Lessons in Insuring Skateparks and Extreme Sports Events

Article originally appeared in the Insurance Journal, April, 2010.

“Too dangerous.” “They’re scary.” “Those kids try too many tricks.” While many carriers use these descriptors for skateparks, I do not feel the same way. When I think of skateparks, instead of images of rowdy teens and claims for broken bones, I focus on responsible park owners who need an insurance advocate.

I started in the Southern California insurance business in 2004 and supported a broker with more than 100 skatepark clients. The commercial liability policies were very expensive then, averaging from $5,000 to $10,000 annually, and the paperwork associated with the coverage was tremendous. There were numerous forms to be completed, including processing surplus lines taxes and fees.

Because of the onerous paperwork involved in servicing these clients, my manager offered me the opportunity to take on this business niche. Over the past five years, I have focused on the unique needs of the industry and have successfully developed a skatepark portfolio with $50,000 in annual revenues and more than 200 clients. Turning this commercial insurance specialty into a success story wasn’t as hard as landing a “kickflip,” but I learned some valuable lessons along the way.

Provide Underwriters With the Business Case

I researched the number of public and private skateparks in the nation and shared the detailed data I gathered with underwriting offices. The research showed that the majority of cities wrap their skatepark liability coverage into their municipal liability policies, often with a $1 million deductible. A standalone policy for a skatepark allows municipalities to insure skateparks for $1 million in liability with a much lower deductible and eliminates the need to dip into their larger deductible for skatepark claims.

Skateboarding has become mainstream in America; thus, there is a vast market for insuring skateparks. Once underwriters recognized the bottom-line opportunities, my clients had more cost-effective options to choose from.

Understand Your Client’s Business Model

“It’s important for brokers to understand the risks of our industry, but more importantly, they need to know what’s not a risk,” said Kirsten Bradford, CEO of Spohn Ranch Inc., a world-renowned skatepark construction and management firm. “Football is a much more dangerous sport than skateboarding. A thorough and accurate risk assessment has been crucial to reducing our insurance premiums.”

This is why Kirsten and I approach skatepark coverage with the same philosophy of obtaining policies that offer reasonable, but not excessive, liability coverage. Today’s policies offer a turnkey solution to skatepark owners and can be obtained for as little as $1,200 a year.

Help Your Clients to Avoid Claims

All of my clients’ policies include a participant liability clause in addition to general liability coverage. This offers an extra layer of protection for skatepark owners.

As the exclusive broker for the Skatepark Association of the United States (SPAUSA), I build the membership into my insurance program so that every client can utilize its risk management booklets. These practical guides help SPAUSA members to manage their parks in a safe and efficient manner.

These guides also help them to avoid claims such as when parents seek compensation for their children’s injuries. It is important to note that liability claims are only valid when plaintiffs can prove negligence on the part of the skatepark owner.

Specialization and Efficiency Keys to Profitability

By dedicating myself to learning the skatepark management business, I have yielded multiple referrals from satisfied clients. My sharp focus on the industry has paid off and I insure skateparks in almost all 50 states. It is crucial to develop a large client base for profitability because skatepark insurance premiums are now so much lower than they were five years ago. I have streamlined the insurance application process and developed an Internet business model that automates much of the paperwork associated with skatepark insurance. This increased efficiency is key to running a successful sales operation.

Talk the Talk

I participate in an extreme sport (snowboarding) and my clients appreciate that I can relate to their customer base. I recognize that a skatepark’s liability for accidents is actually rather low because of the way kids approach the sport. Everyone who skates knows it’s risky and when they fall, they get back up and try their tricks again. Broken bones and skinned elbows are battle wounds that young boys and girls wear with pride.

Niche Markets Attract Others

Finally, I have learned that one niche market begets another. Skatepark owner referrals result in my coverage of extreme sporting events like the 2009 MegaRamp in Sao Paulo, Brazil. I add on property insurance for skateparks that also sell equipment at adjacent pro shops. Many urban churches offer skateboarding ministries by building ramps inviting teens to skateboard on church property. I support these churches by providing a small liability policy for this specific ministry to augment their general insurance coverage. My practice has grown to cover roller derby leagues, BMX parks and events, motocross races, and other fun extreme sports that come my way.

For all those outsiders who toss jabs at our boring industry, I invite them to spend a day with me exploring the world of extreme sports liability coverage.