Kids and Liability Risks:
How much of a problem does this really present?

By Charles H. Van Gorder

When people discuss kids and recreational programs, the topics of injury and potential liability always arise. The problem is that kids can get hurt when participating in any activity, no matter how well planned or supervised that activity may be. No amount of planning and preparation can eliminate the risks inherent in activities such as ropes courses, rock climbing or kayaking. These and similar outdoor recreational activities simply would not be the same if they were risk free! If a child is hurt, parents may look to someone else to bear the responsibility for injuries and damages. This could be an effort to assign blame to someone else or to obtain a monetary award or settlement for medical expenses and "pain and suffering."

If a participant, whether an adult or a child, is injured while participating in an outdoor recreation program, our legal system permits them to seek compensation for any resulting damages. One basis for such a claim could be that the sponsor, or its employees or volunteers, did something wrong (or failed to do something they reasonably should have done) which resulted in the child's injuries. The plaintiff must prove the sponsor, or its employees or volunteers, did something wrong (or failed to do something that should have been done), and that error or failure to act resulted in the specified injuries or damages. It makes little difference if the sponsoring entity is an educational or nonprofit organization. In some states, however, and at the federal level, there are laws which may protect volunteers, officers or directors from individual liability. 

The involvement of minors in outdoor recreation programs introduces many special considerations. If a child is seriously injured, not only can the child sue for medical expenses and "pain and suffering," but the parents and other members of the child's immediate family can sue for their own emotional suffering and "loss of companionship." In many states, an injured person must file a law suit within three years of the injury. Where the injured person is a minor, that three year period may not start to run until the child reaches the age of majority (usually eighteen years old).

Involvement in a law suit is stressful, time-consuming and expensive, even if you prevail in the long run. The key to avoiding law suits is to run a safe program and to minimize accidents through an aggressive risk management program. If and when a serious incident does occur, emphasis needs to be placed on keeping frivolous claims out of the legal system.
Express Assumption of Risk - Liability Release Forms

Under the law of many states, one defense to a negligence claim is the injured party's assumption of the risks inherent in a particular activity, such as rock climbing. If someone participates in rock climbing, he or she may recognize there is a chance of injury and therefore "assume the risk" of such an injury. If this defense is applicable to a particular claim for damages, it could completely defeat the claim or reduce the amount of damages that might be recovered.

In applying the assumption of risk defense, a court will consider many factors, including whether the injured party knew of the specific risks that caused the injury, and whether he or she expressly chose to voluntarily participate in the activity despite knowledge of those risks. The use of an appropriate written release or acknowledgment of risk form is one way to show that the injured party was aware of specified risks and chose to participate despite the knowledge of those risks. Courts in many states have ruled a signed release form may completely bar a claim by an injured party. This is a matter of state law and you should consult your own legal advisor about the status of the law in your state.

A liability release should specify all of the risks to be assumed by a participant in an outdoor recreation. Participants may be able to release the sponsor from liability resulting from naturally occurring conditions, equipment failure, actions of other participants and even negligence on the part of the sponsor in conducting the activity. Liability resulting from gross negligence or willful or wanton recklessness on the part of a sponsor usually cannot be waived. It is important that you consult an attorney experienced in the recreational industry when preparing a liability release form. Your release must be tailored to the law of your state in order to enhance the chances that it will be upheld if challenged in court.

A complete release form will not only address the inherent risks in the specific recreational activity, but also other concerns such as applicable state law and the award of attorney's fees in the event of an unsuccessful attempt to challenge to validity of the release. A release should include a severability clause so that the entire release will not be found void if any one portion is invalid. The release needs to specifically name all of the parties that are to be released from liability, and should state that it applies to the participant and to his or her parents, heirs, assigns, personal representative and estate.

Preparing the appropriate release form is only the first step in protecting yourself or your organization from liability. A release form must also be used in an appropriate manner in order to be effective.  Participants must have an adequate opportunity to read and understand the release. A participant must also have a realistic choice of not participating in all or a portion of the subject activity, and of receiving a refund of any fees paid if he or she does not want to sign the release. The release should state that the participant has had a full opportunity to read and understand the release, and that he or she understands that signing the release may result in the loss of certain legal rights in the event of injury. Minors who are unwilling to participate in an activity should not be forced to do so, and should be protected from peer pressure in the event they elect to withdraw from a particular activity.

The law is quite unsettled over whether releases can be enforced against minors. Courts in some states have ruled that minors simply do not have the legal capacity to sign releases for themselves; therefore any releases they sign are unenforceable. If a minor cannot sign a release on his or her own self, is a release signed by a parent effective to bar a minor's claim? Some states have ruled that parents can sign releases on behalf of their children, while other states have ruled parents have no right to sign away the legal rights of their children. Note that where a release signed by a parent is not binding on a child, such a release may still be effective to bar claims that might otherwise be brought by the parent, on behalf of either the parent or the child. Where a state does enforce releases signed by a parent, do both parents have to sign the release? Once again, you need to know the status of the law in your state! In some states, a parent may not be able to sign on behalf of the other parent, especially if the parents are divorced. Attention must also be paid to whether the applicable age of majority is 18 or 21 years of age.

Implied Assumption of Risk - Acknowledgment of Risks
If release forms signed by minors are unenforceable in your state, not all is lost! Written release forms often contain an express acknowledgment of the specific risks involved in the particular recreational activity. A minor's signature on a release form containing such a listing of risks, along with the minor's decision to voluntarily participate in the recreational activity despite his or her knowledge of those risks, may constitute an acknowledgment of and an assumption of those risks. This is often referred to as implied assumption of risk, whereby the mere participation in an inherently risky activity is considered to be an acceptance by the participant of those inherent risks. Since this form of assumption of risk is not necessarily dependent upon the signing of a contract, it can be applied to minors.

One key consideration in the successful application of an implied assumption of risk defense is demonstrating the injured party was aware of, and fully appreciated the nature and severity of, the risks inherent in the activity. One way of accomplishing this is to have every minor participant read and sign an acknowledgment of risk form. If this is required of a minor participant, his or her signature can be used to show he or she considered and understood the risks of participating in the particular activity.

Another key consideration in applying implied assumption of risk to minors is to be sure they are well educated in the nature of the activity, including its inherent risks, and are carefully exposed to such inherent risks, participating in activities that slowly increase in difficulty and degree of inherent risk. Ensure that each minor understands the risks of participating in different levels of the specific outdoor activity. Let the kids have the principal responsibility in deciding when they are ready to progress to the next level of difficulty. If you can show your kids are fully advised as to the inherent risks of the specific activity, and have been brought along carefully so that they appreciate the nature and severity of those risks, you stand a better chance of a court deciding that the child assumed the risks involved in that activity and therefore waived the potential liability of the sponsor.

Indemnification Agreements
A relatively new concept for limiting potential liability when minors participate in an activity with inherent risks is for the parents or guardians to agree to indemnify the sponsor (and its employees and volunteers) in the event a minor, or someone on a minor's behalf, successfully sues the sponsor for damages. Thus, if there is an award on behalf on the minor, the sponsor can seek reimbursement from the parents or guardians. A sample indemnification agreement for the participation of minors, to be used with a standard liability release form, follows this article.

Indemnification agreements may not be useful in all cases. If the parents or guardians have minimal financial resources, the sponsor will have a hard time extracting sufficient funds to cover a major financial award to the minor. Where an award is likely to be relatively modest, as with a minor injury, the parents or guardians will often have sufficient resources to pay any indemnification award. While an indemnification agreement may not stop a lawsuit on behalf of a minor in the case of a catastrophic injury, it may discourage the filing of "nuisance" law suits on behalf of minors.

Since the use of indemnification agreements is a fairly recent practice, there are few court cases involving challenges to the validity of such agreements. It is possible that state courts may decide such agreements are contrary to public policy and therefore invalid (and a trial court in at least one state has reportedly done so). Until a court in your state rules on this issue, it makes sense to use indemnification agreements in an attempt to limit potential liability.

Risk Management Practices
Proper risk management practices are the keys to minimizing potential liability. While a comprehensive discussion of risk management is beyond the scope of this article, several points should be noted. Your organization should have a comprehensive risk management program in place. In addition to the release forms and indemnification agreements discussed above, it should also include ensuring that participants are fully aware of and appreciate the nature of the risks inherent in your activities, and voluntarily accept those risks when participating. You should have a suitable medical form that allows you to screen the physical ability of potential participants in your programs. When potential problems or special needs are identified early enough, they can usually be accommodated in a safe manner. You may also want to ensure that your participants have adequate personal health insurance coverage.

Insurance
Accidents will happen from time to time, so it is important to shift the financial burden for any monetary damages for which you might be found liable. The ultimate question is how to protect the financial viability of your organization in the event of an award of damages. The answer lies in purchasing an adequate insurance policy to provide financial protection against such awards. Care must be taken to find a policy that will provide the necessary coverage. Comprehensive General Liability Insurance is the type of insurance that will protect you in the event of a participant's claim for damages due to an injury while taking part in outdoor recreation activities with your program. The advice of a trusted insurance professional is essential in making an informed decision.

It is important to understand from whom you are buying your policy, what the policy covers and what are your obligations under the policy. A mistake in buying insurance or fulfilling the conditions of the policy can destroy your program. Decisions should not be based merely on the cost of the premiums. You need to consider the following questions: Who is the insurer? Who is covered by the insurance policy? What is covered by the insurance policy? What is not covered by the insurance policy? What are the conditions of insurance coverage? When is there coverage under the insurance policy? How much insurance coverage is there? How is the cost of the insurance coverage calculated?

Claims handling and settlement authority are critical considerations as they focus on how your insurance actually works in the event of a claim. You must know how, to whom and when to report any accidents that may result in potential claims. Your failure to properly report an incident may dramatically reduce the insurer's ability to investigate the underlying facts and act to control the resulting damage. You need to know exactly what constitutes an "accident" under the terms of the policy so you know whether there needs to be a report made to the insurer.

Also important is an understanding of how the insurer is going to handle claims. Who is actually going to handle the claim, and what is their philosophy? Are they going to agree to a quick settlement in order to keep down the legal fees? Are they willing to fight the claim tooth and nail, regardless of the cost, in order to discourage frivolous lawsuits? Who makes the final decision on whether or not to settle? Who gets to choose the attorney who will defend you?

Have one person be responsible for understanding the insurance coverage you need and for obtaining appropriate price quotations. If you have a question about coverage, ask it in writing and get a written response. Ambiguities in insurance coverage questions are generally construed in favor of the insured. An insurer will know their policy inside and out - you need to know it as well! Also, errors or omissions in the application for insurance coverage can be viewed as misrepresentations and possibly void the policy. It is essential that you are thorough and accurate in completing the policy application.

The bottom line in purchasing insurance is to remember that insurance companies are businesses, and their objective is to make money. While they are trying to sell you a product, they will not give away their money if a claim is not covered, or if you have not complied with the conditions of the policy. Once a policy is in place, an insurer has a right to expect its insureds will adhere to all of the conditions stated in the policy. There should be one person with your program who has the responsibility of reading the policy each year (page by page), and being sure that you are fully aware of all of the exclusions and conditions of coverage. A failure by an insured to comply with the conditions of the policy can lead to a denial of coverage.

Conclusion
At first glance, the issue of potential liability for those conducting outdoor recreation programs for kids is almost overwhelming. The legal system does provide significant protection through the assumption of risk defense. Appropriate risk management practices, adequate insurance and the selection of the proper form of business organization can reduce potential liability to an acceptable level. An unwarranted fear of potential liability should not stand in the way of an outdoor recreation program when everything else is ready to go!