Article in Bicycle Industry & Industry News (BRAIN) points out major issues in not understanding when a retailer is liable.Posted: September 9, 2015
Remember the “Ride Board” in college? People looking for rides and people going somewhere with cars would post on the ride board. College’s involvement was the board, nothing more. If you are more than a “board,” you may have legal issues as a retailer.
Bicycle Retailer and Industry News is the trade magazine for the cycling industry. One of their columns is titled Retail and asks several retailers a question each edition about a topic of importance. The September 1, 2015 issue, Vol. 24, Number 15, page 18, asked the question “Does your shop host group rides? Is liability a concern?”
The answers from the retailers were all over the spectrum, as usual. However, what caught my attention was the lack of knowledge on where the liability boundary lies with retailers.
Below are quotes from the article and my response about what the liability may really be.
“We have a weekly road rides that leaves from the store, but it’s just a starting point – the shop doesn’t really have anything to do with it.”
Hopefully, this statement is 100% correct. However, the issue is not what the liability is from the shops’ viewpoint but the liability from the customers and riders’ viewpoint. Do they see the shop as hosting the ride or does the shop just function as an address and parking lot?
Remember the ride board in college. It was usually a cork board with pins. People with cars going someplace looking for people to share gas or costs would post the info about their trip on the board. People looking for a ride someplace would also post their info on the board. If things matched a driver with a car got a rider for the trip.
The sole involvement of the college was the cork board, maybe pins and the 3X5 cards. The college did no go find drivers or riders. Consequently, the college’s involvement created no legal liability.
Legal liability attaches when you create a duty, an obligation to someone. That usually is not from your perspective but from the perspective of the injured party. Do the riders’ meeting at your store understand that you have no liability for the ride? That you are offering your packing lot as a service and that service ends when the riders walk out your door and leave on the ride.
A group ride where the retailer can’t be liable should probably be run the same way. In litigation, any involvement by the retailer can be interpreted as legally liable for the ride. Employees in kits from the retailer, employees organizing or leading the ride, or the employees telling customers about the stores rides might be enough to drag the retailer into court. Advertising the ride in a newsletter or online may create that misunderstanding in a rider.
Probably, retailers should jump in and get involved in the ride, have liability insurance to protect them from incidents on the ride and have a release signed or just put up a ride board. You are generating positive community feelings with the ride, which may be blunted by not telling anyone about them and telling those that show up you are not responsible for them.
“A weekly group ride leaves from our store, but it is organized by the participants. We also hope to have gravel/adventure and mountain group rides leaving from out shop in the near future.”
The issue here was the two different sentences in the quote. If the participants truly are running the ride and the store is just an address, then the store is probably not liable. However, the store created liability when it said, “we hope to have” other rides. If the store wants the rides, is the store liable for the rides? That could be an issue.
You can probably create a ride board like situation with your newsletter or website; however, that would require a disclaimer. Actively going out and getting people to show up for a ride probably places you in a different view from the people showing up for the ride.
“Several of our structured activities, like an “Introduction to Mountain Biking” series, are led by a professional instructor who carries her own insurance for groups like this.”
This is one way of avoiding liability but only if you go the extra steps.
1. The professional leading the rides MUST list the store on her insurance policy as an additional insured. Just because she has insurance does not mean the insurance will cover the store. If the store is found to have something to do with the ride, only if the store is covered as an additional insured will the instructor’s insurance be of any help.
The rider can have insurance and defend any claim but the store maybe left holding the bag. The professional’s insurance will not cover the store, unless there is an agreement, naming the store as an additional insured, to do so.
Just because one of the two possible defendants has insurance will not protect the one without insurance. If the injury is great enough or the medical bills large enough, the injured party, their insurance company and their attorney will look to anyone who might be able to write a check for the damages.
2. The professional rider should have a release that covers her and the store. That way, the instructor and the store and both protected rather than the injured consumer realizing the rider can’t be sued because of the release suing the store because they were not covered by the release.
Again if the professional rider has a release that protects her, the injured party may immediately turn to the store. The store is no covered by the release it makes the lawsuit against the store much easier. Small claims through many big claims will be started against the retailer than fight a release.
“We try to keep a pretty chill attitude around the shop and events, and that tends to attract less litigious group of people.”
A large percentage of the lawsuits in the US are not filed by the injured person. They are filed by the injured person’s health insurer. Every health insurance policy, in fact, every insurance policy, has a subrogation clause. That clause allows the insurance company to file a lawsuit using your name to recover any funds from someone who may be liable for your injuries.
A rider, you best friend, is riding in your group rides. An accident occurs, and your friend is injured and spends a week in the hospital. Your friend’s health insurance policy looks at the facts and determines that your store was liable for the friend’s injuries and sues you. Your friend can do nothing to stop that lawsuit, unless he refuses the benefits under the policy and repays all the money the insurance company spent on his injury.
Not only is your shop at risk but so is your friendship.
The second big way this theory is destroyed is the surviving spouse. Facing life with no husband, no breadwinner with several kids a surviving spouse with no interest in cycling, and who saw your cycling shop as a money pit, might not have any qualms suing you.
The final issue is it might be money. If a customer becomes a quadriplegic or paraplegic, the cost of living is beyond anyone’s ability. Medical bills usually pass $5M, and future medical bills are usually more. Consequently, just living may force a cyclist now in a wheel chair or worse, to sue.
“We do organize, collaborate on or host various endurance races, and for these we run the liability through a statewide organization that has a series of free events. These free races require a signed waiver to participate, and between that and the no-cash organization that keeps the series going…”
Just like the professional rider mentioned above the other party’s actions are not enough. The statewide organization should list the store as an additional insured on its policy and place the stores name on the release.
So Now What?
Events are a great way to get a retail stores name in front of the public and promote good will. They can be done with a minimum of money and mostly a lot of effort. The liability issues can be handled just as easily.
1) Make sure your general liability coverage on your policy covers the events you want to have. The policy should cover events and activities away from the store, in the parking lot and in the store. If you have doubts contact your broker and get an email or letter saying you have coverage for the event or activity.
2) Have a release created by an attorney to cover all the events you have that protects the store, the employees and officers of the store and anyone else that could be sued because of the event.
a) If the release is being provided by a third party, someone else, make sure your store and your employees are covered by their release. Your store must have its name on the release.*
b) At the same time, don’t have two releases. Several lawsuits have occurred where the plaintiff signed two releases and one or both releases were thrown out.
3) Make sure that anyone else that is part of the event and has insurance lists your store as an additional insured. Fights between insurance companies over whose insurance covers an accident can take longer and cost more than the original accident.
4) Dependent upon the type of event and who is putting it on, you may want an indemnification agreement from the party organizing the event. An example would be a cyclist jumping over your store on a mountain bike. You are getting some PR from the event, but the liability far exceeds the PR value in some cases. The Organizer is making money and should be able to indemnify you if the rider is caught by a gust a wind and lands on spectators, someone’s car or the wrong building.
* Retailers forget that a release collects information. You can use the release to collect names and contact info for future marketing or promotions. Include in the release language that they give you the right to contact them.
Additional articles you may find helpful:
Insurance 101 http://rec-law.us/yw3HhI
RELEASE (Waiver) CHECKLIST http://rec-law.us/ZVVUtd
Release/Waivers: The basics, the very basics! http://rec-law.us/AaqwqH
States that do not Support the Use of a Release http://rec-law.us/1i5C6cN
Scott Chapin of Marsh & McLennan Agency who specializes in cycling insurance issues runs a blog about these issues: http://bicycleindustry.rjfagencies.com/Blog/ProtectionforShopRides.aspx
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