Why You Need Insurance AND Liability Releases

At Equine Legal Solutions, boarding stables, trainers, riding instructors and other callers often ask us if they still need insurance if they have liability releases, and vice versa. The answer is, "Absolutely!" Insurance and liability releases play very different protective roles.

What Liability Releases Do

A well-drafted, properly executed liability release serves two very important functions. It can discourge potential plaintiffs from suing you, and by providing valid legal defenses, reduce the possibility they'll be successful if they do sue. If the liability release also contains an indemnification clause, as Equine Legal Solutions' forms do, you can also recover attorneys' fees and court costs from the plaintiff if you win the lawsuit.

What Liability Releases Don't Do

While liability releases may discourage potential plaintiffs, they don't guarantee you won't be sued. And, there's no such thing as the "bulletproof" liability release that's often requested. Some types of liability, such as intentional misconduct, can't be successfully disclaimed in a liability release. Furthermore, if the liability release doesn't include an indemnification clause and you are sued, you will likely pay tens of thousands of dollars to defend yourself and not be able to get those costs back from the plaintiff - even if you ultimately win.

What Insurance Does

If your liability insurance provides coverage for a liability situation, your insurer will take over your defense. That means the insurer will hire an attorney for you, defend your lawsuit, and if appropriate, negotiate a settlement on your behalf. If the insurer negotiates a settlement, the insurer pays the settlement amount. If you lose the lawsuit, the insurer pays the judgment. All of these payments, of course, are subject to the limits of your policy.

What Insurance Doesn't Do

Insurance doesn't discourage potential plaintiffs from suing you. In fact, the availaiblity of insurance often serves to encourage potential plaintiffs who think the insurer may just pay them to go away. The presence of insurance often represents a "deep pocket" and therefore an incentive for plaintiffs' attorneys to take cases on contingency.

While insurance may help pay for your defense, it doesn't provide a legal basis for defending the lawsuit. In contrast, when a plaintiff has signed a liability release, it provides the legal basis for assumption of the risk and other legal defenses.