"They Are Really Worthless, You Know"

John A. Dirkse, Assistant Vice President

Frank B. Hall & Co. Of Wisconsin

In the continuing "soft" marketplace, public entities must continue to work towards controlling losses, even in the face of lowering insurance costs. This is especially true when insurance companies consider loss ratios and their impact to the underwriting success of any particular line or classification of business they write. For when premiums are at a low, the impact of losses is greater than when the premium paid is more favorable to the insurance carrier.

Today, as always, the importance of controlling losses should be viewed with concern in order for any county to control their insurance destiny. Even when assisted by member-owned formations such as the Wisconsin County Mutual Insurance Corporation, each individual county must do it's part in order to control the cost and stability of their insurance programs.

In 1991, the Mutual has stepped up it's efforts in the loss control area in order to provide assistance for individual member counties. This article, like many others, is written to provide information, and hopefully answers, to loss control and insurance issues confronting counties on a daily basis.

Recently, one of the members of the Wisconsin County Mutual questioned the use of Liability Release Forms or Waivers for use in conjunction with boat rentals at a county park. My immediate reaction was, similar to that of many people, "They are really worthless, you know." The County had decided to use disclaimer or waiver forms when the public rents a boat for use at the park. In order to assist them, I offered to find out more about Liability Release Forms and how they should properly be used

I had always been disturbed by this perception, but not being an attorney, I simply relied on what I had heard from various adjusters and over time, began to believe in that perception. In order to truly assist in this request and others that would surface, I began to study what could be found on the subject. This article summarizes loss control aspects of Liability Release Forms and does not represent a legal opinion on the validity of individual forms or specific uses.

Perhaps the reason that release forms have been so misunderstood and their validity questioned is the fact that in our seemly litigious society they have been tested so often. Even more disturbing is that the forms that receive so much attention are those the courts have found to be flawed or invalid. When in fact, often these forms clearly demonstrate the intent of the parties and have been found to have provided some relief. Specifically with regard to sports-related activities, these forms do not always avert claimants from filing suit to recover damages.

From a loss control standpoint however, requiring these forms from all participants of an activity that has risk of injury can prove to be an extremely beneficial means of controlling losses. The forms original purpose was to release the provider of service from litigious or "sue happy" clientele, the use of the form now is one of definition of responsibility or understanding of the hazards associated with the risk bearing activity. Properly constructed the form requires that the individual acknowledge the risks associated with the activity and define or state each parties understanding of the risk involved.

For example, using the boat rental release as an example, the form allows that each party enters into an agreement that the renter understands that the County is free of liability for the conduct or resulting consequences of such conduct which would otherwise be negligent. Taking the example further, if an operator of the rented boat was injured as a result of the negligence and carelessness of other boaters, the County may be released from liability as a result of the agreement executed when the form was signed. However, the release would not release the County from liability resulting in injuries from the County's negligence.

In other situations, releases have been limited by or to a particular type of injury, claim, demand or obligation of each of the parties. Where this criteria was met, the intent clear and the form found not to be ambiguous, the courts have found in favor of the defendants.

In addition to a properly worded and constructed form, the operators of the risk bearing activity, in this case boat rentals, must properly apprise each renter of the risks associated with the activity and provide proper instruction as to rules, regulations and safe operation of the boat. The wording of the form must fully inform the renter of these risks involved, otherwise the renter can argue that he or she had not assumed that risk.

Carefully constructed to include mention of the specific risks involved and the potential for injury, the form may be readily accepted. On the other hand, if the is broad and ambiguous the form may be insufficient to provide release of liability. The criteria for validity involves several considerations regarding the rights and responsibilities of the parties to the agreement. Generally speaking of the forms reviewed the following should be discussed with Corporation Counsel or outside counsel when drafting the document:

1. Intent, Purpose and Clarity of the form
2. Incidents or Situations that may be contemplated during the course of involvement in the activity.
3. Review Applicability of Statutory Laws

After initial draft of the form, review past court decisions and statutes relating to activities similar to those covered by the form. This will give you insight as to whether or not your document will stand the test or criteria already established in the Wisconsin. As Administrator of the Wisconsin County Mutual and "reformed believer" in the validity and potential loss control tool present with liability release forms, we encourage the continued use of such documents.

Once the document has been drafted and put into use, please "manage" it's use for conformity with no exceptions. That means that anyone who participates in the activity covered by the form, must sign that form. In addition to public use of the form, please forward copies of the form for discussion and review with your insurance carrier. In all likelihood, they will want to present the document to their claims department for use after a claim for damages is received and during the investigation procedure and ultimately for defense or settlement of the claim.

As stated earlier, the above article represents a non-legal opinion as to the use of liability release forms. Please work with your legal counsel to draft these documents and completed discuss and instruct all individuals affected by the form in it's proper use. If any questions have been generated by this article, please contact legal counsel, your insurance agent or carrier for their assistance.