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Sunday, November 5, 2017

Obstacle Course Race Company Needed an Insurance Lawyer

This case is a cautionary tale about what happens when a race director doesn't have an insurance and contract lawyer look over their documents. Since this is a case about Obstacle Course Racing and Insurance law, it pretty much has my name written all over it. So that's why I offered to write this article, which was first published at SDV Law. This version has been updated a little because my readers here generally know a little bit more about OCR and there's no one here to edit out my bad jokes.

Me - running an obstacle course race in the rain
and wondering how anyone could ever get hurt
doing this.
With the rise in popularity of obstacle course racing, millions have participated in races like Spartan Race, Rugged Maniac, Tough Mudder, and Warrior Dash in the last ten years. Although serious injuries are rare relative to the number of participants, several notable incidents, including the collapse of the Warrior Dash obstacle “Diesel Dome” in October 2016 which resultedin the indictment of five individuals, have caused race companies and participants to question whether their insurance will cover injuries sustained during one of these extreme competitions. Insurance issues have become even more prevalent as smaller race brands and even local farms have started getting into the obstacle course racing business.

Such was the case in Maxum Indemnity Co. v. Dirty Foot Mud Ranch, LLC. In Dirty Foot, a small race company sought defense and indemnity from its general liability insurer after a race participant sued for an injury sustained during one of its events. 
Dirty Foot maintained a commercial general liability (CGL) insurance policy with Maxum Indemnity Company that contained the common general liability language: We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies.

Insurance Dork Says
We will have the right and duty to defend the insured against any “suit” seeking those damages even if the allegations of the “suit” are groundless, false or fraudulent. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply . . . The policy went on to list many exclusions, including an exclusion for sports participants: “This insurance does not apply to . . . any person while participating or performing for or in any sports or athletic contest, event, or exhibition that you sponsor, including practice for such contest, event or exhibition . . . .”

The policy also contained an exclusion for suits related to a sporting event: “This insurance does not apply to any claim . . . which occurs while any person is preparing for, practicing for or participating in any performance, contest, sport or event.”

Based on these exclusions, Maxum filed a motion for summary judgment and the Florida District Court held that, because of the two exclusions, Maxum had no duty to defend or indemnify Dirty Foot.

This waiver could use some work.
Many race directors and venue owners believe they are protected because their participants sign liability waivers (jokingly referred to as “death waivers” in the gallows-humor parlance of obstacle course racing). However, these waivers vary in effectiveness from state to state, and they rarely absolve a race company of its own gross negligence. When a waiver isn’t enough, injured participants and race directors turn to insurance, unaware that most general liability insurance excludes such losses.

For race directors and venue owners, the Dirty Foot Mud Ranch case is a cautionary tale about the importance of having an experienced insurance attorney review all of your insurance policies, contracts, waivers and legal obligations before hosting any kind of sporting event, performance or special event.

So, if you're putting on an OCR or another event that involves people (most events, I suppose), you might want someone who understands insurance and contract law and how your insurance policies, contracts, waivers, and local laws all interact. It also might be a good idea for that person to understand OCR and similar events, so they can more easily identify risks and gaps in coverage.

Does that sound like someone you know?

Anyone? Anyone? Bueller? Bueller?

Also Me if you think you need some legal advice about this kind of thing, please feel free to give me a call at 203-287-2112 or send me an email by clicking HERE There's no charge to talk things over, although my hope is that you'll find me to be so knowledgeable and charming that you just have to put me on retainer.