Insurance Allies, LLC, division of Specialty Program Group LLC. Doing business in California as SPG Insurance Solutions License No. 0L09546.
© Copyright 2024 SmashRoomInsurance.com
There are several ways a rage room can be sued and lose money. In this section we will examine
some of the main exposures that a rage room can mitigate from an insurance perspective.
Before we dive into the details, our firm at Insurance Allies (SmashRoomInsurance.com) is an
independent insurance agency with zero ties to any one specific insurance company. We believe
we know them all in the industry and for the most part can always obtain you the best price. We
always strive to do what is in our client’s best interests. We care about obtaining the best price,
but in the process of doing so, we also care just as much and if not more about educating you
throughout the process, ensuring things are done correctly and helping you build an insurance
program around the coverages that matter to you. Unfortunately, when you purchase insurance,
you do not just pay a dollar amount and you are covered. There are numerous aspects to
coverages (and exclusions) and it is our utmost goal to help you build an insurance program
around the coverages that are important to you!
Let’s examine some of the main coverages below in more depth. Please note the below is meant
to serve as a high-level overview and is not all encompassing.
General Liability covers bodily injury OR property damage to others. This is almost for sure
going to be required if you are operating on someone else’s premises. A standard liability
policy in America (whether you are a flower shop or Pickle Ball Company) comes with the
following limits: $1M per Occurrence and $2M in General Aggregate. What does this mean?
Occurrence and Aggregate, huh? Here is an example: If one court was wet and three people
slipped at the same time, that is one occurrence. Technically, you could have three lawsuits
from that one slip and fall. An occurrence limit is the maximum amount your insurer will
reimburse you for one covered incident or claim. The aggregate limit is the maximum amount
your insurer pays for all covered claims over the term of your policy. Depending on your policy
limits, one claim or multiple claims reach your aggregate limit. This covers participants,
coaches, and spectators.
If I purchase and umbrella, I am covered for anything that goes wrong, correct? This is one of the
biggest misconceptions in insurance. All an umbrella does is it provides higher liability limits.
You can raise your $1,000,000 per occurrence and $2,000,000 in general aggregate up to
whatever limit you want (i.e. by purchasing a $1,000,000 umbrella you would raise your limits to
$2,000,000 per occurrence and $3,000,000 in general aggregate).
This is a coverage that we highly recommend, and we personally believe it is one of your most
important coverages. General Liability only is triggered in the event someone calls a lawyer and
sues you. You may not want someone suing you on small situations. If a customer comes into
your venue and cuts their arm, they are the ones going to the hospital and incurring medical bills,
not you. They are most likely already upset with you. People that are hurt, upset and possibly
do not have money to pay for their medical bills tend to call lawyers. The problem is lawyers do
not ask for $4,000 in medical bills for stitches, they ask for $1,000,000 in mental anguish on top.
The point of an accident policy is provide up to a limit, say $25,000 of medical expense “go
away” money to prevent small incidents from turning into a large lawsuit, (i.e. Bob (customer) I
am so sorry you were hurt, please send in your medical bills and no questions asked we will send
you a check in the mail to take care of your medical bills. (Hopefully this deters Bob from
actually calling a lawyer).
Liquor Liability is insurance coverage for selling, serving, or distributing alcohol in America.
Obtaining coverage for selling alcohol when rage rooms are present is not impossible, but it can
make your insurance costs increase significantly. Most insurance companies are not favorable
towards BYOB and especially with rage rooms. In their minds you can control what people
drink when you sell it, but when you do not, you cannot.
Just like any other line of insurance, unfortunately there is no one set “Property Coverage.”
Property insurance is made up of a multitude of line items. Property insurance is somewhat ala
carte. As long as your landlord is not requiring you to have property insurance (some do per
your lease, please refer to our LEASE REVIEW) then you should be able to pick and choose
what you want, if you want it at all. It is our goal to help you pick the plan that works best for
you! Below we will examine some of the main items:
1. Building: This typically refers to the structure of the building itself. You typically will
only insure against this if you own the structure itself.
2. Betterments and Improvements: This is meant for renters and refers to a dollar amount
you want to insure against for the replacement cost of the construction you have put
into the unit (such as a walls, counter tops, smash room build-out, etc.)
3. Contents: This applies to all of your “stuff” inside. Imagine you were to flip the building
upside down, anything that were to fall out would be your contents (i.e., desks, chairs,
computers, equipment, inventory, items for people to smash).
4. Outdoor Sign: Whether you rent a building or own it, if you are concerned about
damage to your outdoor sign, you would typically need to schedule a dollar
amount/value for this.
5. Plate-Glass: Plate-glass refer to the front windows. If you own the building, this should
be included as part of the building, but what if you do not own the building and you are
renting it and some jerk throws a rock through your window and your landlord holds
you responsible? You can actually insure against the replacement cost of your front
windows for whatever dollar amount you want to
6. Equipment Breakdown: Equipment breakdown refers to a loss to your property from
direct physical losses due to things such as damages caused by covered internal forces,
such as power surges, electrical shorts, mechanical breakdowns or steam pipes, boilers,
or equipment
7. Mobile Equipment: Property insurance is typically limited to a specific location, but you
can add on coverage for a property that travels around such as a mobile trailer
8. Business Income and Extra Expense (or Business Interruption): Business income and
extra expense was a huge topic in America over the last few year’s with the pandemic.
This will cover you for up to one year’s worth of lost revenue and expenses you incur in
the event you are shut down and cannot operate. This does typically require a direct
physical loss to your space that prevents you from operating such as a fire, tornado,
hurricane or even riot. There are usually three main exclusions on almost any property
policy and business income and extra expense (or business interruption) is part of your
property insurance: 1. Flood 2. Earthquake and 3. Virus and Bacteria (aka Covid
Shutdowns).
Flood: Flood is typically not included in a property policy, but it can be obtained
separately. We always highly advise you to understand if you are in a flood zone and if
you are, we always highly recommend purchasing a flood policy separately.
Earthquake: Earthquake is also typically not included in a property policy, but it can be
also obtained separately. We always highly advise you to understand if you are in a fault
line and if you are, we always highly recommend purchasing a separate earthquake policy.
Workers Compensation is required by law in almost every state the minute you hire an
employee, and it is meant to protect your employees if they are hurt on the job. Whereas general
liability protects third parties, workers compensation is meant to protect your own people.
Typically, up to 4 owners can opt out of coverage (depending on the state), which means the
owners are not awarded coverage, but they are also not incorporated into the cost. Workers’
compensation is governed by a government body named National Council Compensation
Insurance (NCCI) in as many as 36 states (even the states that are not governed by NCCI,
they have very similar rules and regulations). They set class codes (or job descriptions) for every job
you can ever think of. For example, they set job descriptions for carpenters, lawyers, teachers,
hairdressers, and they even set class codes for smash room operators. They then set rate
guidelines on what your private insurance companies should charge you based on your payroll in
these various class-codes. In short, it is a very regulated industry and there is a calculation as to
how your costs are originated and it is very state based. Our team is here to educate you through
the process.
There are many others coverages that are not discussed above that may be an exposure that our
team is prepared to help you understand. Please do not hesitate to schedule a time with one of
our consultants here (https://calendly.com/axethrowinginsurance).
Some of these items include, but are not limited to the following:
1. Hired and Non-Owned Auto: vehicles used for business purposes in a vehicle not owned
by your business (i.e. Bob employee running errands)
2. Assault and Battery: (think of two people hitting each other with baseball bats in a rage
room)
3. Employment Practices Liability: allegations of age, sexual, racial discrimination,
wrongful termination. Note in many states a corporate veil may not protect you from
being sued personally
4. Directors and Officers: Suits from investors and creditors for “mismanagement” of your
business. I.e., if you take a loan, someone may allege you ran the business into the
ground and sue you for their money back. Alike employment practices, in many states a
corporate veil may not protect you from being sued personally
5. Cyber: damages resulting from cyber related crime or even someone hacking your
credit card systems and them you are fined or having to pay out money for items such
as sending out certified letters by mail or credit monitoring, both of which can be very
costly
6. Crime: Crime is theft of money. You may have coverage for your property such as
contents, but the definition of contents does not include cash money (theft from
employees or third parties)
7. Employee Benefits Liability: Mismanagement of employee benefit plans such as 401K’s
or health plans (i.e., John customer shows up to the hospital and shows the person at
the front the Blue Cross Blue Shield Card that you provided, and it does not work
because you forgot to pay the bill!)
We can absolutely obtain coverage for mobile or off-site operations on either a stand-alone basis
for “mobile only” or as part of your brick and mortar.
The below are items that we have seen insurance companies look for when underwriting your
risk. Please note the below is not meant to meant to be anything more than providing some
feedback and we issue no guarantees as incidents can occur whether you are following the
below protocols or not. We do highly encourage the below.
– Before entering, smash room participants must sign waivers
– No participants physically unfit should be able to participate in the smash room
– No horse playing in the smash room
– Appropriate safety gear will be always worn in the rage room. This includes gloves,
closed toed shoes, and face/eye protection
– No pretend fighting with others in the rage room
– Anyone who intentionally tries to hurt someone will be asked to
– The Rage Room is monitored at all times
Insurance Allies, LLC, division of Specialty Program Group LLC. Doing business in California as SPG Insurance Solutions License No. 0L09546.
© Copyright 2024 SmashRoomInsurance.com