Two amusement park visitors were taken to the hospital on June 13 after a ride malfunction at Six Flags Great Adventure in Jackson Township, New Jersey. The incident happened on the Saw Mill Log Flume ride when one of its boats nearly tipped over after making a four-story descent into the water. The 18- and 22-year-old riders who were hurt reportedly suffered leg and shoulder injuries.
An initial report from Six Flags on the mishap noted that a second boat hit the back of the first boat after the drop. No mechanical breakdown took place, the report stated, and the ride has been closed while additional inspections take place. Meanwhile, a video taken by another guest revealed that a section of the track’s railing appeared to be dislodged before the accident occurred.
Amusement park accidents could become more common in the coming months due to the usual attendance spike during summer combined with pent-up demand for recreation as COVID-19 restrictions are further reduced, said Travis Verdino, Associate Managing Director, Underwriter, Commercial Insurance, Burns & Wilcox, Las Vegas, Nevada.
“There is definitely an increased risk in the amusement industry during summer due to children being out of school and parents taking them on vacation,” he said. “This year, it will be even more of a risk because families have been cooped up. Individuals are going to take advantage of the first chance they have to get out.”
From pop-up carnivals on church or school grounds to fireworks displays and parties hosted by private companies for their employees, special events and attractions can bring considerable risks and typically require Commercial General Liability (CGL) Insurance, Special Events Insurance, or Liquor Liability Insurance.
“The greatest risk with any of these events is bodily injury, especially when you have large crowds of individuals,” said Jakub Zarebski, Senior Underwriter, Commercial Insurance, Burns & Wilcox, Toronto, Ontario. “Alcohol-related incidents can also be a risk if alcohol is being served on the premises. At the end of the day, the entity hosting these events is ultimately accountable for it.”
Special events and attractions may require an additional insurance policy
In addition to high-profile attractions — Disney’s theme parks are rebounding more quickly than expected, for example, and a celebratory “mega-concert” is being planned at Central Park — there may also be a boom in smaller-scale festivals and other special events hosted on commercial property.1,2 In Rialto, California, the owner of Pyro Spectaculars said he has over 250 fireworks shows planned nationwide after booking less than 20 last year.3
“Especially with outdoor and summer events, there is going to be a huge demand for it,“ Zarebski said.
Anyone planning to host or sponsor a special event should be aware of the risks, however. Rides at fixed-site amusement facilities in the U.S. and Canada typically cause over 1,000 injuries each year. Injuries can also take place at traveling carnivals, where attractions such as waterslides, mirror mazes and bouncy castles are often found.4,5
“There is always the potential of someone getting severely injured inside of an attraction like that,” Verdino explained. “That individual could sue the company that is hosting the event.”
Other potential hazards include tripping due to electrical cords on the ground, slip-and-fall accidents in bathrooms, and fireworks-related injuries, Zarebski said.6 On Prince Edward Island in Canada in 2015, a man sued several entities after he was injured by a water balloon thrown from a float during the P.E.I. Potato Blossom Festival parade.7
In the event of an injury or property damage caused by the attraction, CGL Insurance policies can help with expenses including ambulance fees and other medical costs for those injured, loss of wages for the injured party, and defense costs in the event a lawsuit is filed.
“Slip-and-fall accidents tend to be something insurance deals with a lot. They can be very minor, or they can grow significantly,” Zarebski said. “Some of the larger lawsuits can go well into the limits of the insurance.”
Not all CGL Insurance policies will cover special events. When this is the case, Special Events Insurance can be purchased to cover single- or multiple-day events such as corporate gatherings, parties, and weddings. “A Special Events policy ensures that they will have proper coverage for that event in case something happens,” Verdino explained.
Serving alcohol creates additional risk for property owners
After a challenging year, many employers are looking for ways to bring together and celebrate their employees, Verdino pointed out. Whether they are held on- or off-premises, though, these staff appreciation events could mean a liability exposure. “If you are the one hosting an event, there is a risk that if something were to happen, they could come back and sue the company,” Verdino said. “If something were to happen while their employee is on the Ferris wheel, for example, they could be looking at a potential lawsuit. There are a lot of potential risks that businesses may not think about when they are considering hosting an event.”
This is especially the case when alcohol is provided at the event. In 2019 in Pembroke, Massachusetts, an employee of Hi-Way Safety Systems had just left a company holiday party intoxicated when he was involved in a car crash that killed a 13-year-old girl and injured another teen.8 The injured girl later filed a lawsuit against the intoxicated driver and the company that hosted the holiday party.9
If you are the one hosting an event, there is a risk that if something were to happen, they could come back and sue the company. … There are a lot of potential risks that businesses may not think about when they are considering hosting an event.
Events that involve alcohol may need to be covered by a separate Liquor Liability Insurance policy or a liquor liability enhancement, Verdino said. In Canada, this type of coverage can be purchased separately as Party Alcohol Liability, or added to a standard CGL Insurance policy to include liquor liability. These policies are specifically designed to cover events involving alcohol, Zarebski said.
“Restaurants with liquor licenses should have this included in their policy, but those that aren’t licensed, such as some banquet halls, for example, can obtain it separately if they do not have this coverage,” Zarebski said. “This can also be purchased to offer protection for street events and house parties.”
Having CGL Insurance, Special Events Insurance and Liquor Liability Insurance is essential for the business hosting the event, even if the provider of the equipment or other vendors have their own insurance. “An amusement park like Six Flags, for example, will have their own insurance as well,” Verdino noted. “With the more severe injuries or death, though, attorneys may start going after any insurance policy they can.”
Consider risk management and future insurability
The June 13 ride accident is not the only time Six Flags, which is based in Texas, has been in the news in recent days. Also this month, the theme park agreed to pay $36 million to settle a class-action lawsuit over its use of fingerprint scanners, which may have violated an Illinois law requiring permission before using the technology on customers.10
Any time a lawsuit occurs, there is a chance that the company’s future insurability could be impacted, Zarebski said. This could mean they pay higher rates or face exclusions for special events in the future. This is one of many reasons why risk management is so critical for any company hosting special events or allowing them to take place on their property.
“By doing your best to prevent any potential losses, you are complimenting your insurance,” he said. “That can be anything from exit signage to pointing out and cleaning up spills. These steps help keep the company insurable. The best thing you can do as a business owner is to make sure you are insurable.”
Property owners planning to host an event — or even allow it to take place on their vacant land — should confirm in advance that the vendors they work with, including caterers and other food vendors, are appropriately insured. Ask for a certificate of insurance to confirm this, Verdino suggested, and be sure to research the reputation of any potential vendors in advance. With fireworks, in particular, only approved and licensed fireworks vendors should be used.
“Above and beyond that, they need to make sure they have checked with their local guidelines and authorities,” Verdino said, noting that there may be local regulations on fireworks or other attractions.
The insurance broker should be notified before risk profile changes
While coverage and limitations will vary based on a company’s specific CGL Insurance policy, it is essential that business owners consult their insurance broker before committing to any special event or attraction. Although they may believe CGL Insurance or Special Events Insurance will be expensive, that is generally not the case, Verdino said.
“Whenever you are going to be hosting an event, there needs to be a conversation with your insurance broker,” he said. “Make sure your broker has all of the details of the event so you can ensure there will be proper coverage. A lot of individuals come to us and assume it will be very expensive to cover an event, but normally it is not.”
Insurance is intended to protect your business. Sometimes it only takes one small incident, like a slip-and-fall, to bankrupt a brand new business. If you are just starting a business where you are hosting events and you have one of these injuries, that could end your career.
Insurers write policies “based on the information that is disclosed at the time,” Zarebski said, and adding a special event or new attraction could “change the risk completely,” making a company’s existing insurance policies unsuitable for the new risk.
“Failure to notify the carrier could even lead to a claim being denied, leaving the insured to carry the financial burden of the risk,” he said. “Business owners often assume they are not big enough to need the coverage, but you are never too small to get sued.”
An uninsured loss could be disastrous for a company, Zarebski emphasized.
“Insurance is intended to protect your business. Sometimes it only takes one small incident, like a slip-and-fall, to bankrupt a brand new business,” he said. “If you are just starting a business where you are hosting events and you have one of these injuries, that could end your career. You just might not have the funds, after paying out settlements, to continue that business. The whole point of insurance is to be one of your support pillars; your backup in case something does happen. No matter how small the risk is, you definitely need the insurance.”
1Szalai, Georg. “Disney Analyst Raises Stock Target on ‘Steeper’ Theme Parks Recovery.” The Hollywood Reporter, June 17, 2021. 2Sisario, Ben; and Fitzsimmons, Emma G. “New York City Plans a Central Park Mega-Concert to Celebrate Reopening.” The New York Times, June 7, 2021. 3Nelson, Joe. “Rialto pyrotechnics company rebounds from ‘devastating’ pandemic, plans 250 fireworks shows this year.” The San Bernardino Sun, June 20, 2021. 4National Safety Council. “IAAPA Ride Safety Report – North America – 2017.” 5Leckrone, Bennett. “Going to a carnival? Here’s how you can make sure those rides are safe.” PennLive, June 19, 2019. 6Consumer Product Safety Commission. “2019 Fireworks Annual Report.” 7Ross, Ryan. “Man sues over alleged water balloon injury during PEI Potato Blossom Festival parade.” SaltWire, September 30, 2017. 8Kath, Ryan; and Haddadin, Jim. “After Fatal Pembroke Crash, Could Holiday Party Hosts Be Held Liable?” NBC10 Boston, January 8, 2020. 9Vervaeke, Abby. “Teen Injured in Deadly Pembroke Crash Files Lawsuit: Report.” NBC10 Boston, January 29, 2020. 10Associated Press. “Six Flags park settles lawsuit over fingerprint scanners for $36 million.” USA Today, June 12, 2021.