LEISURE RISKS/PAY FOR PLAY

Rough Notes, Sep 2007 by France, Larry G

You pay your money and you participate in the activity. In other words you are part of the action, not sitting in the bleachers. Because of your active participation, you also increase the chances that injuries may occur. Of course, the degree of exposure varies with the activity. Bowling centers present a lower degree than amusement rides.

The types of risks that fall under this category range from amusement rides to golf courses, paintball centers to trail rides.

Let's take a look at a couple of examples-one that has been around for some time and the other, a relatively new type of entertainment.

According to David Hatlem, executive vice president of Club Programs at Bollinger, Inc., "There are approximately 16,000 golf clubs/courses in the United States. It is estimated that about 5,000 are considered private clubs. The remaining clubs are semi-private (limited number of annual memberships), and daily fee courses. While there are currently a significant number of carriers that will insure clubs, the coverage provided can vary as wildly as the typical amateur golfer's driving capability off the first tee.

"The range of clients and exposures in this sector also varies dramatically," says Hatlem. "A highly prestigious private club with a limited membership requires a completely different level of coverage from a municipally owned daily fee course or driving range operation. Some insurers will treat the club as a simple property risk and standard liability exposure.

"Others have broadened definitions that are tailor made for the club's liability and property exposures," he continues. "Understanding the exposures and club needs in order to fully insure its assets are critical when placing the insurance."

Hatlem explains that clubs "are striving to compete in the ever-increasing segment of family hospitality and entertainment. Due to this, a wider range of exposures is now becoming part of the club's environment. Many private and semi-private clubs are enhancing their entertainment options and services. The traditional club exposures of golf, swimming and tennis will be prevalent in all private and some semi-private clubs.

"However, the expansion into less traditional activities can include health club exposures including weight lifting/training, spa services and day camps for children," he continues. "Childcare and the subsequent exposures also increase the need for the correct risk management procedures. In order to make a club a year-round experience in locations where the traditional activities are curtailed due to weather, there are additions such as crosscountry skiing, sledding, skating and hunting that may be provided and increase exposures."

An insurer will typically need to understand controls put in place for valet parking, liquor service, pesticide/herbicide application and storage, pollution exposure, and commercial auto. D&O and fiduciary liability as well as workers comp are also exposures that many clubs must address. Additional insureds under the policy should include employees, club members, volunteer workers, golf and tennis professionals, Hatlem suggests.

"Property coverage and corresponding extensions will apply to buildings and personal property. The limits available will also vary widely based upon the insurer. 'Tee to Green' coverage is an extension and provided on a special perils basis. This coverage defines the limits that are applicable to the tees, driving range, cut fairways, greens, cut and maintained roughs and other maintained surfaces found on a golf course. The availability of wind and hail coverage and deductibles will vary based on the location of the club. Other unique coverages for a club could include 'errant golf ball' and hole-in-one reimbursement expense," offers Hatlem.

One of the newer forms of leisure risks is inflatable play structures. What was mostly an attention getter for one-day promotions and children's birthday parties now is utilized in several ways to provide participating entertainment. Placing of coverage was very difficult in the beginning as there was no history to base underwriting or rates upon. For many underwriters, that simply meant that when asked if they would cover the risk, the answer was "No."

Dan Meyer, national program underwriting director at Fireman's Fund, says: "The inflatable structure industry is a fast growing business segment that gives individuals an opportunity to start a business with a modest investment of capital and labor. It is also an attractive business for larger enterprises catering to the broad field of entertainment.

"Up until recently, fixed location amusement parks or traveling carnivals offered the only alternatives for children and young adults to experience the thrill of amusement rides. Today they are brought to the backyard, schoolyard, and community park for an afternoon or a few days. Inflatable play structures make this possible and the industry is growing rapidly. Outdoor rental companies, indoor entertainment centers and event companies are the largest purchasers of inflatable play structures," Meyer adds.