According to the Haunted House Assn., an industry trade group, there aremore than 2,000 fee-charging haunted attractions in the U.S., andanother 300 amusement facilities offering some sort ofHalloween-themed events, as well as another 1,000 seasonalattractions produced by local charity groups operating eachOctober.

The haunted house industry generates between $400 and $500million in ticket sales, the HHA estimates, and is the anchor for aboatload of vendor industries that supply props, costumes andspecial effects for these venues. The industry's annual premieretrade event, HauntShow,features more than 100,000 square feet of props, animation andspecial effects, and draws attendees from around the world.

This trend represents a scary-good opportunity for independentinsurance agents specializing in the coverage, says Larry Cossio,president of CossioInsurance Agency in Simpsonville, S.C. Cossio addressed thetricks and treats involved in making haunted attractions an agencyspecialty.

Learn more by clicking on the following slides.

1. Knowwhat sort of coverage is needed.

Like any other business, haunted houses need general liability,with typical limits, and $1 million/$2 million aggregate. If theproperty is actually owned by the operator, they'll need standardproperty coverage, including contents–a huge, expensive, high-techinvestment for most venues. If the property is leased, they'll justneed contents coverage—which, depending on the elaborateness of thevenue, can run into the hundreds of thousands of dollars, Cossiosaid. The venue will also need workers' compensation for bothemployees and volunteers.

For the increasingly popular zombie-hunt events, which aresimilar to paintball, the venue will need general liabilityinsurance for participants to cover accidental medical coverage incase of injuries, with the same limits as above.

Premiums typically start at a minimum of $1,000 for basiccoverage and can go as high as $40,000. Pricing depends on thenumber of participants and/or gross sales, Cossio said. Marketingfor haunted houses starts 5 months before Halloween, set-up onhaunted houses begins at least 30 days before doors open, andcoverage starts when the policyholder takes possession of theproperty.

2. Learnhow to market this specialty.

Cossio Insurance Agency, which has specialized in hauntedattractions since 1999, does most of its specialty marketingonline through its 225 livewebsites—with specialties ranging from bungee jumping to mudruns, paintball and rock climbing walls. Most of their new businesscomes through referrals, and no two risks are the same, Cossiosaid. The agency places business nationwide for about 30 hauntedhouse attractions, with most being temporary set-ups. Primaryinsurers for this coverage include Scottsdale, Philadelphiaand Nautilus.

3. Find out about the emerging trends in haunted houseattractions.

Although the growth of fixed haunted sites has been slowerbecause of the expense of the building, overall seasonal eventshave grown about 10 percent per year, Cossio said.

A new wrinkle that reflects the popular fascination with allthings zombie is the increasing popularity of “zombie shoots,”Cossio said, which he estimates have grown by about 25 percent overthe last several years. Similar in layout to a paintball field,zombie shoots feature costumed, padded actors who jump out atpatrons, who then “shoot” them with hand-held Airsoft-typeguns—replica firearms that shoot non-metallic pellets–or with gunsfixed onto trailers that drive through wooded trails.

One of Cossio's clients, Travis Krause, is introducing anextreme mashup between the zombie shoot and the traditional hauntedhouse with his AdventureCombat Ops events. Krause, whose background is in U.S. militaryspecial ops, is using vacant buildings in different cities—startingwith Miami in early November–to stage elaborate “post-apocalyptic”zombie shoots using actors from the U.S. Army Rangers, SpecialForces, Navy SEALS and Delta Force. Patrons receive severalhours of weapons training before embarking on their “missions,” andcan upgrade their experience packages with specialized equipmentand costuming. Krause eventually plans to expand Adventure CombatOps to locations in most major U.S. cities.

4. Knowwhat a typical claim looks like–and how to prevent it.

Heart attacks? People dying from fear? Nope. Like mostbusinesses, the most common claims arising from haunted houseattractions are your basic slip-and-fall injuries, Cossiosaid.

And although there can be costly claims involved—such as anasthmatic teen whose parents filed a wrongful death lawsuit after attending a St. Louisattraction–policyholders can mitigate most risk with a few simpleprecautions.

As with any haunted attraction, Cossio and his clients gothrough buildings and outdoor staging areas with a contractor tosee that they are structurally sound. For outdoors events,underwriting guidelines are standard: lit trails, trip-and-fallprevention and sites must pass fire department inspections.Venues taking patrons through the site ontrailers, typically in groups of 25, must have anemployee on each vehicle and a tailgate. Because 95 percent ofoutdoor events are on preexisting paintball fields, the locationsare usually in good condition, he said.

To prevent claims, Cossio recommends the following:

• Obtain all required city inspector and/or fire department priorapproval
• Make sure any walk-throughs are as “non-aggressive” aspossible, ensuring that costumed characters do not make physicalcontact with patrons
• Avoid using steps or steep inclines and declines
• Maintain appropriate spacing between costumed characters, andspacing of 5 feet to 8 feet between the characters and patrons
• Tape off areas featuring “live” props such as chainsaws
• Avoid anything “extreme,” such as live animals like snakes orrats, open flame or trap doors
• Clearly mark entrances and exits.