Summer is a season of recreational fun and personal relaxation; a blissful stretch blessed with balmy weather to enjoy long weekends with friends and family, the children and grandchildren off from school. Unfortunately, summer is also the riskiest season of the year.
Automobile accidents and related fatality rates alarmingly rise during summer months, particularly among teen drivers. Summer is also when people are more likely to become injured or ill due to heat stroke and water-related accidents. It’s also the riskiest period for someone ill or injured to have to go to a hospital.
Summer brings us all a range of wonderful activities, but many of these pursuits are fraught with liability exposures — particularly for high-net-worth families and individuals. Summer may entail long vacations to far-flung locales, backyard parties by the pool and outdoor bar, guests staying at one’s homes and pleasure-seeking jaunts on diverse watercraft. But the warm weather also invites fire threats at mountain cabins, and hurricane winds and floods at coastal homes.
“Summer should be a season of stress-free fun with the family and friends,” said Dale Krupowicz, COO at Personal Risk Management Solutions, a New York-based insurance agency that serves a predominantly HNW clientele. “It can be, but only if the various hazards that tend to occur during this season are understood and addressed.”
Krupowicz noted a few atypical risks her high-net-worth clients confront during summer months. The first hazard is in watercraft and water sports.
“The risk with jet skis is that they’re often operated by teenagers and even younger children,” Krupowicz explained. “Typically, the kids have friends they’ve brought along who have no experience or training in how to safely ride these vehicles. If they’re injured, assuming the friends’ parents have given permission to ride the jet ski, the homeowner is usually covered by insurance. Nevertheless, there are still other coverage nuances that have to be considered.”
Krupowicz pointed out that routine homeowners insurance policies only absorb the owner’s liability if the jet ski is powered by a 50-horsepower engine or less. Many luxury jet skis like the Sea-Doo GTX 215 have twice that horsepower and more, with the capacity to reach speeds approaching 60 mph. “Hitting the water at that speed is like hitting cement,” she said.
With faster jet skis, the sleep-easy solution is to acquire personal watercraft insurance, which covers first-party and third-party liabilities involving a family’s sailboats, yachts and jet skis. It is important to note that typical watercraft insurance does not cover liabilities emanating from parasailing or hydro-powered jet packs. “It’s critical that customers talk to their agent or broker to determine if this coverage can be scheduled to help absorb these risks,” Krupowicz said. “If not, you’re on your own.”
Big Boats, Big Worries
Yacht ownership comes with a range of unique risks. More than 100 yachts today are as long as 225 feet, double the length of what was considered a “mega-yacht” a generation ago. These boats require the hiring of captains and crews. Much smaller yachts also need specialized professionals at the helm, but often people who have sailed their whole lives disagree with this.
Krupowicz explained, “We just had a situation with one of our clients who had never operated a large watercraft, [and] only had experience with smaller boats. We explained that […] as you upgrade, the experience level of the operator is extremely important. In this case, we told him that he needed to hire a full-time paid captain. If this condition was not complied with, the carrier would not provide coverage for his new yacht.”
Other watercraft risks involve worker injuries and illnesses, as well as first- and third-party bodily injuries and property damage. There are also stringent insurance coverage requirements based on maritime law. With regard to the latter, owners of vessels with a captain and crew are required to have Jones Act coverage, which is similar in some respects to workers compensation insurance.