Mr. Welty

Insurance

Ancillary Services Can Bring New Profits, and New Risks

By John Welty, Practice Leader, SUITELIFE, Venture Insurance Programs

Hotels provide a variety and growing number of ancillary services from child care to swim lessons to spa treatments. With so many different services being offered in one hotel, it can become increasingly difficult for hotel owners and operators to make sure they have the right protections in place in case anything goes wrong. Unfortunately, when a hotel is providing day care services, youth related events or intimate spa services, among other things, risks abound. In this article, we talk about the insurance coverages hotel owners and operators should consider when they add additional service offerings to their suite of hotel guest services.

Waivers of liability are an important critical risk management technique in protecting the hotel resort. Many believe that liability waivers are the first step in protecting the policyholder, the hotel. Properly written and structured liability waiver documents become the initial basis of defense in litigation. Enforceable liability waivers are the necessary first step to protect a hotel's fitness center, spa, golf course, pool, etc. and other activities.

There are many web-based liability waiver templates and free recommendations that are helpful, but keep in mind the weight having the right protection carries. At minimum, a hotel should have its liability waivers reviewed by counsel. Each state, even jurisdictions within a state, have different laws, rules and guidelines that need to be considered. A one-size-fits-all waiver does not exist, regardless of what the internet might claim.

In a nutshell, waivers are documents that transfer risk back to the signee, the guest. Managing contractual risk is challenging at best, increasingly more difficult in the hotel industry. Plaintiff attorneys continue to chip away at the protections waivers seek to provide to hotel owners.

So, are waivers worth the cost of development and enforcement? Yes. In fact, a liability waiver carries much more value than the cost to develop it. The money saved by a hotel for even one claim now or in the future can be significant. A well written waiver may be the single best tool a hotel's fitness facility, spa, pool, etc. has to manage risk. Remember that the waiver is meant to release the hotel from liability for injury resulting from ordinary negligence. A general or all-encompassing liability waiver that covers 'all activities' is not advisable.

Even the best structured and worded liability waiver cannot protect a hotel from gross negligence, reckless conduct or intentional acts. Gross negligence is defined by www.law.com as "carelessness which is in reckless disregard for the safety or lives of others, and is so great it appears to be a conscious violation of other people's right to safety. It is more than simple inadvertence, but it is shy of intentionally evil."

Get Your Fitness Facility in Shape

Consider that many hotels, at a minimum, have a fitness center. They have several elyipticals, stationary bicycles, some free weights, etc. On their own, these items may appear harmless, but are these pieces of equipment secured to the floor or wall to prevent tip over? Can a guest, who is working out, move the elliptical or stationary bicycle to get closer to the fan or TV? This is a serious risk exposure for hotels as the industry has seen numerous claims from guests trying to move a machine and subsequently sustaining injuries.

Additionally, the hotel's fitness center often has a steam room that can be used by guests. First, a waiver to use the fitness center and steam room should be signed, but that might not release the hotel from all liability. Consider a situation where the guest sees that the temperature can be changed. He increases the temperature and is sitting near the steam inlet. As the temperature increases, the steam coming into the room results in a serious burn to the guest.

How could this incident have been prevented? First, guests should not have access to the temperature setting. Second, the steam vent, from a pressure basis, should have a cover or sign, at minimum, to prevent a guest from sitting too close to the steam vent.

Sadly, these accidents do occur in fitness facilities and saunas and can be a liability as a YMCA in Massachusetts recently learned. In this case, a 62-year-old man was using the YMCA's sauna after signing a waiver. Sadly, the man was later found unconscious on the sauna floor with burns over up to 15 percent of his body. After undergoing numerous surgeries, the man died. Evidence in the case, reported in an article titled "When Going to the Gym Isn't Good for you: Liability for Gym Injuries" found that gym employees could not unlock the control room to shut off the steam, proving the gym liable. Additionally, the gym's defibrillator was not in working order because it had not been maintained.

Taking Care When it Comes to Children

What about children and minors? How many times have you signed a waiver for your child? If you are a parent, you've probably signed too many to count. Although waivers for our children or minors rarely hold up in most state courts, it is imperative that these waivers be signed with either acknowledgement of the parent or the parent being present at all times during the child's activity. If your hotel activity is open to minors, proper legal advice on the language in the liability waiver wording is critical.

Notably, every claim is different and all cases are unalike in a court room. A similar case in Maryland will have a different outcome in Michigan. Even in the same court room, a judge or jury could rule differently in one case than in a similar case simply due to the variations in the case details.

Whether we are providing bicycles for guests, canoe rentals on a lake, day camps, or equestrian experiences, any number of inherent liability exposures await. Understanding the exposure and hazards associated with each activity will better assist a hotel and its legal team in the development of an appropriate waiver, signage, and instructions.

Take Care in Hosting Events

Consider a situation where a hotel owner allows a "professional" to host an event where guests walk over hot burning coals with their bare feet. It is not 'mind over matter' when a guest suffers first degree burns, especially when the so-called expert carries no insurance. In this scenario, the expert transferred this risk to the hotel in the event agreement leaving the hotel subject to litigation. Hotels need to be wary of these experts. Even self-help celebrity Tony Robbins' program participants have experienced injuries, according to CNN.

Another risky fad is Lawn Zorb Soccer or Bubble Soccer, where guests wear inflatable bubbles to crash into each other on the field. Sounds like it would be a blast, but dangerous injuries have occurred. While not at a hotel, bubble soccer led to a brain injury for a high school soccer captain outside Atlanta, according to the Atlanta Journal-Constitution.

A Waiver Alone is Not Enough

Liability waivers are not guaranteed to withstand judicial scrutiny in every state as there are variations and interpretations in every jurisdiction. As states define these waivers in legal terms of 'Express Assumption of Risk' to 'Exculpatory Clauses,' it has become increasingly difficult to transfer the risk back to the guest.

Waivers alone are not a sure solution. Hotels need to take additional steps to ensure they have the protection they need. Aside from having well-written, legally-reviewed waivers, hotels should be sure they are carrying the appropriate limits or level of liability insurance and that they are implementing proper risk management and safety procedures. This could include the maintenance of equipment and training employees to be alert to potential risks.

By making sure risk management is top of mind for everyone in the hotel organization, hotels can ensure they are in the best possible shape to prevent incidents, protect their guests, employees, the hotel's reputation and its future. The right insurer can help hotels understand their risk exposure and determine the best ways to protect the business.

John Welty is the practice leader for SUITELIFE, an all-lines insurance and risk program for upscale hotels and resort properties administered by Venture Insurance Programs. Venture is a national program administrator for select industries, including the hotel, hotel resort, hotel management and luxury boutiques industries. At Venture, Mr. Welty is responsible for managing SUITELIFE’s underwriting team and maintaining the company’s top-tier carrier relationships. He is responsible for pro-actively and strategically managing the retention and growth of the SUITELIFE through disciplined underwriting, managing program profitability, and program expansion and development. Mr. Welty has worked in the insurance industry for more than 30 years, specializing in commercial risks. Mr. Welty can be contacted at 800-282-6247 ext. 276 or JWelty@ventureprograms.com. Please visit http://ventureprograms.com for more information. Extended Bio...

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