For some businesses and event organizers, the risk that their clients and customers could be injured while participating in activities sponsored or offered by the business creates the need for a business liability waiver.
A lawsuit resulting from accidental injury may create insurmountable financial problems for a business, so understanding the nuances of a business liability waiver can make a huge difference in terms of legal protection.
What is a Business Liability Waiver?
A business liability waiver document releases the business from legal responsibility for injuries sustained by customers and clients while engaging in certain activities. For example, a personal trainer waiver form signed by a client means that the trainer and the business they represent aren't legally liable if the client becomes injured while following the training program.
Business liability waivers may also be called by any of the following names:
- Legal release
- Waiver of liability agreement
- Liability waiver form
- General waiver
- Online liability waiver
- Business liability waiver
- Hold harmless agreement form
- Unconditional or conditional waiver form
What is a Release of Liability Waiver?
This form is a legal document that goes into force when the releasee, the company or person who could potentially be sued, and the releasor, the person stating they take responsibility for the risks associated with their participation, sign and date the agreement.
A release of liability waiver can be used when a business wants to protect themselves from legal action resulting from an accident, or when there's been an accident resulting in property damage or injury and both parties want to settle the matter out of court.
When Does a Business Need a Liability Waiver?
It's smart to get clients to sign a business liability waiver before working with them. A general release covers current and future claims against the business and includes claims that could commonly be brought against a business by a customer.
Entertainment and event companies may use a standard business waiver for participation in an event or activity as a condition of allowing admission to or participation in any activity that could result in an injury. Athletic events, paintball tournaments, and some sports leagues require this type of liability waiver form.
Business owners who have a general liability insurance policy may think they don't need to deal with business liability waivers. While general liability insurance is essential, as it covers damages associated with basic risks across every industry, it isn't a replacement for liability waivers forms.
General liability insurance covers losses due to bodily injury, personal and advertising injury, and property damage. A signed liability waiver form shifts the legal responsibility away from a business owner or company, but it doesn't completely remove that responsibility.
Liability release forms may not be legally enforced, depending on the circumstances of the situation. If the waiver form isn't enforced after a customer is injured during a company-sponsored or company-facilitated activity, business liability insurance could protect the company from devastating financial consequences of the injury. Businesses need liability insurance in addition to liability waivers.
How Should a Business Get a Liability Waiver?
There are a variety of free, well-written business waiver forms available online. Here's what an online waiver should include:
- Releasor: any person promising not to take legal action, or sue, the organizer of an event or owner of a business that they are attending or participating in
- Releasee: the activity organizer or business owner in charge of the event or activity and who risks being sued by participants
- Effective date: the date when the waiver form goes into effect
- Event: description of the activity, event, or circumstances governed by the waiver form
- Consideration: an optional part of the agreement that offers details about promised inaction, amount of money, or something of value offered in exchange for signing the document
- Governing law: details about which state laws the parties will use to solve any future disputes
Any business that offers services where clients are at risk of injury should require all participants to sign a standard business liability waiver form. Release forms provided online may not address the needs of an individual company. For businesses that facilitate participation in activities like bungee jumping, parasailing, ultra-marathons, deep-sea fishing, bike races, music festivals, or travel tours it's wise to consult an attorney for help designing the waiver form. In many cases, offering an online liability waiver that participants are required to fill out and bring proof of to the event is also a good idea for businesses to follow.
For businesses who need customers to sign waiver forms on-the-go or who process numerous waivers, a digital smart waiver that customers can sign using a tablet or mobile device may be the ideal solution. Some businesses have customers sign digital, online waivers on their website before their first visit. This offers clients the time they need to read the online waiver carefully so they can become fully educated about any risks associated with the activity. It also allows the business to keep signed waivers on hand indefinitely, without keeping track of paper copies.
What Protection From Lawsuits Does a Business Liability Waiver Provide?
A release of liability form does not guarantee that a business won't be sued, however. Customers and clients can still sue for gross negligence or tort-related breaches.
The liability waiver represents proof that a customer waived their right to file a liability claim if they become injured while participating in a service or event provided by the company or one of its representatives. Some business insurance policies require the use of liability waivers as a condition of covering the business.
While the business liability waiver is a 100% guarantee that the injured party won't sue the company, it does reduce the frequency of negligence suits.
General liability insurance limits financial problems resulting from lawsuits. All businesses should have a policy designed for their company. Owners and managers are responsible for conducting a small business risk assessment to understand how best to manage that risk. Ideally, businesses that could potentially be sued if their clients become injured should have liability insurance and use a business liability waiver form.
Only 44% of small businesses are open for more than four years. Liability loss is one of the leading causes of business failure. Requiring clients to sign a business liability waiver form is a great way to help reduce the chances that a lawsuit will cause irreparable harm to the company.
Ideally, every small and medium-sized business should have both a general liability insurance policy and a standard liability waiver form.
Next Insurance provides affordable business insurance policies tailored to your specific needs with 24/7 online access. Get an instant quote to protect your business with general liability insurance.