Insuring Screams

On the corner of GL Lane and Workers Comp Avenue sits the industry of insuring haunted houses. Inside you may find killer clowns wielding chainsaws, vampire cowboys chasing you for blood, and the most horrifying, dimly lit, emergency exit signs obstructed from view.

We’re not talking about real haunted houses of course, because we have yet to see that industry take off. However, haunted attractions have grown not only in price but also in profit in the past couple of years and are estimated to be generating around $500 million each year. Although haunted attractions try to blur the line between guests’ safety and the terrifying thrills, it is often the insurer’s job to account for the risks associated with the actors and the patrons they are trying to yank a scream out of.

Brett Lipton, vice president of Castle Rock Insurance Agency, spends the bulk of the year working in product liability coverage for manufacturers. But when autumn rolls around, Lipton continues his decade-and-a-half practice of covering everything from haunted houses to escape rooms to the latest virtual reality spooky attractions.

Haunted attractions can vary from a family’s transforming their garage into a haunted house for the neighborhood to a theme park hosting a commercial Halloween festival filled with hundreds of props, actors and guests. General liability coverage is entirely dependent on how big and how intense a haunt operation is.

For just about $20 or $30, a guest can go through an attraction filled with several actors, props, machinery and sets. “Some of them are pretty elaborate, but a lot of it is the cost of hiring someone at minimum wage and then paying the workers comp and the other expenses involved with setting up the pyrotechnics and lighting,” Kevin Morency, president of Morency and Associates, says.

Protecting Patrons

From a risk management perspective, there are steps haunted houses can take to protect their patrons and thus limit their liability. For most haunted house attractions, there is often a low-lit path that patrons must stay on and actors must stay off. That way a guest can make it through the entire attraction or find exit signs if something goes wrong during their experience. This can also help prevent trips and falls. Some high-tech operations also utilize cameras to capture all encounters in case of an assault, battery or molestation charge. “Most of these policies have an assault and battery exclusion on there,” Lipton says. “If somebody [an actor] jumps out and hurts you, that’s really going to fall under assault and battery, especially if somebody is wielding a weapon, whether it’s sharp or not.”

Although being scared stiff from an actor creeping just a few feet away is enough for some, other thrill seekers look for an even larger rush. Risk management and commercial insurance agent Kyle Teeples, of Olivier-VanDyk Insurance Agency, specializes in haunted house coverage and works with haunts that allow touching, with consent from patrons.

“Every underwriter is automatically assuming the worst-case scenario when it comes to haunted houses,” Teeples says. “We have a haunted house that is in the Detroit area that’s multiple levels, and it is a full hands-on experience. People sign lots of waivers, and they can grab you and pull you away and lots of different things. It’s terrifying…Lability is our biggest exposure and it just depends on the attraction or what they’re doing in their show that’s causing their premiums at the end of the day. So, if its hands on, yep they’re going up.”

Actor Injuries

Patrons aren’t the only ones who need protecting. Injury is common among actors and those who put on the events.

Actors are vulnerable to injury from the patrons who want to hurt them purposely or who do so by accident. The Universal Orlando Halloween Horror Nights addresses the issue of harming scare actors by stating on its website, “If you mistreat any of the Halloween Horror Nights performers, you’ll be sent home (possibly in a body bag).” However, the reality is no joking matter to insurers and actors.

“There’s the people who are just downright belligerent, punching, hitting, choking, spitting at or groping actors,” says a 29-year-old actor at Terror Behind the Walls at Eastern State Penitentiary. “We’ve pretty much seen it all. One year somebody came in with a gutter pipe-like object, and they cut an actor’s hand open.”

For some guests, reacting to a scare may result in punching the actor in the face rather than screaming.

“None of them want to get punched in the face; I get that,” Teeples says. “The unfortunate thing is that the easiest solution to make the employees safer in reality is creating a further barrier between the customer and the employee. Separating them to some level. But part of the scare factor and the enjoyment of going to these haunted houses is the fact that people can get right up next to you and scare you, which is where they’re getting hit.”

Workers compensation is available for haunted houses interested in protecting their actors, and both actors that Leader’s Edge interviewed confirmed they receive workers compensation through their employer in case they are ever hurt on the job.

While receiving workers compensation can be expected in large-scale haunted house attractions, obtaining that type of coverage can be difficult for many actors in smaller operations. One reason is that premiums for many types of haunted house insurance can make coverage unaffordable for small haunts.

According to Lipton, it is common for smaller haunts not to offer their employees coverage, as many operations refer to their staff not as workers but, instead, as volunteers. While this allows for more wiggle room in profit and higher pay for laborers and actors, it can render them unprotected.

And things can definitely go wrong. A lot of labor goes into creating the atmospherics of haunted attractions, and putting together haunts can be just as, if not more so, dangerous than acting in them.

Lipton describes a past haunted house accident. “Everybody at this point was a volunteer. They had ordered a bunch of these big 42-, 48-gallon oil drums as props. One of the volunteers who was helping set this thing up took an acetylene torch to this thing…It was part of the décor there. He lit the torch up and started cutting into it. Nobody bothered to see what that container was used for before they got their hands on it. And the thing went off like a grenade.”

The oil drum contained highly flammable contents and ignited when touched with the torch. The volunteer was killed in the accident. If the haunt had offered workers compensation, the accident likely would have been covered, as workers comp should cover injury, death or dismemberment. But a general liability policy will usually exclude injury to employees. And in cases like these the carrier can decline the loss, leaving the proprietor on the hook for injuries. The proprietor in many cases can be the person who’s land the accident happened on.

General liability and workers compensation are the two juggernauts that drastically impact the high premiums found in covering haunted house attractions. From attractions sinking into the Great Lakes to horror houses that torture the most extreme thrill seekers, there will always be plenty of threatening risk exposures in this sector. The hard part in this industry is juggling the entertainment of forcing screams out of guests, while also ensuring no one gets hurt in the act.