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Insurance Alert


Supertrax International
Kent Lester, March 2004, Page 5

There's a crisis looming in the snowmobile industry with the potential to radically alter our ability to enjoy our favorite winter pastime. No kidding. We need to be paying attention.

The crisis is insurance – more specifically, the skyrocketing costs of insurance coverage. The situation is twofold – a double whammy in the pocketbooks of the sport.

Most of us understand insurance in terms of what it costs us every year to be able to insure our faithful sno-bullet should we have the misfortune to be involved in an accident during the season. This is called Personal Liability Insurance. It protects the other party should someone else be injured, it covers property damage should our snowmobile cause destruction to someone's personal effects, reimburses us for fire or theft and, if we pay extra for collision coverage, it will cover the expenses to fix our own sled.

In some jurisdictions the premiums for Personal Liability insurance have skyrocketed out of control. Riders with any kind of a negative driving record (speeding tickets, no-fault and minor accidents) are either told to look elsewhere for coverage – difficult, to say the least, when many underwriters aren't even willing to look at the snowmobile insurance business, let alone provide coverage. In the best case, premiums are bumped so high it no longer makes sense to own a snowmobile – and the owner is forced to drop out of the sport.

The second and even greater problem is with General Liability Insurance. General Liability is the insurance your state or provincial snowmobile association pays so you can ride the snowmobile trails. It protects clubs, association members, the volunteers who work on the trails and landowners from claims associated with the operation of trails. Without this protection in place, volunteers and landowners would be at risk personally for any accident occurring on the trails. Without General Liability coverage, private landowners would cease allowing snowmobilers to build, maintain and use trails on their property and the volunteer network would collapse. There would be no snowmobile trails.

Don't think this is a serious issue? Get this: in the Province of Ontario the cost of General Liability Insurance has skyrocketed from $3.00 per trail permit in 2000-01 to $41.00 per permit in 2003-04. That's an increase of over 1300 percent in three years! With 100,000 plus permit buying snowmobilers in Ontario, rate hikes like this can't help but have a very serious effect on winter tourism and snowmobile related businesses.

Last year New York state's snowmobile association had an emergency when their General Liability insurer bailed on them at the last minute. No coverage. In an eleventh hour remedy the situation was saved but, think about it – with the great winter enjoyed last year on the Eastern Seaboard, there could well have been no legal snowmobiling.

Why is this happening? We're doing it to ourselves. Some within our ranks who have experienced injuries as a result of an accident on the trails have allowed and even encouraged their lawyers to sue everyone within swinging distance to get the fattest settlement possible. For instance, in a single sled accident where the snowmobiler may actually have been a) going too fast b) driving carelessly or c) driving under the influence (although within the legal limit), everyone gets sued. First target is the General Liability insurer, then the person who owns the land the section of trail is located on, the groomer operator, the volunteers who built or maintain the trail, the club executive, the association – even the snowmobile manufacturer. In fact, anyone on a long list of people to blame unfairly who ever had anything to do with the trail is at risk.

Perhaps you're saying: "This is just how the legal system works and I'm entitled to my rights. Besides, in many cases these claims don't hold up in court." That statement is partially true but not always. By the time all the evidence is gathered, inspected, affidavits prepared and legal time calculated, the cost for a day in court can easily run upwards of $20,000.00 for each party. If the case is strongly defended there can be several court dates. If you're an innocent party, even if you win and don't have to pay a cash settlement, you lose – or at least the insurance company loses. Thus the high cost of premiums.

Recently, it's been established snowmobile claims are becoming both more frequent and have an average cost equal to automobile claims. Check the stats and you'll find there's only a fraction of snowmobilers out there buying insurance compared to car owners. The pool is small in snowmobiling and the insurance actuaries see the risk as being great. Do the math and you can see why insurance companies don't want to write policies for us.

How can we fix this? First of all we need to check our egos and ride responsibly. This means governing ourselves about alcohol consumption, speeding on trails and irresponsible riding habits. Furthermore, it means when we have an accident, we need to look inside first and determine where the fault really lies. A frivolous lawsuit can affect thousands of our fellow riders and eventually shut down the sport completely.

Secondly, we need to write to and talk to our government officials. Legislation which allows insurance companies to be sued with abandon needs to be restricted. We need lower limits placed on liability settlements. These limits already exist in many states but not all. North of the border, the limit on a claim in Quebec is $5 million; in Ontario it's $15 million. Guess who's having more trouble with insurance coverage. These ceilings need to be reduced to sensible limits and paid out without the legal wrangling which makes the price so high.

Once again, common sense needs to prevail.

$10.7 Million Awarded To Musselman


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