Allowing Use of your property for ATV, Dirt Bike or Snowmobile use.

An insured with 30 acres in Foster recently contacted me about whether or not he could allow people to use the trails he has constructed for Snowmobiles in winter, and Dirt Bikes and ATV’s the rest of the year (described as “trail vehicles” in the remainder of this article). He is proud of the trails he has made and wants to share the fun he and his family are having on them with others. He’s concerned about the liability he might be assuming when someone gets hurt; was this use covered by his insurance policy?

As we discussed further, it was apparent that he knew he had a substantial liability exposure and did expect the insurance company would have an issue with the activity. He may have wanted to know if he could do it without telling the insurance company? He also wanted to know if I had a cheap way for him to get a document he hoped to have all users sign to waive him of “all” liability. There are lots of issues that came out of this discussion that are worth sharing here.

Trail vehicles may be used as work horses for a variety of uses without giving rise to special coverage concerns; but more commonly they are used for recreational purposes which are a concern. It is thrilling to speed along a back country trail, splashing through puddles or bouncing over the crest of a hill. But with that thrill is the element of danger evidenced by National Safety Council statistics for such vehicles. These statistics track the number of people killed or injured on these machines every year. The injury profile from such vehicles include a high frequency of operators 15-25 years of age, a high incidence of debilitating intracranial and cervical trauma, and the most common injuries being trauma to arms and legs.

First, the issue of creating a document for riders to sign. I’m not an attorney. There are serious legal concerns arising from a proposed agreement that must be addressed by an attorney.

I can explain that the document he was seeking is known as a “Hold Harmless Agreement”. In theory, it spells out that the signer of the document is assuming responsibility for all of their potential for personal injury and waiving the right to sue the property owner for whatever role they served in the resulting injury. If it worked as intended, then the kid, who becomes seriously injured after he crashes his dirt bike, would not be able to bring suit against you for failing to supervise him, or any others using your property. It would avoid suits for failing to make sure all natural hazards on the trails (such as rocks and tree stumps) have been removed. It would shield you against the allegation that you failed to make him aware of the hazards that might have been encountered while using the trails. That agreement might also protect you when the kid’s parents go after you for allowing their minor child to use your property. Such agreements are seldom worth the paper they are printed on. They usually are a defense in court to show that you tried to make them aware of the hazards. But, it can also back fire by showing that you knew the hazards existed and failed to eliminate them.

Anyone can drag you into court with any allegation; legitimate or not. The question usually becomes how much money are you, or the insurance company, prepared to use to defend against such actions? Will a jury side with you, or a teenager confined to a wheelchair for the rest of his life because he lost control of his bike when his tire glanced off a surface rock as he was speeding through your trails. I predict the jury would find you had some degree of negligence. The reality is that the friendly well intentioned desire to allow friends to use your property for these thrilling recreational activities could escalate into an extra ordinary liability claim.

Even if the property owner did develop an iron clad “hold harmless agreement” signed by all of the known recreational vehicle users, it would not protect him from the unknown riders. It likely would not protect against claims by others (third parties) injured by the trail vehicle operators who cause them to be injured.

If you have an old logging road or other trail for property maintenance, logging, farming, or some other incidental use, and someone were operating a trail vehicle on it and was injured, the insurance company would have to respond to at least defend you. Your personal use of your property with such trail vehicles creates no coverage questions.  However when you clear trails for this intended use and specifically invite riders to use your property, you are creating exposures not intended, or rated for, when an insurance company agrees to insure your property.

When you originally sought the insurance coverage, you signed an application that included several questions that would have identified if any similar activities were being performed, or planned for the property. If your answers denied such use, the insurance company has grounds to cancel the policy or to deny coverage if there were a loss due to fraudulently completing the application. If you decided after taking out the policy to add the trails for this intended use, you have increased the exposure giving grounds for the insurance company to cancel your policy.

With the severity of potential injuries incurred by such use, merely increasing your liability limits may help protect you, but at what cost. How much liability coverage do you think you’d need to settle a law suit arising out of a teenager’s crippling accident? The added cost to increase liability limits to a few million dollars, was motivation enough for my insured to rationalize the entertaining of friends is fun, but not at the expense of his family’s financial well being.