#IEBA2018 Recap: Terms & Conditions Power Panel Part 1 – Additional Insured


Jason Bernstein, AEG Presents

Berkeley Reinhold, Business & Law Office of Berkeley Reinhold

Tim Epstein, Duggan Bertsch, LLC

Brent Daughrity, Anderson Benson Insurance


Moderated by Pam Matthews, IEBA


IEBA’s Pam Matthews opened this session by welcoming her panelists and making the blanket statement, “None of this should be construed as legal advice. It is information and insight.”


“Although, if any of my clients are in the audience,” Epstein chimed in, “I will be billing you for this.”


Matthews set the panel agenda: “A lot of what we will talk about today is allocation of risk and transferring risk through insurance. Insurance can cover attorney fees, court costs, settlements, and judgements.”


Additional Insured

IEBA’s Pam Matthews opened this session by welcoming her panelists:


Jason Bernstein, Senior Counsel for AEG Presents: “I represent Goldenvoice and their festivals, Louis Messina’s office, and Madison House. I do a little bit of everything – contracts, insurance claims, cease & desist, NDAs, the whole gamut.”


Berkeley Reinhold: “I am an entertainment attorney. I started my career at William Morris, running business affairs for the music department for about 20 years. I now represent festivals like Lollapalooza and have lots of clients on all sides of the equation – vendors, artists, and so forth.”


Tim Epstein, Duggan Bertsch in Chicago: “I serve as outside general counsel to about two dozen promoters. A lot of that work is concentrated in the festival space, but I have non-music clients like Maker Faire and Refinery29. I also represent some interests on the ticketing side, and sports groups within my law firm as well. Some examples of clients in the music space would be Bottlerock, Pitchfork, Life is Beautiful, Riotfest. And I still teach sports entertainment law. It’s been 8 years now.”

Brent Daughrity with Anderson Benson Risk Management and Insurance in Nashville: “I primarily work with the entertainment industry. I work with festivals, artists, vendors, kinda everything that touches a festival or an artist.”


Matthews set the panel agenda, “A lot of what we will talk about today is allocation of risk and transferring risk through insurance. Insurance can cover attorney fees, court costs, settlements, and judgements. One of the topics that we talked about last year is still confusing: additional insured.”


Daughrity began, “Additional insured status is an endorsement that is granted by the CGL form of an insurance policy. Pam is talking about a certificate versus an additional insured endorsement. A certificate is just a snap shot in time. It does nothing for you. It’s probably what all of you get all the time. Unless you’re obtaining the actual additional insured endorsement, you really don’t have anything. These certificates are obtained months prior to an event. You could get in a situation where somebody missed a bill and there is no insurance when you thought there was. Having that actual physical endorsement is a best practice.”


“That endorsement is going to be in form of a blanket additional insured endorsement,” Epstein continued. “Basically, whenever you’re in a written contract with someone that endorsement becomes effective. Tell the underwriter to give you that additional insured endorsement, which you can use for anyone at no additional cost.”


“In a contract, there are two main points that govern liability: indemnity and additional insured,” Reinhold said. “If you just have an indemnity provision, you have to enforce that indemnity. If you are additionally insured, you can tender the claim to their company and it’s a lot easier. That is why people like to have it.”


Bernstein added, “I’ve had people hesitate to list us additional insured because they say that increases their exposure. It doesn’t. The named insured owns the insurance policy. You can literally list every single person in the world and the carrier is still only responsible for what the named insured does. They’re not going to extend coverage for negligence of vendor.


“After I convince them that it is okay to list me as additional insured, someone goes ‘It’s going to cost me a huge amount of money.’ If you are doing a minimal amount of work for a broker, they might charge you $10 as a document fee. It should be free. It doesn’t cost a dime and it doesn’t create any new liability. If anyone tells you that listing you as additionally insured is a problem, the problem is them.”


“There are different ways you can add someone as an additional insured,” Reinhold added. “I get this question a lot – the difference between an additional insured and additional named insured. You’ll see a certificate of insurance with ‘You’re an additional insured with respect to my sole negligence.’ Or ‘You’re an additional insured with respect to my acts or omissions.’ With additional named insured, you are covering that person for their negligence and it’s not something that you would want to do. Leave it as an additional insured.”


Epstein: “The current state of case law relative to insurance coverage on additional insured is if you don’t have privity of contract – that means direct contractual privity with that party – it is likely that additional insured status is void. So as much as possible, what I would advise my clients to get into as many primary contracts as possible, if you care about the additional insured status. Saying all subcontractors need to name me as additional insured is fine. But it’s likely the carrier is going to decline that claim because you don’t have direct privity of contract.”


“When the subcontractor is security, how are we handling additional insured?” asked Matthews.


Bernstein answered, “As a promoter, I don’t know all of the nooks and crannies of a venue or what is/isn’t safe. So, we usually have a provision that says ‘Except with regard to security that we (as the promoter) hire, we expect the venue operator to engage a security company and cause them to put in a security plan to protect people both inside and outside the venue and the areas that they can control. We are not responsible.’ Then the venues go, ‘Depending on what you do, you may or may not be responsible.’ And I say ‘First, your security company needs to learn to say no and to control themselves appropriately no matter what the situation.’ But more than that, I say ‘When you contract with your security provider, tell them to indemnify you, the promoter, and anyone for their actions. Just like we will list the world as additionally insured.’ Staff Pro and Contemporary should be happy to reciprocate because they are only responsible for what they are responsible for. As a venue operator, we do the same thing. I don’t want the band to tell me everything that’s happening; it’s my house and I rule the roost. The venue operator gets to be in charge.”


Epstein responded, “Lately, I’ve seen ‘We are not responsible for overdoses. We are not responsible for spotting an overdose. We are not responsible for terrorism.’ The exclusions I see now on security contracts are crazy. I strike all of them. Even if there is insurance coverage, don’t give an insurance company an out over exclusions. You don’t want to get into a coverage battle.”


“That’s a tough class to insure,” said Daughrity. “Make sure the security firm has proper coverage. I even go a step further because a lot of carriers are either silent or exclude assault and battery on the security policy. You should have a lawyer look at the security contract. Spend the money. If you’re only going to have one contract reviewed, have your lawyer look at security not the artist contract.”


Matthews shifted the conversation to additional insured and sovereign immunity and asked, “Can a tribal nation name you as additionally insured? Can the federal government insure you? What about a state or a municipality?”


“The basics behind sovereign immunity is that the local government entity has some level of immunity from a claim, usually in tort – so personal injury, property damage, so civil, not criminal,” Epstein replied. “If somebody gets hurt or property gets damaged, there is a higher burden to go after that local government entity to get some recovery from them. Usually you have to prove there was some intentional conduct on behalf of the governmental body. Relative to sovereign immunity and additional insured, you need a permit to [work on that body’s property.] The permit has to come from the local government body. Anyone coming on their site has to list that body as an additional insured.


“A number of people have Native American casino interests here. You are well aware that someone doing work on a tribal site must specifically get registered. Vendors may not want to subject themselves to tribal courts. I would make sure to say to the venue ‘These national vendors are not comfortable being subjected to tribal court. Why don’t we just pick the local municipality.’ The tribal body is usually fine with that. They also don’t want to burden their courts. Just make sure it’s in the contract.”


Reinhold: “My experience with sovereign immunity is mostly on the artist side. When I represent artists performing at Indian casinos or state schools, I always try to have the end buyer limit their sovereign immunity. But often times they are not going to because their core business is not entertainment. They’re either a casino or a school. Your performance is really just ancillary. The agent can be clear with their client regarding the limitations – if there is a breach of contract, you can’t sue the buyer. So maybe get a deposit. Just be transparent with your client on what the rules are. The biggest problem is for the middle buyers. The state entity can’t protect the middle buyer. The middle buyer is contracting with the artist who wants indemnify for all of the normal things. So if you’re a middle agent, I would be careful weighing the two sides to that.”


“States can and will control what local governments are responsible for,” added Matthews. “Tennessee will say what you can sue Nashville for. It’s complicated.”


Epstein agreed, “You do not want to get the municipality involved. Avoid it at all costs.”


“You aren’t going to get indemnified by the state, but at least have a carve out,” Daughrity said. “If they say you need to indemnify them for all kinds of things, at least say ‘Except to the extent that it rises from their negligence or their willful misconduct.’ They may not protect you, but at least you can get rid of that part of the obligation to them.”


“I think that is smart with any contract,” Bernstein commented. “Everybody should take care of their own liabilities. If that happens, it will be a perfect world.”


“On indemnification language, I had a saying that was two or three sentences and it got expanded until it was 3 ½ pages,” Daughrity said. “Some stadium operator wanted to address one really weird specific issue. If he says that then I have to have a carve out. So, I went back to him with my original couple sentences, which basically said that each party is going to indemnify the other and its affiliates and subsidiaries, except to the extent that it arises from the actions of the party that is seeking the benefit of this provision.”


Reinhold: “Yeah, but if each party is responsible to indemnify the other for everything except for their own faults, then potentially they’re both indemnifying for the same thing. What I usually say is ‘I’ll identify you to the extent that directly results from my negligence.’ And depending on what side of the equation you are on, you may accept that or you may not. But it’s a good starting place.”


“I’m on both sides, because AEG operate venues and we operate tours, so I get into these arguments all the time,” said Bernstein. “Sometimes we don’t give mutual indemnity, because we don’t have to and we can get away with it. But I’ll still give the carve outs. If a band is playing on stage and they throw a guitar into the audience and that causes a problem, that’s not the venue operator’s fault. The promoter and the band should deal with that. If there is a slip & fall on the 400 level of your stadium, it has nothing to do with the band, other than they caused people to show up and pay money. That shouldn’t be on the promoter or the artist. So just be reasonable.”