Insurance Trends, and Tips to Ensure SuccessJanuary 1, 2014 No Comments
At celebrations ranging from smaller backyard birthday parties to city-wide festivals, event planners entertain youth by ordering closed inflatable trampolines, including traditional bounce houses, bouncy obstacle courses, and other attractions. Owners of the rental companies that provide this equipment take numerous measures to ensure children’s safety, but wherever kids are playing, there is a risk of injury. Liability insurance specific to the inflatable rental industry protects companies that operate in a safe manner from letting accidents turn into lawsuits. However, insurance involves many complexities, and the decisions that inflatable operators make on insurance policies can affect their long-term success.
Price and reputation are the most important things to consider when choosing an insurance company, said Jeff Kelly, owner of three North Carolina-based companies called Triangle Moonwalks, Raleigh Moonwalks and Inflate A Party. Business owners can learn about insurance options by speaking with their peers through Internet forums or during trade shows.
In addition to the price of premiums, there can be burdensome secondary costs, such as insurance certificates. Many event organizers, such as schools and parks, ask to see proof of insurance before an event. Kelly said his former insurance company required him to order certificates at a $15 charge. With his current insurance provider, Kelly goes into his online account and prints the certificates himself. That change created significant savings, as Kelly prints 75 to 100 insurance certificates per year.
Kelly’s companies lend equipment for 800 to 900 events per year. He has only had two complaints and neither was for a serious injury. One involved boys wrestling on an inflatable obstacle course, and the other involved a girl grabbing the side of a slide and cutting her finger, Kelly said. His insurance company handled the complaints, and Kelly did not need to take any action. Kelly is pleased with his insurance provider; however, he still looks around the marketplace to compare premiums. “We try to shop every year just to make sure we’re in the ballpark,” Kelly said.
David Hieronymus, owner of Hop N Party in Austin, Texas, agreed that networking within the industry is important. He has only been in the business for three years, but he has learned a lot from speaking with more experienced business owners and doing thorough research. When he first searched for insurance, he was quoted a premium three or four times more expensive than the policy he ultimately chose. “I was persistent, and I found what I was looking for,” Hieronymus said.
Once they have found an insurer, operators can make costly mistakes, such as tinkering with a rental agreement. For example, a school might ask a company to remove a clause to hold the company harmless in the event of an accident. “If you go altering your rental agreement without notifying your insurance agency and something were to happen, you just gave your insurance company a way out. And I see that a lot,” Hieronymus said.
Another mistake occurs when inflatable operators use equipment not covered by their policy. Whenever someone begins or renews a policy, they should fully disclose all of their inventory and check the policy’s exclusion policy, said Kevin Baldree, owner of Austin Moonwalks, which has operated in Austin, Texas for 15 years. Insurance policies may exclude certain items, such as inflatable rides with attached landing pools. “Basically you’re exposing yourself to trouble, because your insurance company isn’t going to cover you if the item’s excluded,” Baldree said.
In addition to running their businesses, Baldree and Hieronymus are both active in organizing inflatable rental companies in Texas and advocating for more safety education. They helped to found the Texas Inflatable Operators Association in 2012. They are concerned that the large majority of inflatable equipment operators in Texas do not have insurance or comply with other state regulations. Hieronymus has witnessed unsafe practices, such as one operator setting up a bounce house next to a lake without staking it to the ground. He worries that such behavior could negatively affect others in his business. “That kind of stuff is what I want to stop because this is my business and this is how I’m planning to feed my family,” Hieronymus said.
Showing a high aptitude for safety can also help operators to secure a good insurance policy, said Sheryl Mallory, owner of All About Fun Inc. in Groveland, Mass. All About Fun has a mandatory safety training program in place for all employees and renters. Mallory said showing this to insurance providers can help secure a reasonably-priced insurance policy. “Showing that you’re aggressive in making sure people know how to operate your equipment makes a big difference. It takes time, but our theory is that it’s to our benefit,” Mallory said.
In the search for an insurance policy, Mallory said price is her first consideration, because insurance is the second largest company expense after the cost of property rent. “They’re all providing the same service, so the real difference is dollars,” Mallory said. But rather than searching alone, Mallory hired an insurance broker who has secured her significant savings in insurance costs.
Allen Johnson, owner of Jump N Fun Inflatables in Leesville, La., has had the same insurance company for his entire 10 years in business and is satisfied with it because it provides a number of factors he considers important. “You want somebody you can get hold of 24-7, somebody that will fight for you and a company that will guarantee your coverage, and a company that doesn’t cancel your policy or up your coverage because of one claim,” Johnson said.
Johnson has come across some small companies that operate without liability insurance by charging low prices, but they usually fold when their owners realize the many challenges of running such a business. “I’ve only known of a couple companies that don’t have insurance, but they don’t stay in the business more than a couple years,” Johnson said.
Another mistake many companies make, according to Johnson, is lending inflatable equipment to event organizers and letting those organizers set it up themselves. They may fail to properly use stakes and sand bags or operate too close to trees, roads or in dangerous weather conditions. Johnson said he would support laws requiring all companies in the industry to deliver and set up the equipment themselves. “The accidents in our industry would be almost zero if the law required that,” Johnson said. –Back