During the past two years, the number of lawsuits against recreation and entertainment business venues has steadily risen. In today's struggling economy, even the smallest incident can result in a lawsuit.

As more people lose their jobs and medical insurance benefits, they will turn to litigation to recover the costs for injuries that may or may not have been the result of the venue's negligence.

How can we as an industry mitigate the litigation costs and help our customers run safer operations–a win for the insured and the carrier? The answer is by providing them with important risk management tools that will help reduce the potential for litigation and mitigate jury awards.

For most recreational operations such as indoor climbing gyms, sports centers, paintball/laser tag facilities, and outfitters and guides programs, the most utilized and required risk management tool in the insurance industry is the “Waiver-Release and Assumption of Risk” form that must be signed by the participant.

These forms are designed to provide two benefits:

o Transfer responsibility of injuries and property damage from the insured to the participant through the Waiver-Release & Indemnification clause.

o Offer the insured the “Assumption of Risk” defense of tort law.

Adult Waiver-Release and Assumption of Risk laws vary from state to state. A few states will not enforce waivers, and many states have very strict interpretations of the waiver language. Other states are more lenient in their interpretations.

One area that is causing concern involves minors. If a minor signs a waiver, it is usually not upheld in court. Agents should be sure to advise their clients to include a parental or legal guardian signature section in the Waiver and Release.

There has been momentum toward accepting a properly signed minor Waiver and Release in many states, but this is not always a “best practice.” The primary requirement is that the minor must be capable of understanding the inherent risks involved in an activity when adequately explained.

An example would be a minor in his early teens playing on a soccer team, who will in all likelihood understand that getting hit by a soccer ball is part of and an inherent risk to participating in the sport. However, a six-year-old minor most likely would not understand these “inherent” risks.

The key to the waiver-and-release procedure of any operation is to make sure that all participants read and sign the waiver, and that the insured keeps the waivers for a minimum period of time as required by their insurance carrier. Most require a minimum retention period of two years.

The enforceability of the release generally depends upon several major elements:

o The wording must be clear and unambiguous.

Use simple words and terms that are easily understandable by the participant.

o The print must be large enough to be easily read–10 point type at a minimum.

o The release must be standalone and not combined with any other form.

Co-mingling forms may confuse the participant and render the release unenforceable.

o Roster-type (multiple signature) waivers are harder to enforce, but not unenforceable.

o The waiver-release should warn of the “range” of possible injuries or circumstances.

Avoid being too specific. The form should include words such as: “risks both known and unknown,” “in all phases of the activity,” “while in or about the premises,” and “disability or death.”

Being too specific narrows the interpretation of the risk by the courts.

o The waiver-release wording should relieve the insured from negligence to “the fullest extent permitted by law.”

o All waivers should contain photograph and video release language.

o Waivers should be updated regularly to include any new activities or operations.

A specific White Water Rafting waiver is not appropriate to use for a newly added Guided Mountain Bicycling operation.

o The waiver cannot violate any state laws or public policy.

Waivers combined with other risk management tools, such as those listed below, are very important in protecting the insured and the carrier from frivolous lawsuits, mitigating jury awards, and actually educating the participant on what to expect while participating in the program.

With today's economic hardships, bailouts and the overall litigious climate, every layer of protection–whether 100 percent enforceable or 50 percent enforceable–is a needed layer of protection between the claimant, the insured and the carrier.

WHEN WAIVERS DON'T APPLY

There are recreational businesses that due to the nature of their operation do not lend themselves to the use of Waiver-Releases and Assumption of Risk forms as a method of transferring the risk of injury to the participant. These include bowling centers, ice skating rinks, arcades, family fun centers and theaters, to name a few.

Risk management procedures that are closely followed and documented are the key to providing a safe environment for the patrons and educating them in the risks of participating in these types of activities. Documented procedures will also provide proof of a “standard of care” when an injured party is claiming negligence or lack of safety procedures.

Some procedures that should be implemented by many of these types of operations include:

o Signage warning patrons of the inherent risks they may encounter.

Signs must be in conspicuous areas and be easily read and understood.

Posting in multiple languages is advised.

Some bowling centers have begun to post warnings on their automatic scoring machines. The team must read the warning and press a designated button acknowledging the warning before bowling can begin.

o Have a documented/written self-inspection checklist.

The checklist should include items such as clear walkways, burned out light bulbs, emergency exit signs, tears in the carpet and broken chairs, to mention a few.

The checklist should also include the date and time that repair, maintenance or replacement was done.

Make sure the sidewalks and parking lots of the facility are plowed, that cracks and holes are filled in, and areas are well lit.

o Have a documented/written equipment maintenance program.

This should include the date and time the equipment was inspected and if repairs were performed, and it should indicate that what that repair was.

This is especially important for interactive arcade games, skates, family fun centers that include motorized activities such as kiddie rides and go-karts. Minor maintenance issues, if neglected, can result in a major lawsuit if someone is injured.

o Have a strong incident reporting procedure.

Assign designated employees to be “Game Masters” who observe the activities. In the event of an incident, the employee should be trained to immediately call a parent if applicable and complete an incident report that should include witness names phone numbers and statements.

If emergency medical treatment is necessary, then management should make that call. At least one person trained in CPR and first aid should be on staff at all times during the hours of operation.

o Surveillance cameras, of course, while costly, would be an excellent investment and may qualify the insured for more competitive insurance coverage pricing.

Waivers and risk management procedures do not guarantee a lawsuit will be dismissed, but they will help tilt the scales of justice a little more toward the business owner's side.

Grace Cunningham is managing underwriter at R.B. Jones Insurance. She may be reached at [email protected].