As summer evolves, so does the increase in facility rentals for occasions such as weddings, family reunions and other events requiring larger community spaces. Municipalities and non-profit organizations are often the primary providers of these facilities and play an important role in supporting community use.
With increased demand comes increased exposure to risk. These risks can often be overlooked without proper planning and oversight. The RMA Insurance team has prepared the following guidance to help municipalities and organizations better manage facility rentals and support safe, well-managed use for all parties involved.
Facilities may also be used for ongoing or long-term rentals, such as user groups from the community, including 4-H clubs, sporting groups, or educational organizations. These types of arrangements typically require more detailed agreements than short-term rentals and should be clearly defined within the municipality’s or ANI’s (Additional Named Insured’s) user agreements.
Duty of Care and Site Safety
What responsibilities do owners have when renting facilities?
Municipalities and non-profit organizations (“owners”) are responsible for ensuring their facilities and surrounding grounds are safe, well-maintained, and free of hazards. This includes routine inspections, ongoing maintenance, and prompt correction of any known issues.
Under the Occupiers’ Liability Act, owners owe a duty of care to all entrants, including trespassers. This means known hazards must be identified and addressed regardless of how or why an individual is on site.
Key considerations include:
- Maintaining clear, well-lit pathways, parking areas, and entrances
- Monitoring for hazards such as uneven ground, loose gravel, or seasonal conditions like ice and snow
- Conducting regular inspections of both interior and exterior spaces
Slip and falls continue to be the biggest risk for outdoor exposure to any facility. Implementing inspection checklists and ensuring proper lighting can significantly reduce this exposure. Facilities should also maintain and regularly inspect safety equipment, including:
- Fire extinguishers
- First aid kits
- AED’s and emergency response and evacuation plans should be documented and clearly communicated, including within rental agreements.
Type of Rental Agreements
How should rental agreements be structured?
All facility or grounds use should be supported by a formal rental agreement. These agreements define responsibilities and are one of the most effective tools for managing and transferring risk.
Rental agreements will vary depending on the type and duration of use. These may include short-term event rentals, one-time bookings, or long-term agreements with user groups. Longer-term arrangements typically require more detailed terms and conditions.
Different renters present different levels of risk. Municipalities should assess each booking based on the nature of the activity.
Medium-to-high risk rentals – in which proof of liability insurance should be required prior to approving any booking – may include:
- Events involving alcohol,
- Activities where a business is operating (such as paid instruction),
- If an instructor is operating as a volunteer on behalf of your organization, the current General Liability coverage through RMA will respond should an incident occur, and no additional coverage is necessary.
- When an instructor rents your space to reach a class to the public for a fee – regardless of the subject matter – the instructor is operating as a business and you should require proof of liability insurance in the form of a certificate of insurance prior to permitting them to teach.
- Events involving children or large groups.
Lower-risk rentals, such as hobby groups or meeting-based activities, (e.g., scrapbookers, quilters, arts groups), may present limited exposure. However, expectations and responsibilities should still be clearly defined within the agreement.
Rental agreements can be reviewed in consultation with your RMA Risk Advisor.
Liability Insurance and Compliance Protection
What insurance requirements should be put in place?
As a municipality or ANI group insured through RMA Insurance, your Commercial General Liability (CGL) policy provides coverage up to the limits outlined within the policy. When rental agreements are in place, renters can purchase necessary insurance for the event as listed.
Municipalities should consider requiring:
- A minimum of $2,000,000 in liability insurance for renters
- Proof of insurance in the form of a certificate
- Listing the municipality or facility owner as an additional insured
Additional considerations include:
- Host liquor liability coverage when alcohol is served, along with appropriate permits
- Use of reputable providers such as IRC or PAL Insurance for event-based coverage
- Valid food service certifications for any kitchen use by renters or third parties
Property Checks, Protection and Inspections
What should be reviewed before facilities are used?
Many organizations have small-to-medium-sized facilities that are not regularly used, such asa Community Hall that only hosts fifteen to twenty events a year or a seasonal property that is only open in the spring. A thorough inspection should be completed prior to any rental or event, as facilities that are not used regularly may present additional risk when reopened for public use.
Exterior checks should include:
- Roof condition, including snow load where or when applicable,
- Eavestroughs and drainage systems,
- Steps, ramps, and handrails to ensure they are in good working order and free of damage.
Interior checks should include:
- Mechanical systems such as furnaces and filters,
- Plumbing systems, including water tanks and piping
- Floors, stairs, and access points.
Identifying and addressing issues before use helps prevent both operational disruptions and potential liability.
Restricted areas, including mechanical rooms, storage areas, crawl spaces, and outbuildings, should be securely locked. This helps prevent individuals from entering unfamiliar or potentially hazardous areas.
Operations and Controls
How can facilities be effectively managed over time?
Effective operations and facility management rely on clear documentation, coordination, and proactive oversight. Municipalities should maintain a written maintenance schedule outlining routine tasks and inspection timelines. There are many links and documents that can be useful to maintain a well-functioning and vibrant facility that all the public in your area can enjoy for years to come. These include:
- RMA Insurance: Insurance FAQ
- Instant Risk Coverage: Smarter Business Insurance Solutions
- Pal Canada: Special Events Liability
- CIFS Food Handler Certification
Effective implementation of these risk controls will ensure the safety of all visitors and promote a well-managed facility with minimal risk and hazards. Please reach out to your assigned Risk Advisor or the Risk Team at risk@rmainsurance.com for any questions or concerns relating to these facility rental best practices.