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As more than 10 million skiers schuss down Europe's ski slopes this winter, owners and operators of ski facilities are trying to minimize their exposures above and below the snow's surface.

Despite tight safety regulations and wide-reaching state health coverage for local skiers, resort and lift owners still face plenty of unforeseen risks.

Mechanical defects and employee errors are the main causes of ski area accidents in the last decade, says the Austrian ski lift association, Interkantonale Seilbahnkonkordats. Since 1984, 224 accidents were reported in Austrian ski resorts. About 61% of those resulted in serious injury and 3.2% in death.

But, "compared to other forms of transportation, we are actually talking about relatively few accidents," said Franz Bichler, an insurance broker at AGI GmbH in Rosenheim, Germany, which specializes in ski risks. "But when they occur they usually result in serious bodily harm."

Last year, for instance, Austria reported 33 ski accidents, including 17 serious injuries. Half of the accidents were the result of a technical defect in equipment or employee mistakes. Skiers were at fault only 30% of the time. Other accidents resulted from natural causes like storms and lightning.

Safety regulations

Ski resorts are required to comply with a variety of safety and security measures. Government and trade guidelines define how often and what safety features resorts must check.

In Germany, for example, lift owners must perform daily, weekly and monthly inspections of their lifts. Once a year, facilities are checked by a quasi-government engineering control association called the Technische Ueberwachungsverein, or TUEV. And guidelines call for regular inspections of cable clamps, the cable itself, the electrical equipment and brakes.

The Federal Transportation Ministry and trade cooperatives are responsible for monitoring safety guidelines and controls at German ski resorts. Lift owners are obliged to present reports of their reviews to a supervisory office every three months.

"Any time there's a change in technology, a committee made up of government authorities and industry representatives update the list," said Helga Wagner, a ski sport lawyer and director of the German Assn. of Lift Operators.

From an operators' standpoint, keeping up with changes in safety regulations can be costly.

In 1995, for instance, regulators altered inspection guidelines for lift cables after a ski resort reported lightning damage to a cable. Even though only three steel threads-out of a 198-thread, 3-mile cable for a gondola at Wendelstein-Seilbahn in Osterhofen, Germany-were severed, authorities required that the entire 50-ton cable be replaced, rather than merely repaired.

Operators also now are required to inspect cables regularly for lightning damage.

Liability exposures

In addition to complying with tough safety regulations, ski lift operators generally face strict liability for accidents on their slopes.

In Austria, France, Germany and Switzerland, where most European ski resorts are located, ski resort owners' liability is set by legislation that compels resort and lift owners to protect skiers from "atypical" risks.

In contrast to the United States-where resorts generally are protected by laws stating that skiers must ski at their own risk (BI, Feb. 14, 1994)-European resorts are strictly liable for accidents they cause, which means operator negligence need not play a role for damages to be awarded.

Skiers must be warned and protected by the operator from any object 30 centimeters above and below the snow's surface. To minimize this strict exposure, resorts use cushions around many potentially dangerous objects like ski lift supports or rocks.

In 1984, a German court ordered damages to be paid to a skier who was crippled when his skis snagged a fence that was buried under the snow.

Damages for pain and suffering as well as lost wages were awarded against the lift operator, the German Ski Assn. and the community. The skier's wife also was awarded damages for loss of income during the time she took care of her husband.

Details on the award were unavailable, but Winfried Hansen, claims division director at ARAG Sportsversicherung A.G., estimated such a claim would range from 1.3 million to 1.5 million DM ($877,000 to $1 million).

Regulations now call for fences around a ski area's slopes to be taken down before snowfall.

One of the most common risks on the ski slope is avalanche. To reduce their liability for this risk, resort operators often detonate explosives to release areas of built-up snow. "If there is any doubt of the condition of the snow, the run is closed down," Mr. Bichler said.

"By law, resorts must protect skiers from any risk the skier wouldn't normally anticipate," explained Ms. Wagner of the German lift operators' association. "The problem is that sometimes it's difficult to determine what they are."

A landmark ruling in this area came from the Swiss high court. In 1978, a lift operator in Churwalden, Switzerland, was held liable when a 24-year-old skier crashed and hit a stump several meters off the run and was left paralyzed from the neck down.

The case went to the Swiss Supreme Court, which held that ski areas must protect skiers from any danger that the skiers cannot recognize.

In this case, the court concluded that skiers naturally slide down the slope when they fall and therefore resorts must pad or remove solid objects in their path. The case was sent back to the regional court to determine other issues and a final judgment is pending a new trial.

Resort owners, though, already are bracing for consequences of the decision.

"You can't cushion every tree on the run," Ms. Wagner observed. "Because of this case and cases like it, resorts are even more insecure than ever before."

Among other steps, resorts in Switzerland are beginning to use different color demarcation along the boundaries of ski runs. In the past, they often only marked the middle of the run.

The liability exposure created by the decision also demonstrates how important insurance is to the survival of ski resorts, according to Ms. Wagner said. "Even with the most careful precautions, accidents happen and liability is a serious threat to owners."


Many lift managers acknowledge that government-mandated coverage limits are much too low for the exposure.

"Most laws governing ski lift insurance date to the early 1970s, when medical costs were much lower," said Peter Hirt, director of Zugspitz A.G., a company in Garmisch-Patenkirchen that owns and operates 12 lifts at Germany's highest mountain and ski resort. "We need much more insurance coverage than prescribed by law," he said.

By law, German chair lift owners are required to have liability insurance equivalent to 50,000 DM ($33,730) per person using the lift. The maximum coverage required is only 1 million DM ($674,600) per ski lift.

AGI's Mr. Bichler instead recommends liability insurance up to 10 million DM ($6.75 million) in limits for personal and property damage. Some larger resorts-like the Zugspitz-should have amounts up to 30 million DM ($20.24 million), he suggested.

"The rule of thumb is go with the maximum possible loss, gauged by the number of passengers per cable car or lift," Mr. Bichler said.

Lift operators' liability coverage must extend to third-party property damage, personal injury and include compensation for the injured person's earnings, damages for pain and suffering and costs of rehabilitation, he said.

When a skier injures him- or herself, government insurance programs normally cover health and pension costs, unless the resort is found responsible for the accident.

"Insurers will cover strict and negligent liability but not gross negligence," Mr. Bichler said. "By law, resorts are compelled to have insurance for strict and negligent liability for large lifts and negligent liability for smaller lifts."

Since T-bar and rope tow accidents are usually caused by a skier's mistake, an operator's liability for these lifts is limited to cases in which it is found negligent.

However, operators with more advanced facilities-such as chair lifts and gondolas-must have coverage for both their own negligence and strict liability.

Mr. Bichler suggests a minimum of 3 million DM ($2.02 million) of operators liability coverage for T-bars and rope tows, 5 million DM ($3.4 million) for chair lifts, 10 million DM ($6.75 million) for gondolas that can carry six passengers and 15 million DM ($10.12 million) for those that carry more skiers.

Highly regulated safety procedures have kept operators liability premium rates at 4.5% to 7% of insured limits.

"Safety standards are so strict it's very difficult to improve quality of risk management to the point operators get better rates," Mr. Bichler said.

For a typical ski area, a four-person double chair lift operation might have 4 million DM ($2.7 million) liability insurance for personal injury, 400,000 DM ($269,840) for property and 100,000 DM ($67,460) for consequential loss. The premium would be about 4.5% of the limits.

Higher limits for the same lift with a flat-rate all-risk policy of 10 million DM might have a premium equivalent to 5.5% of limits.

Other risks

Most European resorts insure both their lift equipment and exposures on the slopes with an all-risk policy that includes property and liability coverage.

All-risk insurance covers the risk of liability or damage from operational errors, construction and material faults, failure of measuring devices and safety equipment, cable breakage as a result of runaway gondolas, electrical shortages and power surges-even storm, frost, ice, mudslides and falling rocks, earthquake and avalanche.

Typical risks are dislodged cables and skiers who trip when they get on or off a lift. A chair can slip on a cable during descent, and sometimes passengers fall off the lift due to a technical problem or human error.

"Most ski resort policies include coverage for operators liability and damage from fire caused by lightning," Mr. Bichler said. "Property insurance for damage to machinery is common, as well as business interruption due to fire, lightning, explosion and machinery breakdown," he added.

Of particular importance, according to Mr. Bichler, is machine insurance for electronic parts. "Replacing a control board can cost 10,000 DM," he said.

The most common machinery problems occur with transmissions and older electric motors with poor insulation or in control panels damaged through electrical shorts or power overloads.

Property claims also can arise when avalanches damage lift supports or when geological changes damage equipment.

Machine insurance is often used by ski lift operators to minimize their repair costs, Mr. Bichler said. "It works much along the lines of all-risk insurance and serves to cover all unforeseen damage to motors, or transmission, cables, supports, foundations or control units," he said.

"Climate change is another factor that makes machine insurance advisable," Mr. Bichler said. "The probability of cave-ins and mud slides is increasing and many resorts are looking at a higher possible loss" to their equipment, he said.

To offset premiums, Mr. Bichler said resorts often opt for a deductible to retain smaller claims under their liability and property insurance.

"As a rule, resorts do without a deductible for fire insurance because the premiums are so low," he said. "But machine insurance deductibles can be anywhere between 2,000 DM and 20,000 DM ($1,350 to $13,492)."

Employee error is another factor to consider when buying machine insurance, according to Ms. Wagner. In 1994, a gondola in Pitztal, Austria, jumped from its anchoring and crashed into the car in front of it. A door sprang open and a passenger fell to his death. Nineteen others were hurt.

The lift had been in operation for only three weeks and was inspected by authorities. During a special presentation to local authorities, however, an employee bypassed safety controls, which led to the accident.

Leading ski resort insurers in Europe include: Versicherungskammer Bayern of Munich; Hamburg-based Albingia Versicherungs A.G.; Cologne-based Colonia Group A.G.; Cologne-based Agrippina Versicherungs A.G.; Haftpflichtverband der Deutschen Industrie VVaG of Hannover; and Dusseldorf-based ARAG Versicherung A.G.