Collaborative risks are messy! It's like mixing ketchup and mustard on your hamburger bun. Once they are combined and my teeth sink into the burger, if the ketchup is bad, well, I can't just scrape it off, the mustard is going to get scraped off too. I thought of that as I was eating a burger prepared by the volunteers at Stepping Up's beach party/surf day last Friday, when Dufour Insurance co-sponsored a free surf clinic for 40 jr high and high school kids.
One of my clients, Orange County Community Housing Corp., has a college awareness program, Stepping Up, providing enrichment opportunities for underprivileged teens, in the hopes of giving them the tools to apply for, and be successful in, college. When I visited my client last, I mentioned offering myself as a volunteer to teach these kids water safety and surfing, my personal passions, over the summer "sometime". They took me up on the offer, and pretty soon, all of their students had signed up for a surf lesson. Oh boy! I recruited some friends and family to help teach the lessons...and we borrowed some gear from another nonprofit, Wheels 2 Water, so that the event would be successful. Of course, I followed my own "Event Planning Best Practices" advice (see last blog), so we were prepared.
But let's say someone was injured... this was a collaborative event, so who is liable for the injuries? We all would be! Dufour Insurance, as the sponsor, Orange County Community Housing, as the nonprofit program manager, and Wheels 2 Water, the owner of the gear used.
It's important to decide who is handling this event's liability insurance. Generally, it's best if each partner holds each other harmless and indemnifies each other. Each party should agree to be responsible for their own negligence and indemify the other for legal expenses and claims arising out of their negligence.
In this case, since we borrowed the gear from a 3rd party nonprofit who was otherwise not involved in the event, we thought it was important to name them as Additional Insured for this event (they are doing us a favor letting us use their gear, we don't wnat them to be liable in any way). Dufour Insurance carried one day event insurance for the surf clinic, and named both nonprofit organizations as "Additional Insureds" on this policy. In this manner, the event insurance coverred all three organizations in the event of a claim. Orange County Community Housing also carries liability insurance covering not just activities on their premises, but ALL sponsored activities.
There are many ways to structure insurance requirements for collaborations, but at minimum, insurance limits should be:
1. Commercial General Liability insurance - $1 million per occurrence
2. Auto liability insurance - $1 million per occurrence
3. Workers Compensation- to cover any and all employees working on the collaboration
4. Certificates of Insurance should be accompanied by the actual ENDORSEMENT to the policy showing who is the Named Insured, and who is the Additional Named Insured, and what the relationship to the Named Insured is.
Drafting an MOU, "Memorandum of Understanding", will help outline the insurance/liability responsibilities of the collaborative partners. These agreements are great tools in describing the intent of the parties, the responsibilities of each party, and legalize the assumptions with the signature of the organizations' representative(s).
We have plenty of resources to help you with your MOU's, waivers, indemnification clauses in contracts, and risk management in general. Please let us know if we can help you!
