Many of us have seen the now viral video of a young woman, out with friends for a good time, stepping up for her turn in axe throwing at her local family entertainment facility. She innocently lines up her shot, reaches back to begin her throw, and within seconds is dodging the blade of an axe that has bounced back towards her head. If you have not seen the video, see how close this facility was to experiencing a tragedy on camera. This perfectly illustrates why waivers are important.
Now you may say, “We don’t have axe throwing, so why do we need waivers?” A quick review of the IAAPA newsletter or a search of the internet reveals that tragedy is not exclusive to high-liability attractions. Is a tragedy or catastrophic accident more likely in a high-liability attraction? Absolutely. But are they exclusive to them? No.
No solution by itself can fully protect you from a catastrophic accident and the liability that follows. However, there are many tools that, when working together, will provide security for a business and its owners as the facility deals with the fallout associated with any accident. Having a good lawyer that you trust to call is invaluable. Incorporating a business properly can protect an owner from personal liability. Working with knowledgeable insurance providers will shield you to a point. Each of these are steps that almost every facility takes.
However, these same facilities do not always feel it is necessary to have a waiver which covers all of their attractions. I equate this to a queen having a great army but failing to provide them with every tool necessary to defend her kingdom. So, let’s explore three ways that a properly prepared waiver is one of the best and most cost efficient tools you can use to improve the protection and financial security of you and your business.
A Properly Prepared Waiver Can Pay for Itself
First, you might ask yourself, “What do I mean by a properly prepared waiver?” Simply, I mean one that is: (i) made by an attorney who was paid, (ii) preferably one who knows your industry, and most importantly (iii) is not copied and pasted from the internet or a sample provided to you by a nonlawyer. I know it is hard to do this since I am an attorney, but just trust me on this one. As discussed below, the minor costs associated with this are worth every penny over the lifetime of your facility.
If you are one of the few owners who have not had to file a claim with your insurance company due to an accident, I will give you a brief recap of what this process looks like:
- A small child is using your facility and gets injured
- The child’s parents are upset at the fact that you allowed their sweet child who “was most certainly following your rules and regulations” to be injured and says something along the lines of, “you will be hearing from my lawyer.”
- You contact your insurance company, some insurance magic happens, and the matter is settled – you are no worse for wear, other than a potential raise in your insurance rates.
But what most don’t know is what happens during that “insurance magic” period after you file the claim. Here’s a peak behind the curtain: insurance companies use adjusters and lawyers to research the claim, determine an appropriate value of the claim based on the likelihood of the claim being successful in a court of law, and then attempt to settle the claim for less than the amount of the predetermined appropriate value.
This is where the properly prepared waiver becomes an effective tool and earns its money. As an attorney who has worked for insurance companies against claims like this, the first thing I would look for is any waiver or indemnification. If I found one, and determined it was viable, I would immediately reduce the value of the case and subsequently settle for a significantly less amount than I would have without the properly prepared waiver.
So how does this save you money? While this might not directly affect your expenses at the moment, when the insurance company spends less on claims, your rate decreases or at least stays the same. If they are paying more, you are paying more.
A Properly Prepared Waiver Can Pass the Liability on to Another Party
I used the term “indemnification” above. If you don’t know what this means, indemnification is a legal term that passes the liability of a situation on to someone else. As an example, if a patron signs a waiver that says they will indemnify you against certain claims; it means when a claim is brought for one of those types of claims, you will pass it on to your insurance company and your insurance company will call the patron who has indemnified you and say, “this is your problem.”
It is no secret that an attorney who represents someone suing a business after an accident will always tell the client “sue the deep pockets.” Now, this may be a surprise to you, but YOU are the deep pockets if you own a facility. The good news: If you have a waiver that states another party is responsible, you now have an argument to get out of the claim. This doesn’t mean that your insurance company won’t settle or pay out, but again, it is an opportunity for them to pay less. (Remember, when the insurance company spends less on claims, your rates decrease or stay the same.)
A Properly Prepared Waiver Can Protect you When Other Protections Fail
No single tool of liability protection can cover you completely on its own. A good lawyer can only go so far, insurance has limits, and while being a legal entity provides personal coverages, that veil can be pierced. Therefore, the smart move is to make sure you have every tool available to you in case one tool fails and you are left to fend for yourself, or you want to resolve an issue prior to getting your lawyer or insurance company involved. (While I always recommend consulting your lawyer and insurance company before you engage in discussions with a patron alleging to have a claim, some owners prefer to handle things themselves, so I want to acknowledge this could help in that situation as well).
If you prefer to fight your own battle, or you are ever left without insurance, a lawyer to defend you, or you have no legal entity protections, having a legally binding waiver, aka a properly prepared waiver, can potentially be used as a tool for negotiating, defusing, or mitigating the fallout of an accident at your facility.
The Bottom Line
A standard waiver being built from scratch should cost anywhere from $750-$1,500 depending on the location, attractions, and needs of the owner. If you are being told you should be paying more, reach out to me and I will help you find someone who can prepare you one in this range. All waivers should be maintained and reviewed annually by your trusted attorney and this process should not take longer than an hour of work unless the legal landscape has changed significantly in that year.
Now think about this cost in comparison to what a 10% increase in your facilities insurance costs or a payout for a catastrophic claim would be. I promise you, the waiver, when used properly, will pay for itself over-and-again.
This is written as an educational article addressing general/broad topics and is not legal advice, nor should it be taken as such. If you need legal advice, you may contact me at Lonzo Law, message me on Facebook, or reach out to your preferred attorney to discuss the specifics of your situation.
This educational post was provided by Lonzo Law.