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May 2006

Shift the Risk

If you're planning on holding special events this summer or next season, here's what you need to know.

Written by John E. Fagan and Adam Strachan, Duane Morris, LLP | 0 comment

As spring and summer approach, resorts will again play host to a variety of special events, ranging from pond-skiing competitions to music concerts. These events can provide publicity and revenue, but there are several important legal issues for resorts to consider before deciding to go forward with these activities.

Most often, a promoter organizes the special event, such as the Pedalfest mountain bike race at Deer Valley, and contracts with the resort to provide the venue. For example, in Deer Valley’s Pedalfest mountain bike race, the promoter stages the event, maps the courses, puts up the ropes and signage, handles the advertising, and enlists the racers. From set-up to tear-down, the promoter organizes the event. Deer Valley maintains control over, among other things, who sponsors it, what food will be served, and when and where the resort’s logo will be displayed. Deer Valley also provides personnel for the event.

The main legal objective for the resort in a promoter-organized event is for the resort to shift the risk of loss back to the promoter and the participants. Three words summarize how a resort can do this: insurance, indemnity, and release.

Insurance Issues
The key to avoiding risk with a promoter-organized special event is to make sure 1) the promoter carries insurance that names the resort as an “additional insured;” 2) the promoter’s insurance company is reputable and; 3) the promoter’s insurance provides adequate coverage.

By being named “additional insured,” this means that, in the event the resort is sued or incurs any kind of insured loss, the promoter’s insurance company is responsible for defending and indemnifying the resort—and not the resort or the resort’s insurer. This is important because the resort’s general liability insurance may not cover losses arising from undisclosed special events. If there is an accident during the event that results in a lawsuit, and neither the promoter’s insurance nor the resort’s general insurance provides coverage for the loss, the resort itself may have to defend the lawsuit without insurance.

Likewise, contractually require the promoter’s insurance to be primary to any insurance the resort maintains, and further require that the promoter’s insurance doesn’t necessitate any contribution from the resort or its insurance carriers regarding any claims.

Confirm that the promoter’s insurance company is financially sound and will be able to cover losses arising from the event. There are two ways to do this. First, contractually require the promoter to obtain an insurance company with an “A” or better rating from the insurance reports issued by the A.M. Best Company (see Second, the resort’s primary insurance company should review the promoter’s policy and confirm that the promoter’s insurer is reputable.

There are a number of other things a resort’s general insurance provider can and should do when reviewing a promoter’s policy. It should ascertain what the policy covers and what it excludes—some promoters’ insurance policies contain exclusions stating they will not cover claims made by injured participants or event spectators. Exclusions like these can be devastating, since most of the larger and more expensive claims will likely involve these areas.

Evaluating Risk
Clearly, a snowmobile-jumping contest and a classical music concert carry different types of liability exposures. Consult with your legal counsel and insurance representatives to determine the level of liability risk and amount of insurance needed to cover the potential financial exposure associated with an event.

Some of the factors to consider in this analysis are:

• How dangerous is the event?

• What are the demographics of the spectators and participants?

• Will alcohol be served?

• Will liability releases be required?

• What is the state’s law with respect to liability releases?

• Will the promoter defend and indemnify the resort?

• What is the state’s law regarding indemnity provisions?

• What is the promoter’s reputation?

• What precautionary measures will the promoter take?

• Have events like this resulted in past lawsuits?

• Does the resort plan on hosting this event regularly?

Once you analyze these factors, you will better understand the kind of risk the event involves, and the amount of insurance coverage the promoter needs. As a general rule of thumb, resorts should require at least $1 million to $5 million for smaller events, and $5 million to $10 million for larger ones.

Because resorts often provide their own personnel to help with set-up, tear-down, and any number of things in between, the promoter’s insurance should also cover workers’ compensation claims. As the NSAA’s “Events Management Resource Guide” aptly points out, “this will help avoid unnecessary finger pointing if an event worker should become injured or file for benefits.”

Indemnity: Gotta Have It
Any contract between the resort and the promoter, or between the resort and an event sponsor, should contain an indemnity provision in which the promoter agrees to defend, indemnify, and hold the resort harmless for any losses or claims that arise. These provisions are critical loss-shifting tools, and they must be drafted carefully in cooperation with counsel due to differing state indemnity laws.

At a minimum, an indemnification provision should say:

“[Name of promoter] agrees to defend, indemnify, and hold harmless [name of resort], its parent company, and its owners, officers, directors, employees, agents, successors and assigns, from and against any and all costs, expenses, losses, liabilities, damages, causes of action, claims, and demands whatsoever arising out of the event, or in any way resulting from any alleged negligence, (of any degree) or breach of this agreement.”

The NSAA’s “Events Management Resource Guide” includes another good example of an indemnity provision. However, simply “cutting and pasting” these indemnity provisions into a contract will not ensure that loss is properly shifted. To the greatest extent possible, indemnity provisions should be unique to the particular special event, since courts in many states look to the intent of the parties when they drafted the provision in determining how to apply it, and who should bear the loss. If a legal dispute between a promoter and a resort arises, and the resort can show it specifically negotiated the indemnity provision and intended it to shift loss to the promoter, the court will more likely apply the provision as the parties intended, and require the promoter to defend and indemnify the resort.

Liability Releases
While proper insurance and indemnity provisions can shift the risk of loss upstream to the promoter and/or sponsors, a well-drafted liability release can shift it downstream to the event participants. Releases, however, may not be valid in all states; consult with your local legal counsel on them. Additionally, to the extent practical, tailor all releases to an event’s particular risks.

At a minimum, include the following four elements in your release:

• Description of the risks associated with the event

• Statement that the participant assumes each and every risk associated with the event

• Statement that the participant agrees not to sue, to defend and indemnify the resort, and to hold the resort harmless for any damages, attorneys’ fees, or costs incurred by the resort if the participant files a suit or makes a claim

• Statement that the release is binding on the participant’s heirs, assigns, etc.

Again, a sample release form is provided in the NSAA’s “Events Management Resource Guide.” But again, be sure to draft release agreements in consultation with an attorney who specializes in personal injury claims, to ensure that the release is appropriate for each event.

In addition, require that the event promoter obtain releases from participants as a contractual condition. To do this, attach a copy of the resort’s version of a specially-drafted release to the resort/promoter contract, and include a clause in that contract that requires the promoter to provide the resort with signed copies of the attached release from each participant before the event can begin. This way, the resort not only ensures that releases are obtained, but also makes certain that its release—rather than one drafted by the promoter—is the one being signed.

Litigators John E. Fagan and Adam Strachan defend ski areas and other resorts in premises liability suits for Duane Morris LLP. They can be reached at or