THE REASONS AND POSSIBLE PITFALLS OF ADDITIONAL INSURED AND HOLD HARMLESS AGREEMENT

As an individual Aerobic Instructor and Personal Trainer, you may have been asked by the health club or other facilities you have used, to name them as an Additional Insured and/or hold them harmless. The facility places a requirement on you to provide this coverage or you will not be permitted to use their resources.

The facility owners realize that by permitting you to utilize their location will add an additional exposure for them that they were not responsible for prior to your presence. To reduce this risk and save premium amounts on their insurance costs, they have been asked by both the Insurance Carrier and their Insurance Broker to request that you add them as an Additional Insured to your Insurance Policy. Since you are an independent contractor, the facility owner's policy may or may not cover you as an insured. Thus, the facility owner does not want to be faced with this gray area of coverage. Their insurance policy should protect them in any case, but they have been advised to demand that you add them as an Additional Insured to your policy. This provides them with a buffer so that your policy will defend them for any negligence that you have caused. Our legal professionals seek indemnification from all possible resources meaning you, the facility and any other party that they can seek as a pocket or means of indemnification. The facility's insurance company will utilize your coverage to protect and defend both the facility and you as the first source of protection. By doing so, the facility does not have to utilize their policy, meaning a reduction in their initial premium and maybe a savings in their future premiums. The facility's policy would not be utilized at all, unless the award for your negligence exceeds your policy limits. The major cost in any negligent case is the defense and investigation expenses. Normally, these expenses are unlimited, meaning the facility would benefit from your policy coverage at no expense to them. Your insurance company might limit the defense and investigation, if it is determined that the cost to continue the defense is not worth it, and the insurance company wishes to settle the claim as quickly as possible.

The requirement to add someone as an "Additional Insured" is done daily by the insurance companies. There may be a cost to do so, depending on your insurance company. By doing so, the Additional Insured receives benefits from your insurance policy. However, their benefits will not exceed beyond the terms and conditions of the insurance policy.

You may be asked to sign a contract between the facility and yourself as an Independent Contractor. At this point, before you sign, please read the contract carefully. By signing, you may be agreeing to provide terms and conditions beyond you insurance policy. The term "Hold Them Harmless" is the term that you want to investigate carefully, especially if it states that you will hold them harmless for all actions caused by you whether or not it is due to your negligence. By agreeing to those conditions, your insurance policy may not defend or indemnify you or the facility. The reason for this denial of coverage is that you may not be liable for the actions that caused harm to others because you were not negligent.

Negligence typically is defined as the failure to exercise the standard of care required by law to protect others from harm. In order to collect damages, the injured party must show that you were guilty of negligence. There are four essential elements of a negligent act:

• Existence of a legal duty to use reasonable care
• Failure to perform that duty
• Damages or injury to the claimant
• Proximate cause relationship between the negligent act and the infliction of damages

Examples of injuries or damages that the Hold Harmless Agreement may obligate and hold you liable, but are not covered under the normal insurance contract:

• An intentional act
• Anything that occurs during the use of the facility
• Acts of God
• Incidents or occurrences caused by the landlord or the facility such as poor maintenance of the facility

Before you agree to the terms that the landlord or the facility requires you to sign, it is imperative that you have your lawyer and your insurance broker review the contract as a safeguard.