By Wendy Tucker, AU, SDRMA Member Services Manager
Special districts pride themselves as being a community partner and will often make great efforts in spreading awareness, providing recreational activities as well as access to facilities and equipment for the public. It seems like a good idea to get a common goal completed. But what are the risks of allowing the public to use district owned equipment? Are you covered if a user causes property damage or bodily injury to another person or property, while using the district’s equipment? Let’s discuss.
Understand how your insurance policy works: Leasing to other individuals or groups does create an additional liability exposure for the district. Many insurance policies will not cover the liability for the acts of users other than employees. If the district is sued due to the acts of the user other than an employee, the insurance policy would not respond. Also, if the user is injured using the equipment, they could potentially also file a claim against the district for their injuries. Understanding how your policy works and if you are protected will help identify what additional coverage may be needed to allow others to use the equipment.
Consider creating a rental agreement with insurance requirements: Having a written agreement in place assures there is a common understanding of the terms of using the equipment in case of a loss. The lessee should have their own insurance naming the district as an additional insured. You may also consider requiring the user to have insurance that covers the equipment if it is damaged, lost or stolen. When loaning out equipment think of yourself as a rental company, similar to Sunbelt or United Rentals. They utilize a “Terms of Use” agreement to mitigate exposure.
Utilize the Manufacturer’s Operating Manual: The district should follow all requirements in the Manufacturer’s Operating Manual when using equipment; including safety requirements, set up, inspections, operations, and other factors. If you consider renting it out, you should be diligent about following and documenting the inspection and repair/replacement requirements. Always provide access to the manual, whether it’s a hard copy or online link. The rental agreement should reference adherence to the manual’s requirements including requiring that the renter wear any PPE required in the manual as well as other PPE requirements based on the renter’s specific operation. If the district rents the equipment to another employer, then the employer must also ensure they are complying with Cal/OSHA requirements when their employee operates the equipment.
Document inspections and maintenance: Documenting all inspections and maintenance is a critical step in verifying that the equipment is being kept in safe working order. If the equipment malfunctioned and caused loss or injury the district could potentially be liable if the equipment was not properly maintained.
Providing new services may create an exposure for a loss but with a thorough evaluation process, steps can be taken to reduce this exposure so you can continue to provide needed services to your community. Contact your risk manager or risk management provider for assistance with creating an effective plan to offer services in the safest way possible.