We’re Back! – Our first episode back after a long COVID-19 hiatus. We share what we’ve been up to, a few lessons from COVID-19, and what we’re planning for future episodes.
Chapter Events in Light of COVID-19 – In this episode, we asked Will Frankenberger, Chief Safety Officer at Delta Zeta Sorority, to join us to discuss events in the time of COVID-19.
Chapter Housing Lessons from COVID-19 – In this episode we discuss what lessons the MJ Sorority team learned from COVID-19 as it relates to sorority chapter housing.
Event Planning: All About Liquor Liability – In this episode we discuss liquor liability.
Introduction
Understanding contracts can be complicated. Full of legal jargon and insurance terminology, sometimes reading a vendor contract can feel impossible and overwhelming. This document is meant to help you break down the components of a contract and identify insurance related language that may be problematic for your organization. We hope that this article helps empower you to think critically about whether signing a contract is in the best interest of your organization.
Contracts and the Transfer of Liability
One of the most consequential insurance issues found in contracts is the transfer of liability from one party to another. Such a transfer can be explicit – “while in your use, you are responsible for any property damage to the rented facility,” or less explicit – “if you agree to this term and there is a bodily injury incident, then you have forfeited the opportunity to sue the venue for an unsafe physical condition in the property because you are holding them harmless.”
Often these less explicit transfers of liability aren’t caught before a contract is signed and a member has unknowingly bound an organization to more liability than is preferable or intended.
Look out for the following verbiage in a contract that can indicate a transfer of liability:
- Hold Harmless
- Indemnification
- Additional Insured
- Primary and Non-Contributory
While MJ does not review contracts for hold harmless or indemnification language, they are still cause for concern and you should consult your organization’s policies for guidance. Under an MJ contract review for insurance language, contracts that include only hold harmless and/or indemnification clauses will be considered satisfactory and there is no need to submit them to MJ for review.
If your contract contains other insurance related language such as additional insured or a third party is requesting a certificate of insurance, please fill out this form to have your contract reviewed for insurance requirements.
Addressing Additional Insured Language
An additional insured extends liability insurance coverage beyond the named insured or your organization and its members and staff to include other individuals or groups. Often, contracts require that the third-party vendor be listed as an additional insured. This extends them coverage under your policy, meaning that you forfeit the right to sue them if they were negligent in their responsibilities under the signed agreement. Potentially, your policy would have to pay for a claim and associated costs where an additional insured was grossly negligent, even if you had little to no responsibility.
This is clearly very unfavorable for your organization. If you see additional insured language in a contract, please first refer to your organization’s policies and procedures. Then, attempt to get the contract amended to exclude the additional insured language. If you have additional questions or are unable to amend the contract, please contact MJ Sorority to review the contract and, in consultation with your organization’s headquarters, provide recommendations.
Determining a Third Party’s Existing Insurance: Certificates of Insurance
When hiring a contractor, renting a venue, or working with other third-party vendors, it is essential to determine whether they have adequate insurance. Before signing a contract, be sure to ask for copies of the third party’s certificate of insurance, which will provide you with this important information.
MJ recommends that third parties hold the following minimum limits of liability insurance:
| General Liability ($1,000,000 per occurrence) | Liquor Liability ($1,000000 per occurrence) | Automobile Liability ($1,000,000 per occurrence) | Workers’ Compensation ($500,000 per accident) |
| Any third party contractor should hold this amount of general liability coverage | This is recommended if the third party vendor is serving alcohol at a chapter event | This is recommended for third parties providing transportation, such as a bus company | We recommend this coverage for any contractors you engage with |
If a third-party does not hold these minimum requirements, please contact your headquarters to determine whether you need to identify an alternative option.
Liquor Liability: Deep Dive
We often hear that a state does not require a venue or bar to carry liquor liability at all. This does not change our recommendation. If you are contracting for a service where alcohol will be served, the party administering the alcohol service should carry at least $1,000,000 of coverage per occurrence in liquor liability. The requirements or lack thereof in state law are immaterial.
Helpful Tips and Tricks
Always do your homework before signing a contract. If you’re considering a facility for rental, do a walk through and refer in the contract to any visible property defects or damage that was present before your function was held. This eliminates the possibility of the venue alleging that you damaged their property during your event.
Plan ahead! If organizing an event, be sure to give yourself plenty of time to find alternative venue or bartending service if necessary. It’s important whenever you enter into a contract to do your due diligence and be confident that you’ve selected the vendor that is the best fit. If a vendor can’t or won’t provide a certificate of insurance at your request, this is a red flag and often a sign of a poorly run business.
It’s always a good idea to have more than one set of eyes review a contract. Check with another chapter officer, advisor, or staff members to review a contract, especially if there is language you feel is unclear or don’t understand. Your organization’s policies are a huge help when determining whether a risk is tolerable! If there is insurance language such as additional insured or a certificate of your insurance is requested, MJ Sorority is here to help! Here is a handy link to our contract review forms.
Examples of Contract Language
Here are some examples of the more common transfers of liability:
- The hotel contract requires your organization to hold them harmless for any bodily injury of your attendees while on their property.
- If you agree to this term and there is a bodily injury incident, then you have forfeited the opportunity to sue the venue for an unsafe physical condition in the property because you are holding them harmless.
- Logically, the entity that has the greater “control” of the conditions of the physical property should be the one bearing the greatest liability, so holding them harmless is not preferable.
- Your agreement may be for exposures that are not covered by your insurance policy, though a remote possibility, it could occur.
- The sorority chapter is hosting an event at the local park where you have contracted with a caterer to provide the food and alcohol for the event. The caterer is requiring evidence of your insurance coverage and wants to be added to your insurance policy as an Additional Insured.
- The most alarming trend is the request for a non-insured to be added to your policy and given the full rights under the policy. In doing so, you forfeit the opportunity to sue this “Additional Insured” for their actions, which may have well been the only reason why a claim occurred. The classic example here would be the caterer not practicing good risk management and over-serving someone who becomes intoxicated and then assaults another attendee at the function. Your insurance policy would be obligated to defend this caterer and potentially pay for any judgment against them. We prefer to have each party to a contract rely on their own insurance coverage and then rely on the “courts” to determine where negligence lies and ultimately where the liability rests for paying for injury or damages.
Signed, Sealed, Delivered!
Our goal is always to help you manage risk and achieve the task at hand—whether that’s contracting with a service provider to mow your lawn or renting a venue for a spring formal. By asking questions up front, you can save yourself and your organization from regretful contracts and succeed in achieving your goals!
The Certificate of Insurance Request Form
So you’ve figured out that you need to complete the form on our website? You’ll need the following before you get started:
- Your fraternity/sorority and Greek chapter name
- Date and type of event (philanthropic, social, chapter, etc.)
- Whether alcohol is being served (and who’s serving it…the venue? A catering company?)
- If alcohol is being served, we’ll need a Certificate of Insurance showing proof that the alcohol provider has liquor liability coverage.
- Name and address of the venue or person requesting the certificate
- A copy of your contract in PDF form to upload
Now we’ll go step-by-step through the form together.
- First, you’ll need to enter the date of your event. If your event is several days, we will ask for the event end date later in the form.
- The form will ask if you have reviewed and are following your event planning policies. You’ll need to have done so in order to proceed.
- The form will ask if you have all of the documentation listed above to make it easier to complete the form.
- The next page of the form asks if the venue is asking to be listed as an Additional Insured or if your contract is asking for a Certificate of Insurance. If the answer to either of those questions is yes, you’ll proceed with the form.
- If you answer no to both questions, you don’t need anything further from MJ Sorority and should proceed with your organization’s event planning guidelines.
- On the next page of the form, you’ll upload your contract. Make sure you upload the entire contract, not just the insurance section.
- On the next page, the form asks for YOUR first and last name. You’ll click next, and the form will ask for your position, email, and phone number, so that we can easily contact you with any questions we have.
- On the next page of the form, you’ll choose your fraternity or sorority name, and your Greek chapter name.
- The next page asks you to choose the type of event from a dropdown list – choose social, philanthropic, or chapter retreat depending on your specific event.
- Answer whether or not alcohol will be served and how many attendees you’re expecting.
- The next section refers to the third-party requesting a Certificate from you. Remember: A Certificate of Insurance is issued to provide proof that your organization is adequately insured. Therefore, you would not request that the Certificate of Insurance be issued to Alpha Alpha Alpha Sorority*, or to Susie Sorority, or Abigail Advisor, my Advisor. This is the name and address of the VENUE or VENDOR that has asked that you provide proof of insurance. In this section, you can add the end date of your event if applicable and any additional comments that you want us to be aware of.
- On the final page, we ask you to confirm several statements to ensure that we can quickly turn-around your request.
- That’s it! We’ll be in touch with your Certificate of Insurance, or any questions if we have them.
Reviewing Contracts
- When you have a question on a contract or have a contract with insurance verbiage, please complete the Certificate of Insurance Request Form and upload the entire contract via the form on our website.
- A snippet may not contain all the requirements needed in determining how favorable or unfavorable the contract is. Contracts often have insurance language throughout the entire document, which can be easily missed and often contradict other things in contracts.
- Please avoid sending contracts without an explanation or supporting documents. Always complete the Certificate of Insurance Request Form with any contract to avoid big delays.
Requesting a Certificate from Someone Else
- When reviewing or requesting a Certificate of Insurance from a third-party vendor or a venue when they are providing the alcohol, always ensure that the limits are specified on the Certificate of Insurance. We recommend the following limits, but check with your organization’s policies. Recommended minimum limits (when applicable):
- General Liability—$1,000,000
- Liquor Liability—$1,000,000
- Workers’ Compensation/Employee Liability—$100,000/$500,000/$100,000
- Automobile Liability (for buses) —$1,000,000
- Feel free to cut and paste the following verbiage to request a Certificate of Insurance from a third-party.
As part of our event planning process we are required by our National Organization to obtain a Certificate of Insurance from venues/vendors we chose to use for our events. It is recommended that we use vendors/venues with a minimum of $1, 000,000 General Liability and $1,000,000 Liquor Liability. The Liquor Liability and Liquor Liability limits must be shown on the Certificate of Insurance for venues/vendors where alcohol is being provided. The purpose of this document is to simply provide the limits and proof that coverage is in place. We are not asking to be covered under your insurance policy as we have an insurance policy that will cover any damages caused by our negligence.
*We are using this as a generic sorority name as an example. Substitute in your sorority’s name.
We are finding an increasing number of chapters using event planning companies/individuals to organize their social and philanthropic functions. While we do understand that planning for large events is often complicated and time-consuming, we are finding that many of the event planners that we have dealt with are not taking the time to review the contracts with the venues, often leaving our clients obligated to much more expansive and concerning liability and negligence verbiage than we are comfortable with in these contracts. In addition, because the event planner/s does not know your organization’s specific policies, we are finding that chapters that outsource their events to event planner/s are often not abiding by their fraternity’s or sorority’s policies regarding event planning.
Therefore, we are often finding that the chapters that engage the use of event planners believe that the event planner is handling all of the details of the event, when in fact, the event planners are not. When we are finally made aware of the situation (most often when a Certificate of Insurance is requested), it is often very late in the planning process, which makes it difficult to modify the contract or plan a different event, depending on the severity of the contract language.
If your chapters are using event planners, we would encourage you to make sure the event planners are aware of your organization’s event planning policies, as well as communicating to your chapter officers that they still need to verify that they are meeting your organization’s risk management policies even when they engage the use of an event planner. In addition, we recommend that when Certificates of Insurance are requested, that you provide both the contract from the event planner and the venue to us at MJ Sorority.
Should you have any questions or concerns, please contact Ruth Akers.
For example
An Event Planner signs a contract on your behalf with additional insured language, which obligated the Sorority to extend coverage to the hotel holding the event. The hotel used glass bottles to serve drinks, some of which were broken on and around the dance floor. A chapter member’s guest sliced his foot open on the glass and severed a tendon in his foot. Because the contract obligated the Sorority to add the hotel onto their policy as an additional insured, the Sorority’s insurance policy was triggered even though the hotel’s employee broke the glass that caused the injury.
Here is the more printer-friendly PDF version.
We are often asked about the worthiness of using liability waivers by our clients. In the past, under the advice of legal counsel, we have taken a somewhat ambivalent attitude toward encouraging our clients to have their members sign waivers or requiring that non-members participating in chapter events sign waivers as we were concerned that the waivers wouldn’t stand up in court.
However, over the past several years, there has been a shift in case law that has caused us to reconsider our position on waivers and releases. This, coupled with the dramatic increase in liability incidents and claims among our clients, has caused us to re-evaluate our position. Our research and the advice of legal counsel now indicates that participant waivers/releases may be advantageous for our clients in two ways prior even to the test of court:
- Waivers may help clients educate their members about the risks associated with various types of events; and
- Waivers may prevent a lawsuit from ever being filed because the participant has acknowledged his or her assumption of risk.
We are now encouraging our clients to utilize participant waivers (both for their own members and for events sponsored by the Fraternity/Sorority with non-member participants) for the following types of events:
- Any athletic event
- Any “risky” event (Link to risky events position paper)
- Any competition
We have developed a participant waiver/release template for our clients’ use. Please be sure to read through the waiver in its entirety and make necessary edits so that the waiver applies to your specific event. You will see examples and further information in the footnotes of the waiver/release template.
Once the appropriate waiver has been drafted by included the requested information in the template form, waivers may be distributed in paper or electronic format. If distributed and collected as hard – copies, chapters should either keep the paper copies or scan and save as an electronic file in accordance with your organization’s document retention policy. It’s important that chapters not go to all of the effort of collecting signed waivers to simply dispose of them the day after the event as claims often come much later than that.
A potentially better option is to use a web-based liability waiver platform that will help your chapters create and distribute waivers to participants and then save signed waivers in a searchable database. There are a few websites that offer this. One such company that we recommend is SmartWaiver as we believe that the waiver creation and distribution process is relatively seamless and pricing is reasonable and upfront.
For additional information, please refer to the article published in Fraternal Law (link). Should you have any questions or concerns, please contact Estacia Brandenburg, JD, MJ Sorority Client Executive.
It is very common for third parties to request a Certificate of Insurance that proves the fraternity/sorority or chapter has purchased insurance coverage. This request can be satisfied by obtaining a Certificate of Insurance that shows your limits and coverages. When a third party asks for evidence of your insurance, you need to complete the Certificate of Insurance Request Form in the appendix of this document or complete the Certificate of Insurance Request Form on our website.
If yes, do not sign the contract until you have contacted Ruth Akers at MJ Insurance. If you sign the contract, you may unknowingly be obligated your organization to unfavorable liability and/or indemnification requirements that could put your organization in jeopardy.
If you are unsure if the contract contains insurance requirements, look for the following verbiage examples:
- “The renting party (i.e. the chapter) shall be solely liability and responsible for all costs, expenses, damages, liabilities, claims or suits incurred or resulting from the use of the property rented.”
- “The renting party agrees to fully indemnify and save and hold harmless [specific venue/entity name] from and against any and all claims.”
- “The renting party shall submit proof of insurance naming [specific name of venue/entity] as additional insured.”
While these examples are the most frequently used phrases that cause us concern from an insurance standpoint, contract language is often complicated, so it is always better to be safe and send the contract to Ruth Akers for review.
If a third-party is requiring Additional Insured status, they are looking to your organization’s policy to defend them and pay claims on their behalf, even if they are negligent in causing a claim.
Additional Insured requests relating to social events are heavily scrutinized; therefore, it is important that you allow two weeks to allow for the necessary parties to review.
Request a Certificate of Insurance via this form on our website.
The below suggestions are recommendations only, not requirements. The information below should be kept on file for your records. We do not need copies of this information.
Please refer to your organization’s risk management policies for specific conditions required by your fraternity/sorority.
When you rent an establishment or engage the services of someone, it is recommended that you obtain a Certificate of Insurance to ensure they have purchased insurance for their operation. If the third-party vendor does not have insurance, then the fraternity’s/sorority’s policy may have to respond, which is not preferable. Your agreement with a third party vendor will dictate what coverages should be represented on the Certificate of Insurance. For example:
- If you are renting an establishment, you will need to have evidence of their General Liability coverage.
- If an establishment is providing alcohol related services, you will need to have evidence of their General Liability, Liquor Liability and Workers’ Compensation coverages.
- If you are hiring a contractor, you will need to have evidence of their General Liability, Workers’ Compensation and Automobile Liability coverages.
- If you are hiring a bus company for group transportation, you will need to have evidence of their Automobile Liability coverage.
As a guideline, the following limits of liability are a minimum that you should accept from a third- party:
| General Liability | $1,000,000 |
| Liquor Liability | $1,000,000 |
| Automobile Liability | $1,000,000 |
| Workers’ Compensation/Employer’s Liability | $100,000/$500,000/$100,000 |
We have established the above minimum recommendations for the following reasons:
- Increased cost of materials and health care costs have significantly impacted the average cost of a claim.
- If there is bodily injury, the costs could very easily exceed the minimum threshold notes above.
- The cost of the insurance premium for a lower limit of insurance would likely be less than a fifteen percent discount for the contractor or venue. The industry now views the minimum limits above as the minimum they will offer and rarely provides limits lower than $1M.
- We and our clients believe that those that control the exposure should bear the most responsibility in paying for a claim.
A red flag should arise any time a contractor or venue shows resistance to or hesitation with these minimum limits of insurance, and you may want to reconsider your arrangement. In our experience, if a contractor or venue refuses to provide proof of adequate insurance limits, it is because they do not have any insurance, not because they do not have adequate limits.
Any time a chapter contracts with a venue, contractor or any third-party for services, it should be clear that each party is responsible for the consequences of their performance and/or work and the conditions under which the service will be rendered. This contractual relationship exists so those who are in the best position to control the exposure are also the most likely to incur the liability for those incidents that may occur. In an ideal world, each party’s insurance policies would respond to the extent that they are negligent in causing either property damage or bodily injury. The essence of this risk management technique is to transfer the liability to the entity/individual the most able to control the exposure. Establishing a minimum expectation is a reasonable effort to ensure that this transfer happens and that you are doing business with a professional and reputable entity or individual.
Does MJ Insurance approve events?
No, MJ Insurance offers recommendations based on prudent risk management. Your National Organization has the ultimate decision as to the approval of your event. It is important that you review the rules and policies of your national organization before you begin the event planning process.
I have a Certificate of Insurance that I received for an event we had last month. Can I use it again for an event that is being held next week?
No, Certificates of Insurance are all issued on an event specific basis; therefore, each time someone requests a Certificate of Insurance from you, you must obtain another Certificate of Insurance. Furthermore, the venue/third-party requesting the Certificate of Insurance will want to be sure that their name is listed as a Certificate Holder on the Certificate of Insurance, which is another reason why Certificates are issued on an event specific basis.
I have an Insurance Overview that shows we have coverage. Can I use it when I am asked for a Certificate of Insurance?
No, the Insurance Overview contains specific and confidential information regarding your chapter and should not be shared with anyone outside your organization.
How long does it take to process a Certificate of Insurance?
It depends on what exactly is required by the specific venue and the nature of the event. We recommend that you submit requests two weeks in advance in order to ensure timely delivery, but we are happy to help you with Certificate requests at any time. Completing the Certificate of Insurance Request Form in its entirety is the best way of ensuring timely processing of your Certificate request.
We are renting a venue that will be serving alcohol. Is evidence of their state liquor license sufficient?
Each state has very strict guidelines for businesses who are licensed to sell alcohol, and we certainly recommend that you only use businesses that have a current liquor license. However, it is equally if not more important, that you require evidence of the business’ liquor liability insurance coverage, which is separate coverage from general liability insurance and will have a separate limit of liability. For much more information on this issue, please refer to our position paper.
It is increasingly common for other organizations and/or people (third parties) to request some evidence that the fraternity/sorority or chapter has insurance coverage in place. The form that confirms that coverage is, in fact, in place is called a Certificate of Insurance, and it shows your limits and coverages.
We will need the following information from you in order to provide you with a Certificate of Liability Insurance:
- Fraternity/Sorority and Greek Chapter Name
- Date of the event
- Type of event (i.e. Philanthropic, Social, Chapter-Oriented, etc.)
- Whether or not alcohol is being served (if alcohol is being served, who is serving the alcohol?)
- Name and address of the venue and/or individual requesting the Certificate of Insurance
- The contact information and preferred contact method (i.e. e-mail, fax, etc.) for the individual to whom the Certificate should be sent
- If the venue is requesting Additional Insured status, please forward the contract immediately to us for review.
Please provide all of the above information and any questions you may have by completing the Certificate/Event Request Form.
In addition, it is also very common for you to receive a request from a lendor requesting that you provide evidence that you carry property insurance. Banks often require you to list them as a Mortgagee or Loss Payee on your policy for property for which they provide a loan. Companies from whom you lease equipment, such as a copy machine vendor, also often request proof that you are carrying insurance to cover any damage to their equipment. This document is referred to as the Property Certificate of Insurance.
In order to process your Property Certificate request, please provide us with the following information by completing the Non-Event Specific Certificate of Insurance Form:
- Name and address of the entity/individual requesting the Property Certificate
- Any written documentation, such as a contract, that stipulates your obligation to provide the entity/individual with proof of insurance
- Loan number, if applicable
- E-mail address of the entity/individual requesting the Property Certificate
Position Paper
We are seeing an increase in the number of riskier and more robust activities being proposed as chapter events and activities, such as the following:
Ropes courses Hay rides
Mud/color/zombie runs Rock climbing/Climbing walls
Skeet shooting Paintball
Trampoline events Slip-and-Slides
Haunted attractions Mazes
Bounce Houses and Dunk Tanks Events over 500 people
Hamster balls Mechanical bulls
Eating activities/contests
Any type of inflatables
On their own, these activities are concerning because of the greater potential for injury due to the more physical and/or dangerous nature of these activities. With good risk management, some of the potential risks associated with these types of events can be mitigated; however, some of these events are inherently dangerous. If we continue to see more claims in these areas, the insurance company may be forced to take action by eliminating some of the coverage that our clients now enjoy. We would prefer that good risk management eliminate action from the insurance company.
In addition to the more physical nature of these activities from a risk management standpoint, we are seeing the contracts in these types of scenarios increasingly contain verbiage that is unfavorable for our clients. Examples of this are where the service/venue includes the requirement that the fraternity/sorority add the venue/service provider onto their policies as an additional insured, contractual verbiage that releases the venue from any and all liability, and the requirement that all chapter members and/or participants sign waivers or releases to eliminate the service/venue from liability. This trend toward more aggressive contractual language with these types of events is concerning for our clients primarily due to the fact that they have little or no control over the equipment and the facility that is being used by its members and to then release the service provider/venue from responsibility is not good business practice.
Thus as we see it you have an increase in the more risky activities, where the service provider/venue is completely “released” from any and all liability and we have the additional trends below to exacerbate the matter:
- Liability incidents are up 15 percent
- Member injuries are up 68 percent
- Economic pressures and uncertainty with health care has impacted both the number and the severity of liability claims
Please refer to your own organization’s policies regarding approved events.
Not all risky events are created equal; please refer to the table below for some specific examples:
| Type of risky event | Red Flag | Better option, yet still risky |
| Ropes courses | Homemade ropes courses on the chapter property | Engaging with an established company or organization that utilizes trained individuals to facilitate ropes course |
| Bounce houses | A bounce house setup on chapter property open to the public | Going to a well-managed facility that has various amusement activities available |
| Slip-and-slide | Set up on chapter property | Going to a well-managed water park |
| Organized runs/walks | Mud/Zombie runs with obstacles | A more traditional 5K on paved surfaces, with appropriate city permits, permissions, etc. |
As you can see from the examples above, there are ways to make seemingly risky activities more advantageous, primarily by holding the event:
- At a licensed establishment that carries adequate insurance limits and practices good risk management in their operations
- At a well-managed facility (as opposed to at the chapter house or somewhere on campus)
If the event is held at another business, they will be primarily responsible for the liability to your members and their business insurance policy will be responding to any claims.
Refer to your inter/national Headquarters for your organization’s policies regarding approved events. Ultimately, it is up to the discretion of each inter/national Headquarters to determine whether or not to allow a specific type of event.
We recommend, when possible, that chapters find alternatives to the types of risky events listed and/or unfavorable contractual risk transfer.
If it is not feasible for you to find an alternate (and insured) venue for the event or to change the event altogether, we recommend that you utilize the services of MJ Insurance Sorority Department by contacting Ruth Akers, Senior Account Manager.
Should you have any questions or concerns, please contact Ruth Akers at ruth.akers@mjsorority.com.