|
|
|
|
|
|
|
|
|
|
TO: |
Mayor and Members of Council |
|
|
|
|
FROM: |
Joel Lustig, Director of
Financial and Client Services |
|
|
|
|
PREPARED BY: |
Fred Rich, Business Analyst |
|
|
|
|
DATE OF MEETING: |
2006-02-06 |
|
|
|
|
SUBJECT: |
Facility User Group Insurance |
|
|
|
RECOMMENDATION:
THAT the report dated
AND THAT the Purchasing Manager be
authorized to complete an application with Sports Can, B.F. Lorenzetti &
Associates Ontario Inc (BFL), or execute any other documents to give effect
there to, in a form satisfactory to the Town Solicitor, to allow BFL to offer User
Group Insurance, to facility renters, with $2,000,000 per occurrence liability and a $5,000,000
annual aggregate, for all Town
Operated Facilities.
PURPOSE:
The
purpose of this report is to obtain approval to amend existing Facility Rental
Agreements to include a new $2,000,000 mandatory
general liability insurance coverage for all rental activities held within Town
Operated Facilities, and to expand the current Pilot Facility User Group
Insurance program as a method of obtaining the required insurance coverage for
all Town Operated Facilitates.
BACKGROUND:
The Town currently has different insurance
requirements stated in various rental agreements, varying from no stated
insurance requirements, to Recreation Facilities stating $2,000,000 in general liability
insurance, naming the Town as additional insured and requiring full participant
coverage.
Current Practice
Town Facility Rental Agreements
The Town’s facilities can be categorized in
to two distinct groups;
1. Town
Operated Facilities:
·
Community
Centres: Angus Glen, Armadale, Milliken Mills, Centennial, R.J Clatworthy Arena,
Crosby, Markham Village, Mount Joy, Old Unionville Library, Women’s Institute
Civic Centre, Rouge River, Thornhill, Milne Park, Warden House, Unionville
Train Station, Varley Art Gallery, Markham Theatre, Markham Museum, McKay Art
Centre, and Milliken Mills Soccer Dome.
·
Sportsfields: include park facility rentals for activities such as;
soccer, baseball, cricket, etc.
2. Community
Board Operated Facilities:
·
Satellite Facilities:
These groups have different facility rental
contracts and insurance requirements stated within.
Town
Operated Facilities:
Community Centres
The Facility Rental Contract was amended as
approved in the December 5, 2005 report entitled “Revised Town of Markham Halls
– Alcohol Policy” to include a clause requiring all renters to have general
liability insurance of not less than $2,000,000 with full participant coverage and
naming the Town as additional insured. It
also contains
an indemnity clause stating the renter agrees to indemnify
Sportsfields
The Sportsfield Application includes a
clause to confirm that the permitted party carries public liability insurance
of not less then $1,000,000. In addition the permitted party agrees to
indemnify
Community
Board Operated Facilities:
Satellite Facilities
The
Satellite Facilities currently do not have a standard rental contract. Only Markham
Village Train Station and
Proposed Practice
Facility User Group Insurance Programs:
In an effort to
protect the Facility Renter and the Town in the event of a claim, the Finance
Department in co-ordination with Recreation (Community Centres), Strategic
Services (Sport Fields) and Asset Management (Satellite Facilities) departments
investigated User Group Insurance Programs. During this investigation, two
insurance programs were identified, “SportsCan” offered by B.F. Lorenzetti
& Associates and “All Sport” offered by Pearson Dunn Insurance &
Financial Services. Staff met with both companies to better understand how each
individual insurance program works.
The benefits of implementing:
1.
From
the User perspective, the User Group Insurance Program may cover up to the
first $2,000,000 for legal fees and/or damages awarded for liability arising out
of the activities carried out during the facility rental involving the Facility
Renter and all Participants. This program also offers cross liability, which covers
claims against one participant brought on by another participant.
Currently, many Users rely on their homeowner’s policy
which may or may not adequately protect them from a claim. However a User’s
homeowner policy will not include participant coverage, and therefore exposing
all other participants to any and all legal costs.
2.
From
the Town perspective, the User Group Insurance Policy may cover up to the
first $2,000,000 for legal fees where the Town is not found negligent. Currently
the Town would be responsible for all legal expenses resulting from a Facility
claim for which it was not negligent.
In the event of a
claim, the injured party will typically name the party or company renting the
facility and the Town in a civil action.
Due to the rule of law known as “Joint and Several Liability”, the Town
will only have to be found one percent liable in order to be responsible for
the entire claim if the other parties do not have the financial resources,
insurance or adequate amounts of insurance to cover their portion of a damage
award.
For these reasons, many other municipalities and school boards have
adopted a mandatory insurance program for facility rentals which obligates a
renter to provide a Certificate of Insurance prior to renting the facility. The
insurance provides financial protection for both the renter and municipality
but not all participants involved.
The Facility User Group Insurance programs
cover all of the
insured’s affiliated leagues, clubs, and or teams, their members, officers,
directors, coaches, managers, officials, players, auxiliary workers, employees
and volunteers. This type of coverage
will provide the necessary insurance coverage for the Facility Renter and all
Participants against legal fees and/or damages resulting from a liability
claim.
Comparison of Facility User Insurance Programs
Although each
program offers similar liability coverage, $2,000,000 per occurrence liability some differences
do exist.
Insurance Deductible: The All Sport deducible is $500 as compared to the SportsCan
$1,000 deductible, this deductible applies to the Facility Renter and not the
Town.
Annual Aggregate ($ limit of claim payments per year):
SportsCan offers a $2,000,000 and a $5,000,000 annual aggregate program on
their $2,000,000 liability policy, whereas the All Sport $2,000,000 liability
policy is limited to a $2,000,000 annual aggregate. The disadvantage of a user group
policy with the same per occurrence liability as its annual aggregate is, any
settlement will directly affects the liability coverage of all other users
during that policy year. For example in the $2,000,000 annual aggregate policy
a settlement of $500,000 would reduce the liability coverage to $1,500,000 for
the remainder of the policy year if no other settlements are awarded. Whereas with
a $5,000,000 annual aggregate policy, the liability coverage purchased by a
facility user is not affected until over $3,000,000 in settlement payments have
been awarded. For this reason Town Staff recommends implementing the SportsCan
$5,000,000 annual aggregate program.
Sporting Events Coverage: The SportsCan program offers coverage for minor
hockey and other minor sports and contact sports, the All Sport program does
not currently cover minor hockey or other minor sports or any contact sports. The limited sports coverage is of concern
to the Recreation Department as they currently have users that are participating
in these activities without the proper insurance coverage.
Pricing:
The pricing schedules for the two programs are not structured in a similar
fashion and therefore are not easily compared. In an effort to compare these
programs a list of common rental scenarios was developed, these scenarios
include current situations where renters do not have proper insurance coverage.
In the attached Appendix “A” price evaluation,
the SportsCan $5,000,000 annual aggregate policy is less expensive for the
Facility Renter in all areas even when compared to the Allsport $2,000,000
annual aggregate premiums. The premiums for the SportCan $2,000,000 annual
aggregate policy are approximately 25% less then the $5,000,000 annual
aggregate premiums identified in Appendix “A”.
OPTIONS/DISCUSSION:
Options to be considered
1.
Status Quo, keep the existing system, where renters provide insurance coverage and not offering a Facility
User Group Insurance program. However this process could leave facility renters
and all participants exposed to potential liability if adequate insurance is
not obtained and this does not provide a uniform process for the facilities and
renters to follow.
2.
Mandatory
Purchase, amend the Facility Rental Agreements making it
mandatory to purchase the Facility User Group Insurance program for all
facility rentals. This option would standardize the facility insurance process providing
$2,000,000 in general liability insurance coverage for the Facility Renter and
all participants. This option will ensure all participants have insurance
coverage, but the Facility Renters does not have an option to provide their own
insurance coverage.
3.
Mandatory
Coverage, amend the Facility Rental Agreements requiring
renters to provide an insurance certificate for $2,000,000 in general liability
insurance coverage with full participant coverage and naming the Town as
additional insured. In addition, the Town would implement a Facility User Group
Insurance program allowing facility renters to purchase the required insurance through
the Facility User Group Insurance program. This option will provide insurance
coverage for the Facility renter and all participants and allows the renter the
option of obtaining the coverage from the Town or through their own means,
where applicable.
Town
Operated Facilities:
Recreation,
Strategic Services and the Asset Management Departments have indicated they support
the implementation of a Facility User Group Insurance program for all the
facilities they operate. The
Finance department recommends implementing option three (3) for all Town operated
facilities.
Pilot
User Group Program for Satellite Facilities:
Satellite facilities have unique requirements making
the implementation of a Facility User Program more challenging than an implementation
with Town Operated Facilities. For this reason the various departments involved
decided to implement a pilot program with three Satellite Facilities to
determine the best method of administrating a Facility User Insurance Program
with the various Satellite Facilities.
During July 2005 the
Finance Department in co-ordination with Recreation, Strategic Services and
Asset Management departments received approval from the CAO to implement a
pilot program with SportsCan, B.F. Lorenzetti & Associates Ontario Inc
(BFL). The pilot program focused on three Satellite facilities; Markham Train
Station, Box Grove C.C. & Heintzman House. During the implementation of the Pilot
program the Chair of the Box Grove Community Association indicated to Town staff they were not to be included in the pilot program at that point in
time. As of
FINANCIAL CONSIDERATIONS:
The insurance
premiums are paid by the facility renters, the Town however pays a $1,500
deposit to BFL and the Town retains the first $1,500 in premiums received from
facility renters to offset the deposit.
Recreation,
Strategy Services and the Asset Management departments
do not foresee any significant impact to revenues pertaining to the
implementation of a Facility Rental Insurance Program.
ATTACHMENTS:
Appendix “A”: Financial Comparison of Facility User Group
Insurance programs.
|
|
|
|
|
Barb Cribbett,
Treasurer |
|
Andy Taylor, Commissioner of Corporate Services |
Q:\Finance and
Administration\Finance\Purchasing\FRED\Insurance\2005 Facility User Insurance
Revised.doc
