Additional Insured or Why Can’t We All Pass The Buck?

Moderator: Walter Howell, Global Entertainment Ins.
Lew Bostic, Global Spectrum
Brad Mayne, American Airlines Center
Sid Payne, Jack Utsick Presents NE
Jay Sendyk, Sendyk, Leonard & Co.
Kevin Topper, Encore Insurance

There were two prominent messages from this panel. One was voiced by Brad Mayne, who summed up what coverage he wanted at his venue by saying, “I want everything. I want to be indemnified and I want to be insured.”

The second point showed how difficult it is to truly comprehend this insurance beast: The nexus of good coverage is not the Certificate of Insurance nor even the additional insured. It all comes down to the indemnity agreement.

“The Certificate of Insurance really isn’t worth the paper it’s written on,” Walter Howell said. “It all goes back to the indemnification you signed. It’s the indemnification agreement that’s on the artist contract and the building contract, the support contract and the insurance language, then, spells out what coverages they want. But it’s entirely based on the indemnification agreement.”

Starting back at the top, it’s no surprise the venue wants all the coverage it can get when a promoter rents out the four walls. For Mayne, his “all” includes automobile liability, workers comp, comprehensive personal liability, property damage and whatever else the promoter can get coverage on. He said an informal survey among ArenaNetwork members found that insurance coverage has jumped 300 percent since 9/11.

“We try to limit our liability through the indemnification in the agreement,” Mayne said. “[We want] to be covered from claims from the patrons and claims from people affiliated from the show. So, if anything happens on our premises, it’s taken care of, and the patrons are taken care of.

“I don’t know where it originated that the promoter [covers the insurance] because when you think about it, the promoter only has a few people on site when the event takes place. The venue and act have a lot of folks, and there’s a lot of contractors and subcontractors involved.”

His honest comments didn’t cause a peep, at least immediately. As the panel wound down, Sid Payne voiced the frustration of promoters.

“What happens when the promoter has no control over the people hired in the building? What if an usher pushes somebody down the stairs or a security guard throws somebody over the fence, for example?”

Lew Bostic, who handles insurance issues for Global Spectrum’s buildings, responded that the venues make sure their rear ends are covered but they also want return business, so there is always flexibility. Then again, if a venue management company is operating a municipal building, that venue contract may be designed by a city’s legal counsel and a management company such as Global Spectrum may not have the ability to change it.
“(But) we want pro-moters to be responsible for reading the contract,” he added.

“There’s got to be some things that are ‘beyond your control’ rather than saying, ‘You should have read the stinking contract,’” Payne responded.

Insurance coverage has got to be one of the least sexy, yet most important, components of live entertainment. Howell took the audience through a quick rundown of what they needed to know about the details of insurance coverage. One myth is that adding additional insured to your policy is a way to cover you in case the AI screws up.

“As far as additional insured, adding one basically doesn’t do anything from your perspective,” Howell said. “You’re only extending coverage to that additional insured for your negligence and he has no first-party rights from your perspective. He has no coverage under your policy unless, contractually, you have agreed to indemnify him for his negligence. That’s the part you need to be careful of.

“It’s not as easy as naming John Jones as additional insured on the policy and he thinks he’s insured for everything he does. That’s incorrect. He’s only insured for the negligence of the guy named on the top box of the Certificate of Insurance. His negligence is what the policy is going to cover, not the negligence of the additional insured.”

Not only that, but adding additional insured means you’re giving their insurance company the opportunity to go against your insurance company if the problem was due to your negligence, Howell added.

What’s really at issue is the indemnification agreement – the piece of paper that basically says, “I hold such and such harmless for any and all losses,” as the insurance veteran put it.

The question was posed that if a piece of equipment was leased, and the lessee signed a contract that released the equipment owner from all liability, who would be responsible if the equipment then malfunctioned and caused injury?

The answer wasn’t simple. It came down to who caused the accident (or, as Jay Sendyk joked, who had the better lawyers). The indemnity agreement would have to be “worded very tight” for the equipment manufacturer to be completely without blame.

An audience member asked what a venue could do to protect itself.

“Look at all documentation,” Howell said. “Swapping additional insured on policies doesn’t add protection. It just says the promoter is responsible for injury and damages. ... You must look at the contract for the event.”

If the venue promotes in house, the contract between the venue and the agent will explain who’s responsible,
he added.

- Back to Conference Schedule -