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May 7, 2015  

 
 Q&A of the Week

Athletic or Sports Participants Exclusion

An Illinois subscriber recently asked the following question:

My question concerns endorsement CG 21 01, the exclusion for athletic or sports participants. If a customer sponsors a little league team with t-shirts or uniforms and no other involvement, is that considered sponsoring a social or sporting event that is affected by CG 21 01?


ANSWER: The purpose of the endorsement is to make clear that the named insured who is a sponsor of any sport or athletic contest as described will not have any insurance under its policy for BI sustained by a person while he or she is a participant in that sport or contest. The endorsement would not preclude coverage if a third party were to be injured by the participant.

The distinction between sponsoring or simply donating money or material things is usually not an issue in relation to liability so long as there is no exercise of control, which would create a liability exposure. If a business provides nothing more than a donation or equipment, it may be difficult to place responsibility on the sponsor or donor for injuries or damage. If the sponsor wants to avoid liability, it is best to not control the event, not hold the event on the sponsor's business property, and not conduct itself so as to give the impression of anything like a joint venture between the business and the entity actually conducting the event.

Now, much still depends on the laws of various jurisdictions, so you might want to check with an attorney who is familiar with the law in your area to see how the courts there view this issue.
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 What's New This Week in FC&S
Riots, Insurance, and Moratoriums
The death of Freddie Gray in the custody of Baltimore police in April 2015 led to riots and destruction in the city. There were protests both peaceful and violent, and damage was estimated to be over $1 million. Read More
 
 Litigation Watch
Your Work Exclusion under Review

A condominium association brought a declaratory judgment action against liability insurers for the condo's developer, seeking coverage for claims of negligence and negligent supervision in the construction of the condo units. This case is Cogswell Farm Condominium Association v. Tower Group, 2015 WL 149956.

Lemery was responsible for the construction of 24 residential condominium units between 2000 and 2003. In 2009, Cogswell sued Lemery and others, alleging negligence and negligent supervision in the construction of the units, specifically defective construction of weather barrier components; the defective weather barriers then led to water leak damage to the units.

Tower issued general liability policies to Lemery during these years. After Cogswell sued Lemery, Cogswell filed a petition for declaratory judgment against Tower, seeking a declaration that its claims against Lemery were covered under the Tower policies. The trial court concluded that uncertainty existed regarding whether property damage occurred during the policy periods and so, it ordered that an evidentiary hearing be held to determine whether the negligence claim could proceed.

The witness at the hearing opined that the defects in the weather barrier caused almost immediate water damage and that the damage went undetected for years. Following this hearing, Cogswell argued that its claims amounted to an occurrence and that the exclusions in the policies did not apply to resulting damage to nondefective exterior and interior finishes that directly resulted from the water infiltration. The insurer countered that the claims did not trigger coverage, but even if they did, exclusions j1 and j6 precluded coverage. The trial court decided that the insurer, Tower, did not have a duty to defend or have an obligation to pay Cogswell if Cogswell was successful in its underlying lawsuit against Lemery. This appeal followed.
 Read More

   
 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by clicking here.
 
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As always, your comments and questions are welcome.

Contact us at:
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The Zalma Insurance Claims Library
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The only source you'll need to successfully handle insurance claims from start to finish. More Info
Construction Defects Coverage Guide
Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
Mold Claims Coverage Guide
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FC&S Team
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Publisher
  Diane W. Richardson, CPCU
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  Donna Cozatchy
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Barry Zalma, Esq., CFE
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