During the past two years, the number of lawsuits againstrecreation and entertainment business venues has steadily risen. Intoday's struggling economy, even the smallest incident can resultin a lawsuit.

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

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

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

These forms are designed to provide two benefits:

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

o Offer the insured the “Assumption of Risk” defense of tortlaw.

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

One area that is causing concern involves minors. If a minorsigns a waiver, it is usually not upheld in court. Agents should besure to advise their clients to include a parental or legalguardian signature section in the Waiver and Release.

There has been momentum toward accepting a properly signed minorWaiver and Release in many states, but this is not always a “bestpractice.” The primary requirement is that the minor must becapable of understanding the inherent risks involved in an activitywhen adequately explained.

An example would be a minor in his early teens playing on asoccer team, who will in all likelihood understand that getting hitby a soccer ball is part of and an inherent risk to participatingin the sport. However, a six-year-old minor most likely would notunderstand these “inherent” risks.

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

The enforceability of the release generally depends upon severalmajor elements:

o The wording must be clear and unambiguous.

Use simple words and terms that are easily understandable by theparticipant.

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

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

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

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

o The waiver-release should warn of the “range” of possibleinjuries 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 thecourts.

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

o All waivers should contain photograph and video releaselanguage.

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

A specific White Water Rafting waiver is not appropriate to usefor 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 thoselisted below, are very important in protecting the insured and thecarrier from frivolous lawsuits, mitigating jury awards, andactually educating the participant on what to expect whileparticipating in the program.

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

WHEN WAIVERS DON'T APPLY

There are recreational businesses that due to the nature oftheir operation do not lend themselves to the use ofWaiver-Releases and Assumption of Risk forms as a method oftransferring the risk of injury to the participant. These includebowling centers, ice skating rinks, arcades, family fun centers andtheaters, to name a few.

Risk management procedures that are closely followed anddocumented are the key to providing a safe environment for thepatrons and educating them in the risks of participating in thesetypes of activities. Documented procedures will also provide proofof a “standard of care” when an injured party is claimingnegligence or lack of safety procedures.

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

o Signage warning patrons of the inherent risks they mayencounter.

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

Posting in multiple languages is advised.

Some bowling centers have begun to post warnings on theirautomatic scoring machines. The team must read the warning andpress a designated button acknowledging the warning before bowlingcan 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 carpetand 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 areplowed, that cracks and holes are filled in, and areas are welllit.

o Have a documented/written equipment maintenance program.

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

This is especially important for interactive arcade games,skates, family fun centers that include motorized activities suchas kiddie rides and go-karts. Minor maintenance issues, ifneglected, 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 theactivities. In the event of an incident, the employee should betrained to immediately call a parent if applicable and complete anincident report that should include witness names phone numbers andstatements.

If emergency medical treatment is necessary, then managementshould make that call. At least one person trained in CPR and firstaid should be on staff at all times during the hours ofoperation.

o Surveillance cameras, of course, while costly, would be anexcellent investment and may qualify the insured for morecompetitive insurance coverage pricing.

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

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