These and many other questions face the ski area operator in his attempt to keep insurance costs within bounds. Realizing this, the directors of the National Ski Areas Association decided that an industry approach to insurance problems could produce distinct benefits to member areas. Research has shown that areas meeting the standards of the American Standards Association Safety Code for Aerial Passenger Tramways have a significantly lower liability claims frequency. In addition, the support of the Association and the promise of a larger volume of business should enable a qualified insurance company to provide improved service and lower costs to participating areas.
Therefore, the NSAA established an overall insurance plan for ski areas which provides broad insurance coverage at an improved cost, expert loss control and a series of lift and operational inspections. The plan is being administered by Lukens, Savage & Washburn, a New York-Philaphia-Boston brokerage firm. Representatives are located in San Francisco, Denver, Salt Lake City, Seattle, and Chicago as well.
A stringent inspection is necessary so that only well-managed areas will be included in the plan. An initial inspection is performed by a professional engineer experienced in lift technology, using the ASA Code as a guide.
The area operator will be asked to absorb the cost of the first inspection at rates which will not exceed $100 per chair or gondola lift, $75 per T-bar or similar surface tow and $25 per rope tow.
For loss control, improved accident report forms have been designed. Claims submitted to the insurance company will be carefully reviewed as to the possible degree of negligence, if any, on the part of the area operator. Downhill claims will be vigorously resisted, but on lift claims where the area operator is at fault, prompt and fair settlements will be made utilizing loss adjusters thoroughly familiar with ski law and ski accidents.
The third element of the plan is broad liability insurance coverage especially designed for ski area operators. A Comprehensive General Liability policy is being offered on terms broad enough to cover all operations of the ski area, winter and summer, including the ski school, ski shop, ski rental shop, restaurant and bar, if any. Additional exposures, such as lodgings, may also be included. For operations conducted under contract or concession, the policy includes the “contingent liability” of the area operator and, if desirable, the interest of the concessionaire may be included for an additional charge. Also, licensed or leased automobiles may be included if operated by the ski area.
The basic limits provided are:
- Bodily Injury Liability
$100,000 per person
300,000 per occurrence
300,000 aggregate - Property Damage Liability
$25,000 per accident
25,000 aggregate
The following modifications of coverage also be included:
$100 deductible per claim
A deductible has been found extremely effective in reducing insurance cost by eliminating small “nuisance” claims.
Personal Injury coverage
This includes coverage for claims of false arrest, detention, imprisonment, malicious prosecution, defamation of character, libel, slander, invasion of privacy, wrongful eviction or wrongful entry.
Products Liability coverage
This extends the policy to cover liability for injuries or damage arising out of goods or products sold, handled or distributed by the area operator or by concessionaires.
Interest of Employees as Additional Assureds
This includes employees and paid ski patrolmen as individual assureds under the policy in order to provide them with defense and insurance should they be named individually in a suit along with the ski area. This extension is a direct result of claims which have been made in the past.
Liquor Law Liability coverage
This endorsement covers the liability of an operator of a bar for injury to a customer or third party under any law covering the sale of alcoholic beverages.
Malpractice Coverage
This endorsement covers the area operator for his liability for possible malpractice by anyone performing services for injuries sustained by a guest.
In summary, the liability contract is broadly drawn and specifically designed to fit the unusual characteristics of a ski resort. At the same time, the plan is flexible enough to adapt to each participating ski area.
Higher limits of coverage are available under an “Umbrella Liability” form—the broadest possible—in amounts of $500,000, $1,000,000 or $2,000,000 in excess of all primary liability insurance. In addition, this policy provides coverage for a number of additional possible liabilities, normally not covered in a general liability policy, over a “deductible” of $10,000.
The plan also offers, on an optional basis, “All Risk” Physical Damage Insurance on ski lifts and tows, terminal buildings, snow making machinery, including pumps, pump houses and piping, and any other structures on a mountain, such as warming huts, canteens, etc. The policy covers not only physical damage to this equipment but also the loss of profits arising out of the interruption of its operation. Deductibles of from $500 to $5,000 will be available to reduce premium costs. This section may also be extended to include unlicensed operating equipment, such as bulldozers, sno-cats and rollers with a deductible of $100.
While the plan is designed on a “group” basis for well-managed member areas of the NSAA, each area is rated individually, based on inspections, size of lift receipts, extent of operations, past loss experience and location. The General Liability policy is written at “manual” rates for the various states, subject to modifications to be awarded, according to the underwriter’s judgment, on the basis of the above factors. The final “rate” is applied against ski lift and ski school receipts only, and no other receipts will enter into the final premium audit. The NSAA believes that costs for liability, umbrella liability and physical damage coverage will be significantly less under their plan.
