Liability Waivers: How to Protect Insureds

Liability Waivers: How to Protect Insureds

Liability Waivers: How to Protect Insureds
Jul 1, 2022
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There’s a lot of confusion surrounding liability waivers and their effectiveness in protecting policyholders. So, let’s explore what waivers are and are not. 

What’s a Liability Waiver?

A liability waiver, or release of liability, is a signed contract executed before participation in an activity or event. By signing, the participant agrees to release the provider from fault or liability for injuries resulting from ordinary negligence. 

A waiver is not a release of liability for gross negligence. A waiver should not be confused with other legal documents such as an indemnification agreement, disclaimer, covenant not to sue, or informed consent, which operate very differently from a waiver. 

A variety of factors weigh heavily on a waiver’s success in the case of a submitted claim including clarity of the language, the state it is issued in, who signed it, the specifics of the loss, and the level of negligence. 

Language Clarity and State Requirements

The liability waiver should be written in as clear and unambiguous language as possible. Generally speaking, that means the wording must not have more than one reasonable interpretation. The language also needs to include a specific description of the activity involved. 

Issuing State

Some states require specific language and particular font size to draw attention to the terms of the agreement.

The laws in any state a liability waiver is signed are subject to change and will not work for every business or circumstance.  

Ordinary Versus Gross Negligence

Negligence is the failure to use reasonable care. 

Ordinary negligence refers to actions that are careless or caused by inattention. Examples are a jet ski accident occurring simply because two operators weren’t paying attention and ran into each other, or a store owner failing to put up a “wet floor” sign after mopping an area.

Gross negligence is characterized as a conscious or willful disregard of the need to use reasonable care – committing an action that is likely to cause harm. Examples are a person who downed several alcoholic beverages in an hour, then drove their car, or a large-haul trucker deciding to overload the truck beyond legal limits to make more money. 

What Can You Do As An Underwriter?

Ask questions, don’t offer legal advice, and request that policyholders use liability waivers whenever appropriate or possible.

While laws can and do change, there is no downside to using waivers, parental waivers, or stand-alone waivers (i.e., not buried in other documents like membership agreements). Even if not enforced, a signed waiver may be evidence that a participant had knowledge and assumed the risk, potentially reducing the insured’s negligence.

Nautilus Insurance Group products and services are provided through various Surplus Lines insurance company subsidiaries of W. R. Berkley Corporation and offered through licensed Surplus Lines brokers. Not all products and services may be available in all jurisdictions, and the coverage provided by any insurer is subject to the actual terms and conditions of the policies issued. Surplus Lines insurance carriers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. ©2022 Nautilus Insurance Group. All rights reserved.

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