and teams

Even during the pandemic, insurance policies are still being written, and sports businesses are still shopping for them.

Typical league policies tend to bundle liability with property coverage, as well as player accident and medical coverage. (Shutterstock)

Sports are like any other business — with maybe a few more bruises and a little more yelling than your typical office.

So, it is probably not a surprise that when it comes to insurance, sports teams, leagues, property owners, and participants all need coverage.

With COVID-19, some of those insurance needs have changed, while other needs are using the same old playbook from before the pandemic.

Whether it is an NFL team, a minor-league baseball team, or just a municipal basketball league, risk is a reality, and with risk comes insurance to help manage that exposure.

Amateurs rule

While it is true that the money involved in professional sports is eye-popping, what might not be quite so obvious is that from an insurance standpoint, the biggest sports market by far is amateur sports.

A busy NFL weekend may mean 16 action-packed games, and while that is exciting, what is much more attractive is offering coverage to the tens of thousands of youth, municipal, and recreational sports leagues that lace up each and every weekend — pandemic notwithstanding.

Increasingly the owners of every venue, be they a private club or a municipality, are now asking the leagues that use them, and in some cases, even the teams that play, to carry their own policies and list the property owner as a named insured.

Perhaps surprisingly, even amid the pandemic, insurers are still writing sports policies, which may mean that a stay-at-home order may be a perfect opportunity to reach out to potential athletically inclined clients.

Basic athletics coverage

Standard property and casualty policies in the sports world look much like they do in the rest of the business world. There are general liability policies, umbrella liability policies, business interruption riders, and much more.

Liability policies are very well suited for the case where a tornado rips through a youth baseball complex. Mother Nature dished out some damage, and the insurance is there, after a deductible, to help the league rebuild.

That liability policy also likely offered a business interruption rider that would help pay the bills and make up for some lost revenues until the diamonds can be re-chalked.

Typical policy limits for this type of coverage can run from $1 million per occurrence, $3 million aggregate, up to $5 million and beyond depending on your need.

Typical league policies tend to bundle liability with property coverage, as well as player accident and medical coverage.

Often, these policies are offered on an excess basis, meaning that if someone twists an ankle doing a lay-up, their health insurance would be the first to pick up the bill, with the league policy covering any overages.

In short, those policies were built with the worst-case scenario in mind — or so the policyholders thought up until 2020.

Managing ‘the new normal’

In the case of the pandemic, it would be the general liability policy that would, in theory, protect against a participant suing if they caught COVID during an event.

And while that may still be true, following the SARS outbreak nearly two decades ago, many policies began including language excluding pandemics or other communicable diseases.

That is almost certainly true of standard business interruption insurance riders. To start, those riders typically require physical damage to a premise to kick in — something a pandemic doesn’t do. But damage notwithstanding, those policies often have those dreaded pandemic exclusions.

So, moving forward, don’t be surprised to find pandemic exclusions in any renewed policy, be it business interruption, general liability, or really anything that could conceivably be tossed asunder by a microscopic pathogen.

Another probability is that underwriters may become more selective and need more documentation, both when you are applying for a policy, and when it comes time to file a claim.

Post-COVID, don’t be surprised if you are asked for a much more in-depth risk management plan before the underwriter signs off.

Looking ahead, many policies are also likely to see increased premiums, whether they were directly shaken by COVID or not. That is because, like a rising tide that helps all boats, big coronavirus claims eating into profits throughout the insurance world may end up trickling into higher rates elsewhere.

Moving forward

The coronavirus has upended the world, but it hasn’t eliminated risk, and so it hasn’t eliminated the need for insurance. Policies are still being written, and teams, leagues, and municipalities are still shopping for them.

Moving past our current crisis, rates and underwriting may change. Policy language is almost assuredly going to include pandemic exclusions. And everyone is going to have a much healthier respect for microbes.

But for those people in the property and casualty world willing to navigate the upcoming unknowns, there is sure to be an opportunity over the horizon.

Michael Giusti (michael.giusti@att.net) is a senior writer at InsuranceQuotes.com. He has worked as a journalist for more than 20 years. He specializes in business, insurance, finance, technology, automotive, and industry-focused writing.

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