SUMMERTIME IS in full swing, and people across the country are dusting off their sports gear and getting into the fun. Facilities like camps, campgrounds and resorts are swarming with American families who are eager to be active and entertained. It’s not all fun for the companies that operate these types of facilities, though – they face a wide and varied range of risk exposures that, if not properly covered, could lead to fi nancial and reputational ruin.
Mother Nature’s risks
The operators of camps, campgrounds and resorts require a broad range of general liability coverages, including fi reworks liability, expanded bodily injury, non-owned watercraft up to 51 feet, personal and advertising injury, transmissible pathogens coverage, cyber liability, and crisis response coverage. They also need commercial auto, excess liability, workers’ compensation and various property coverages, including business interruption, equipment breakdown, and communicable disease and food contamination extensions.
“Campgrounds are usually based in very rural, wooded locations and are susceptible to incidents and claims associated with storm damage, tree fallings, wildfires and other environmental elements that Mother Nature seems to conjure up,” says Ron Norton, vice president at K&K Insurance Group. “Also, a lot of campgrounds have lakes and open water, and therefore have the risk exposure around campers or patrons who go swimming at night unsupervised.”
Summer camps differ slightly from resorts and campgrounds in that children are left by their parents overnight in the care of the camp operator. Whenever children are involved, the complexity of the coverage increases, and agents must have a higher level of knowledge. In order to be eligible for coverage from a reputable insurer, summer camps must be ACA- or CCCA-certifi ed and have a system in place for personnel screening and criminal background checks, along with written sexual abuse and molestation procedures.
Camps are also required to carry a range of general liability coverages, including expanded bodily injury, camp director liability and employee/volunteer liability. Business interruption is also an important coverage feature. “With all the wildfi res and serious weather events that have occurred, there have been cases where camps have been forced to evacuate, which can lead to signifi cant expense,” Norton says. “Luckily, business interruption costs are covered under most good policies.”
One such damaging weather event, Hurricane Sandy, had catastrophic consequences for an insurance carrier that had been operating in the campground space for more than 30 years. The carrier experienced severe loss activity in the aftermath of the hurricane and left the business altogether in 2015. “That created a vacuum for other carriers to capture risk types that were left with limited alternatives,” Norton says.
Tightening health and safety regulations have impacted many areas of insurance in recent years. State departments’ advocacy for claimants and public protection has caused carriers to raise prices to protect themselves from frivolous lawsuits or damages. However, different states approach and assess liability in wildly contrasting ways.
“When looking at a case in southern Indiana versus a case in New York City, the awards are going to be signifi cantly different for the same type of injury,” Norton says. “That creates differences from a pricing perspective. In less litigious climates, you see lower costs.”
Although Norton believes most agents are not necessarily well informed on the coverages needed by clients who operate facilities like camps, campgrounds and resorts, he does believe the space represents a lucrative opportunity. However, he urges caution for agents who are not specialists.
“Just because the quote summary says you have certain coverage, it does not mean you necessarily have it,” he says. “There are always conditions, so make sure you read the forms. Ask for clarification on the policy, and make sure you know what you’re selling.”
High-octane fun
In addition to participating in activities this summer, many American families will attend events as spectators. Motorsports is one of the most popular spectator sports in the country, but for obvious reasons, it’s also one of the most dangerous. As a result, the venue, the sanctioning body and the race teams are all required to purchase their own separate coverage.
Claims resulting from a motorsports event generally fall into two categories: spectators and participants. For spectators, the most common types of claims result from slips and falls typical of any venue that hosts spectator sports. These can occur anywhere in and around the venue, including the garage area where the teams and racers congregate and work on the cars. Accidents involving spectators and golf carts, which are used to transport drivers and other race personnel around the venue, are less frequent but not uncommon.
Among participants (any race team member at the track), the most common claims are workers’ comp claims resulting from generic manual labor related injuries.
“We don’t often see incidents where a pit crew member gets run over by a race car – the team members are professionals and know how to act in those areas not to get hurt,” says Scott T. Carroll, an underwriter and broker in the entertainment division at Take1 Insurance. “We also don’t often see driverrelated claims because drivers typically are not covered. They are independent contractors, so they carry their own coverage independent of what the team carries.”
In addition to needing an over arching general liability policy to cover their third-party exposures, race teams also need property and inland marine coverage to protect their costly equipment when it’s both in transit and at the race venue. Teams also need auto coverage, workers’ compensation, off-track and storage coverage (a bolt-on to inland marine), and an umbrella policy that sits over all of their liability related coverages.
“Some race teams also carry excess liability coverage for their owners and sponsors, which is unique to motorsports,” Carroll says. “It is excess coverage that protects the interests of the owners, sponsors and drivers for covered losses where limits might be insufficient for possible claims where they are named in a race-related incident – for example, after a tragic accident involving multiple spectators.”
Although there’s a steady fl ow of new race teams entering the space and requiring insurance, in most cases they are taking the place of a team that went out of business. As a result, the volume of business has somewhat stagnated in recent years.
Motorsports is a small, expertise-driven space, and most insurance carriers only want to deal with brokers who are specialists in the industry. It is, however, a space with few barriers to entry and few competitors for brokers and agents looking to boost their book of business. But, due to the size of the space, everyone tends to go for the same accounts.
“A broker looking to get into this space should start in the grassroots, with the smaller circuits and teams,” Carroll says. “If you can help those teams get coverage, you can build experience and a reputation, and that wins the day. You have to work o a lot of shoe leather to get that experience, but it pays off in this business.”
