Business Strategies: Obtaining the Proper Insurance Coverage

February 22, 2012 No Comments

Purchasing and maintaining the right insurance coverage has always been a must for owners and operators of leisure entertainment facilities and rental concerns, but is now more important than ever given society’s increasing tendency to initiate lawsuits at seemingly every turn. While it may be tempting to sign on the dotted line with the first carrier who knocks on the door and to pay little attention to insurance policies going forward, this is not the wisest course of action. “Examples of what can happen when operators do not give careful thought and consideration to their insurance are too numerous to list and the consequences, often too dire to contemplate,” said Bill Velin, senior vice president, Wells Fargo Insurance Services USA.

Obtaining the right insurance starts with selecting an appropriate broker, ideally one that specializes at most in just a few narrow segments of the market. Lori Bettencourt, owner and general manager of PUMP’d Funcenter in Watsonville, Calif., chose a certain broker specifically because the company’s principals were able to offer the widest range of specific coverage, for the best premium price. Generalists, she said, are not able to do so.

Tiffany Littrell and Kim Moore, owners of Cleveland, Tenn.-based Bounce Around Play World, followed an identical strategy, and reaped an ancillary benefit.  In conducting an inspection of the facility to assess its initial coverage needs, a representative not only identified an equipment situation that needed to be rectified; he also “explained how it needed to be fixed and he gave us pictures and instructions on how to do it,” Littrell explained. She and Moore believe that a competitor with no knowledge of inflatables would have been unable to assist them in such a fashion, possibly leading to a bad insurance buy.

All leisure entertainment facilities need several kinds of insurance, including general liability and worker’s compensation. General liability insurance indemnifies businesses for third-party liability claims resulting from negligence. Coverage can include premises and operations liability for on-site accidents and products liability claims for products that injure third parties.

“What this generally means is that if you are sued by anyone for negligence, the policy will cover you and the cost of your defense if necessary,” explained Matt Stein of Sterling & Sterling. Stein, who serves as underwriter of the company’s Family Entertainment Center Program, said owners and operators of leisure entertainment facilities “can be sued for just about anything these days, such as slip and fall accidents, abuse and molestation, contract issues, insufficient supervision, etc.”  General liability coverage serves as protection in all of these instances.

Both Velin and Stein also recommended that leisure entertainment centers consider an umbrella liability policy, which acts as an extension of any other liability insurance. “If your general liability policy has a limit of $2,000,000, and you have an umbrella policy that has a limit of $3,000,000, the umbrella will extend the $2,000,000 by an additional $3,000,000, thus providing you a total of $5,000,000 in coverage,” Stein stated. He deemed such a policy an especially smart move for facilities with high traffic risk and high potential for catastrophic loss caused by drowning, dismemberment, or even death.

Equally important are property insurance and business income coverage. The former protects facilities’ physical assets against loss. “Assets” can encompass include a building, personal/business property and equipment. It can also cover other exposures, among them theft of money and securities, mechanical equipment breakdown and computer systems. The latter comes in very handy in situations where a loss prevents a leisure entertainment facility from operating; it covers income that would have been earned had the loss not occurred.

Another component of appropriate insurance coverage covers situations specific to particular types or features of leisure entertainment facilities. As an example, Velin stated, a bowling alley with a bar needs liquor liability coverage should a patron who has been served too much alcohol be involved, en route home, in an accident that results in a lawsuit.

Just as important as adding specialty coverage to create the right insurance “mix” is ensuring that the policies chosen do not include unnecessary protection. Notably, Velin observed, some carriers may try to sell leisure entertainment facility operators on a policy that covers equipment damage or loss due to vandalism or theft. However, coverage for such incidents is typically provided under a venue’s general liability policy. Similarly, Stein pointed out, a leisure entertainment facility with a full-service snack bar requires insurance to cover foodservice equipment breakdown, but one that only serves packaged fare need not procure it.

Moreover, operators should keep in mind that what may constitute appropriate insurance coverage varies even among leisure entertainment facilities in the same category. For instance, a small amusement park with a small number of rides and/or only tame “kiddie” rides probably needs less liability coverage than one with more rides and/or the latest roller coasters geared towards older guests. Similarly, an inflatables rental company with three or four inflatables will almost certainly require less coverage than a counterpart or playspace with a dozen on-site bounce houses, slides, and related inflatables.

One final caveat to remember: Think carefully about the dollar value of insurance policies to be purchased, and heed brokers’ advice when they suggest erring on the side of caution regarding the “numbers.” According to Velin, many leisure entertainment facilities make the mistake of skimping based on misconceptions about the relationship between policy limits and insurance premiums. “I have handled many situations where an owner or operator thinks there is a huge difference between a $100,000 policy limit and a $1 million policy limit,” he stated. “They’ll assume” that the latter is “1,000 percent higher than” the former, “when in reality, it’s maybe 25 percent. Then they kick themselves later for not paying what can seem, compared with the payout from their own pocket after an incident, like a very small price. The cheapest coverage is, to sum it up, not always the cheapest coverage in the end.”

Industry News

Gilderfluke & Company Names Director of Sales

Gilderfluke & Company has appointed industry veteran David Geoghegan as Director of Sales. Geoghegan will lead worldwide sales, marketing and business development for the continuing evolution of the company. His extensive background includes Director of Sales at Alcorn McBride Inc. and 360 Systems, and he brings a great understanding of the themed entertainment, museum, casino, commercial and broadcast markets.

Cretors Announces that Shelly Olesen Has Received the 2012 Bert Nathan Memorial Award

- Prestigious national award recognizes leadership and accomplishment in 
the theater concessions industry -

C. Cretors and Company, the leading designer and manufacturer of food processing and concession equipment for more than 127 years, has announced that Shelly Olesen, Cretors’ vice president of sales and marketing, has been awarded the 2012 Bert Nathan Memorial Award. The award recognizes leadership and significant accomplishment in the theater concessions industry and honors the late Bert Nathan, a past president of the National Association of Concessionaires (NAC) and a leader in the theater concessions industry. Olesen was selected for the award by previous Nathan Memorial Award recipients.

The 28th Annual Bert Nathan Award will be presented to Olesen on Tuesday, April 24, 2012 by NAC President John Evans, Jr., during CinemaCon in Las Vegas.

Olesen has worked at Cretors for more than 20 years, beginning as western regional sales manager, rising to senior marketing manager responsible for developing the North American theater market, and finally reaching her current position, in which she directs the company’s overall domestic and international sales and marketing effort. Prior to joining Cretors, Olesen sold electronics to the airline industry for Midway Electronics.

“We are extremely proud that Shelly Olesen has been singled out for this honor, one of the most coveted in our industry,” said Cretors President Andrew Cretors. “She has worked tirelessly for the company and the community and I can think of no one more deserving of the recognition.”

Olesen was the key organizer of Cretors’ gala 125th anniversary celebration, which doubled as a tribute to the concession industry and was held at the Museum of Science and Industry. More than 400 attendees celebrated the milestone with Cretors, including local celebrities, community leaders, vendors, studios and customers from 48 countries.

In addition to celebrating Cretors’ success, Olesen was instrumental in ensuring that the 125th anniversary event benefitted the community, raising more than $35,000 for Chicago Arts Partnerships in Education (CAPE), a non-profit organization dedicated to expanding the arts in Chicago Public Schools.

Olesen is a member of NAC, and received the Friends of Exhibition/NATO Great States Convention award in 2005, as well as the Person of the Industry award from the Tri-State Independent Theater Association in 2009. She is also on the boards of the Junior Women’s Club of Deerfield, a community-based social and service organization, and the Variety Club Golf Committee.

Over 8,000 votes have been tallied and the winners will be announced at:

Amusement Expo – March 14-16, 2012 
being held in conjunction with
Foundations Entertainment University – March 12-13, 2012

Join us on the trade show floor at 1 p.m. on Thursday, March 15 
to congratulate the winners of the first annual 
”Excellence in Family Entertainment Center” Awards.

In order to recognize entertainment center excellence, here are the nominees once again:

Best Bowling Anchored Center

  • Jupiter Bowl, Park City, Utah
    www.jupiterbowl.com
  • Shenaniganz, Rock Wall, Texas
    www.shenaniganz.com
  • Emagine Star Lanes, Royal Oak, Mich.
    www.emagine-entertainment.com
  • Star Lanes, Newport, Ky.
    www.starlaneslevee.com

Best Family Entertainment Center, Indoor

  • Funplex, East Hanover, N.J.
    www.thefunplex.com
  • Triple Play Family Fun Park, Hayden, Idaho
    www.3play.com
  • Provo Beach Resort, Provo, Utah
    www.provobeachresort.com
  • Fun Spot, Grand Country Square, Branson, Mo.
    www.grandcountry.com

Best Family Entertainment Center, Outdoor/Indoor

  • Treetop Family Adventure, Birmingham, Ala.
    www.treetopfamilyadventure.com
  • Fun Spot, Orlando, Fla.
    www.FunSpotAttractions.com
  • Frankies Fun Park, Columbia, N.C.
    www.frankiesfunpark.com
  • Boomers, Irvine, Calif.
    www.boomersparks.com

Best Roller Skating Center

  • Scottie’s Fun Spot, Quincy, Ill.
    www.scottiesfunspot.com
  • Skate N’ Fun Zone, Manassas, Va.
    www.skatenfunzone.com
  • Classic Fun Center, Sandy, Utah
    www.classicfuncenter.com
  • Northridge Skateland, Northridge, Calif.
    www.skateland.net

Best Laser Tag Center

  • Laser Blaze, Louisville, Ky.
    www.lazerblaze.com
  • The Web, West Chester, Ohio
    www.laserwebtag.com
  • Laserdome, Lancaster, Pa.
    www.laserdome.com
  • Laser Tag & Games, Metairie, La.
    www.ltag.com

Best Games Zone, Arcade

  • Big Al’s, Beaverton, Ore.
    www.ilovebigals.com
  • Mohegan Sun Casino Cyber Quest, Uncasville, Conn.
    www.kidsquest.com
  • The Clubhouse at Hackers, Statesboro, Ga.
    www.clubhouseathackers.com
  • Boomer’s, Dania Beach, Fla.
    www.boomersfunparks.com

Best Birthday Parties

  • TreePaad Family Fun Center, Malta, N.Y.
    www.treepaad.com
  • Fun Expedition/Ashville’s Fun Depot
    www.ashvillesfundepot.com
  • Freedom Station Family Fun Center
    www.freedomstationfun.com
  • Heros, Toledo, Ohio
    www.herostoledo.com

Best FEC Website

  • Family Fun Center and Bullwinkles
    www.fun-center.com
  • Boomers, (Chain)
    www.boomersparks.com
  • Fiesta Village, Colton, Calif.
    www.fiestavillage.com
  • The Children’s Museum of Denver, Denver, Colo.
    www.mychildsmuseum.org

Best Facility Maintenance Program

  • Paradise Park, Lee’s Summit, Mo., 10 years old
    www.paradise-park.com
  • TreePaad Family Fun Center, Malta, N.Y.
    www.treepaad.com
  • Bowlera, Caguas, Puerto Rico
    www.bowlera.com
  • Sahara Sam’s Oasis Indoor Waterpark, West Berlin, N.J.
    www.saharasams.com

Best Facility Food Operation

  • Bowlera, Caguas, Puerto Rico
    www.bowlera.com
  • The Clubhouse at Hackers, Statesboro, Ga.
    www.clubhouseathackers.com
  • San Antonio’s Incredible Pizza Company, San Antonio, Texas
    www.incrediblepizza.com
  • Boomers! Dania Beach and Greater Ft. Lauderdale, Fla.
    www.boomersparks.com/site/dania/

Best Redemption Prize Center

  • Enchanted Castle, Lombard, Ill.
    www.enchanted.com
  • Blue Fusion, Marion, Ohio
    www.bluefusionfun.com
  • Funhaven Entertainment Center
    www.funhaven.com
  • Fannie Farkles, Gatlinburg, Tenn.
    www.fanniefarkles.net

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