Colleges or Schools Endorsement Affects General Liability Coverage

Our insured is a school and the school has a gym. The school rents the gym to several groups of men who play basketball games. These games are for fun and are not any type of formal program. The school's general liability policy has an endorsement, CG 22 71 10 01 (colleges or schools—limited form), that adds the following exclusion to the liability policy: this insurance does not apply to bodily injury to any person while practicing for or participating in any sports or athletic contest or exhibition if there is no direct management, organization, or supervision of such sports or athletic contest or exhibition by any insured. There is no representative of the insured school present during the basketball games.

The insurer tells us that the endorsement is a sports injury exclusion and does not apply to injuries caused by the insured's negligence. The insurer is saying that this endorsement makes sure that the general liability policy is not interpreted as being an accident policy. But, we are not sure what this means. What is the purpose of the endorsement?