Summer Recreation Tragedies Show Elements of Risk

roller coaster with lots of turns

Earlier this summer in Daytona Beach, Florida, two roller coaster riders fell 17 feet resulting in severe injuries when a car derailed due to excessive speed. An investigation showed the derailment was likely the result of the initial design of the roller coaster in combination with wear and multiple strains.

Nearly a month ago, a duck boat used for a guided tour of Table Rock Lake in southwestern Missouri capsized during a storm. Only 14 of the 31 individuals on board survived. It was the highest fatality total for a duck boat accident since 13 people died after a boat sank in 1999 in Arkansas. In that incident, the National Transportation Safety Board (NTSB) concluded that a design flaw contributed to the high loss of life. The Missouri incident is still under investigation.

These summer recreation tragedies show the importance of certified professionals conducting regular inspections on any type of machinery that transports people for entertainment, from duck boats to roller coasters.

Risk mitigation matters

Amphibious vehicles, which include duck boats, have been involved in at least 41 deaths in the United States and Canada since 1999, according to the Washington Post.

Three lawsuits have been filed so far against companies involved in the Table Rock Lake tour, alleging that the companies were negligent for departing as a storm was approaching and for not adopting safety standards recommended after earlier duck boat incidents.

Practices should be put in place by the company to ensure that personnel are operating machinery in a safe manner. “For example you should consider having the person giving a tour not be the same person driving a boat to (decreased the likelihood) of distractions,” said Jon Kovach, President, Afirm, a leading provider of audits, loss control inspections and risk services. Boat tours and other similar operators should have well-defined policies for inclement weather, he added.

Without federally standardized design and safety regulations in place, it was left up to the duck boat company and its employees to determine if hazardous weather should postpone any tours.

“The time when risk can be most effectively mitigated is during the pre-inspection phase before usage begins.” – Jon Kovach, Afirm

Owners of such machinery as duck boats and roller coasters also may retrofit them for a variety of reasons – but such retrofitting may also increase the chances that a malfunction could occur, said Kovach. That’s why risk mitigation practices should be implemented regularly.

When a boat is retrofitted, proper backup buoyancy controls and floatable boat bulkheads to reduce the possibility of being capsized should be installed. However, such items can be expensive to maintain properly. “And since commercial boating typically has more lenient regulations than recreational boating, such investments aren’t always made,” Kovach said.

The NTSB recommends that amphibious vehicles be retrofitted for reserve buoyancy. Retrofitting could affect whether canopy roofs should be removed or life jackets worn. The Missouri duck boats were designed by former owner Robert McDowell, who reportedly had no training or certification in mechanics, and lengthened the boats by 15 inches to fit in more people, according to a lawsuit in Washington state where five people were killed and dozens injured in a 2015 accident.

The time when risk can be most effectively mitigated is during the pre-inspection phase before daily usage begins, Kovach said. But in the case of duck boats, even company-provided inspections of seat belts, life jackets and regular maintenance should be handled by trained staff on a daily basis. Regular licensed inspections can include more structural considerations or other technology features, such as the working capabilities of blind spot cameras. The Missouri duck boats were inspected at various points over the years but one August 2017 inspection indicated that the boats’ engines might fail in inclement weather. Mechanical inspector Steven Paul found an exhaust issue that he felt would not pass Department of Transportation safety standards.

“A GL policy for an attraction owner or operator covers liability arising from negligence in the operation of the ride or attraction.” – Laura Bates, Atain

Some machinery is subject to increased design flaws based on what the original intent was, Kovach added. For example, many duck boats were designed for carrying cargo rather than people.

Kovach works with underwriters to determine how insurable potential policyholders are based on their risk profile. “If an organization is diligent in maintaining and inspecting their equipment, training staff and creating a pre-inspection process that checks off all the boxes, it increases the attractiveness of that operation to carriers who will write a policy for them,” Kovach said.

General Liability policies

According to Laura A. Bates, Corporate Vice President, Atain Insurance Companies, a General Liability (GL) policy for an attraction owner or operator covers liability arising from negligence in the operation of the ride or attraction.

“This could range from not having proper safety procedures in place for riders, not enforcing those safety procedures, lack of proper maintenance and testing, operating the ride in inclement weather (such as in the duck boat tragedy), or operating the ride outside of manufacturer or installer guidelines,” said Bates.

The GL policy for the manufacturer or installer of a ride/attraction would cover any potential Product Liability exposure from the product itself and the installation of the ride.

Pricing and availability of GL policies is affected by high-level factors including: type and size of the operation; the state where an insured party operates; claims history; risk management and the experience of the owner/manufacturer.

An Umbrella or Excess Liability policy is also suggested for more GL coverage, which will include higher total limits, she added.

Design Liability protects designers and engineers

While a General Liability policy will cover many costs, any company responsible for design and engineering work or inspection on various modes of transportation, machinery or entertainment equipment faces increased risk of litigation. If held liable for errors, omissions or professional negligence related to design-related tasks, liability can climb into the millions of dollars, especially when bodily injury is involved.

Design Liability Insurance coverage, a specialized type of Professional Liability, is a necessity, said Nicole Greene, Associate Vice President, Professional and Executive Liability Center of Excellence, Burns & Wilcox, Corporate Headquarters. Such a policy will cover all licensed staff employed within the design firm and is designed to help protect that business from suits arising from negligently performed professional services.

The policy will be drawn from if it is determined that an incident was a result of a structural or design error.  Design Liability will cover financial loss, contingent bodily injury and property damage, including structural damage suffered by a third party. This policy will also provide the design firm legal defense should an incident require litigation. If the liability does not lie with a design flaw or negligence, a GL policy will be impacted.

“Any company responsible for design and engineering work or inspection on various modes of transportation, machinery or entertainment equipment faces increased risk of litigation.” – Nicole Greene, Burns & Wilcox

“It could be a result of negligence or an honest mistake, but there must be a design-related error present for a Design Liability policy to respond. A design-related error can include a defect in the design or the failure to render design-related services provided by the professional,” Greene said. “One example would be if a design company is hired to provide a third party structural review of a boat’s weight load capacity. If that design firm approves a higher weight capacity and as a result the boat sinks due to weight load capacity, it would be considered a professional negligence error related to the design.”

The cost for Design Liability policies can vary depending on the responsibilities of an organization’s engineers and designers, and the nature of the projects they work on, Greene said. For example, electrical engineers that are hired to rewire old homes may pay $3,500 per $1 million of coverage annually, while a firm employing geo-tech engineers responsible for researching the soil composition below a roller coaster might require annual costs four to five times higher because of the heightened impact of their errors.

The liability limits available have no hard cap. It depends on the amount of risk insurance carriers are willing to tackle. However, Greene said that she has noticed a notable increase in contractual agreements from clients of the licensed design firms to carry higher limits for their contracted work.

Given there are more than 2.2 million architecture and engineering professionals in the U.S., Design Liability coverage is likely underutilized, Greene said.

As with any coverage need, an insurance broker or agent must be consulted. Click here to forward this article to your insurance broker or agent to ask if you need this coverage, or share this with clients to start the conversation and ensure proper protection.

This information was provided by Burns & Wilcox, North America’s leading wholesale insurance broker and underwriting manager. Burns & Wilcox works exclusively with retail insurance brokers and agents to assist clients like you with their specialty insurance needs. Ask your insurance broker or agent for which type of General Liability or Design Liability policy is right for you.