The shifting sands of liability, risk management, and property/casualty coverage have become even trickier to navigate because of the pandemic and the changes it will bring going forward.

Playing the role of hospitable host to members and their guests has always required that club and resort operators remain vigilant about risk management and pay keen attention to the provisions of their properties’ insurance coverages. Over the course of several months of the COVID-19 pandemic, managers have encountered new wrinkles that make this need for diligence more critical than ever.

Concerns Old and New

C. W. Cook, MCM, CCM, General Manager/Chief Operating Officer of Sawgrass County Club in Ponte Vedra Beach, Fla., is no stranger to risk management, from both sides of the proposition. In 2009, Cook was General Manager of another club when a six-year-old guest drowned in the property’s pool, an experience that has shaped him ever since.

“I really struggled with it,” says Cook, who a few years later decided to leave his club career behind. He took a position with a Raleigh, N.C.-based insurance company, The Redwoods Group, which specializes in insurance for YMCAs, Jewish community centers, and camps across the country. As one of eight risk-management consultants for the company, Cook says he flew 300 times in two years to visit clients, learning much about the overall scope of risk management.

But the constant travel took too much time away from Cook’s ability to be with his family, and his former club persuaded him to return in 2013. In 2018, he took his current position at Sawgrass CC. Today, like other club managers, he faces new concerns.

“At my previous club, we had more than 1,000 kids under the age of 12,” Cook says. “That had one set of risk factors. Now, at Sawgrass, I have an average age of 64, [so] the majority here would be considered at-risk. 

“It’s a different lens we look through,” he says. “We have to make sure that everything we do, we do to the best of our ability. All it takes in a gated community like Sawgrass is one or two [coronavirus] cases to lead to an outbreak.”

Becase of the pandemic, “We’ve definitely created a different look at our insurance model, now six months into it,” Cook says. “There are things that weren’t on my radar before like they are today.” 

A Changed Game

While industry leaders are weary already of the term “new normal,” they can’t deny that safety protocols of varying degrees—depending on locality and a particular club’s own policies—have changed the game.

“Obviously, COVID is the 800-pound gorilla, so a lot of our operation is now focused on screening people and having policies in place to do the maximum possible,” says Jesse Thorpe, CCM, Chief Operating Officer of Hammock Dunes Club in Palm Coast, Fla. “And that means adjustments to all of our amenities, services and access points—for example, wearing a mask indoors except when eating or drinking, and requiring masks when working out in the gym.”

At Wycliffe Golf & Country Club in Wellington, Fla., General Manager/Chief Operating Officer Rob Martin has made sure the club’s staff has completed ServSafe training and other education in COVID-19 foodservice training. 

“We also made our own custom program,” Martin says. “We are fortunate to have a lot of exterior dining space, such as a big terrace, and we had just put in Phantom screens to keep out bugs. It’s actually nice out there with the fans on. People have dined out there all summer, and we’ve had good revenue.”

Martin’s team also uses elecrostatic fog to disinfect the facility every night, through a third-party company that is licensed and insured. 

“It builds trust with members,” Martin says, “because they know we’re doing everything we can to keep the facility clean. It also builds trust with the employees, who know we’re serious about sanitation for them—especially after we had members with COVID cases.” Using the third-party company helps to limit the club’s overall liability, Martin adds.

Cyber Risks

One risk that has definitely become more top-of-mind for clubs because of how they have had to operate this year is cybersecurity.

“I’ve never in 25-plus years as a club manager had to deal with remote employees,” Cook says. “Now, six months into this, I’ve had many remote employees, and all of them are dialing into our network. When I look at it through a risk-management lens, I have more concerns about network security and membership privacy liability. Issues like VPNs and bandwidth—I never imagined I’d be sitting down from an IT perspective with multiple people at home dialing in, to try to operate the club.”

In an age of flexible work schedules, cybersecurity is always critical, pandemic or not. 

Wycliffe G&CC already had IT security set up for management personnel to be able to work remotely when not on site, and in March, Martin says, the club adopted a “more robust” remote-work policy with parameters for monitoring and tracking activity, to further limit some of the risk. 

“We have a secure platform and we’ve also been able to nestle most of the executive team into the ‘essential’ category, so most were able to come on site,” he notes.

Rude Interruptions

Kyle Phillips, a Vice President with VGM Insurance & Financial Solutions, says the two biggest areas in which VGM, as an insurer, gets questions from clubs related to the pandemic are business interruption and liability related to communicable disease.

“Both of those typically are excluded from policies, so clubs find that coverage they thought they had doesn’t apply in this instance,” Phillips says. “Business interruption coverage requires a direct physical loss of some sort. Thus far, most business interruption claims have not been covered.”

Going forward, Phillips advises that clubs should consider additional coverage for event cancellations. “Those are relatively small policies a club can purchase on a one-off basis for a large event, or by insuring all your weddings for the summer,” he says.

As for general liability coverage and how it applies to communicable diseases, Phillips notes that the general rule—though there are exceptions—is that virus and communicable diseases are excluded from general liability policies.

“The insurance market in general, not necessarily just related to pandemic, is hardening,” he explains. “Clubs and resorts are seeing increases in some lines of business, such as property and umbrella coverage. Clubs should understand that certain things they might have been able to purchase in the past may not be available in the future, such as adding communicable disease coverage to a general liability policy.”

Continued Vigilance

Whether a certain issue is covered or not, smart operators are taking steps to limit risk as much as possible. That focus only promises to be heightened as progress is made with reopenings, such as in Florida, where the governor returned the state’s restaurant industry to 100% capacity during the last week of September. 

“I had to make phone calls to reestablish furnishings and seating, because we’d been working at 50% up until that point,” Thorpe says. “We’ve had to be quick on our feet to make adjustments.”

“My concern is more based on what we’re seeing in Europe, such as in England where the Prime Minister just shut all restaurants and bars down, because they’re getting a second wave,” Thorpe adds. 

“As people return to Florida [for the winter], we’re going to be monitoring it very closely to see if we have a second wave,” Thorpe says. “We have to remain very flexible, with a prime tenet being to do everything allowable and the maximum to protect our members, their families, and our staff.”

Summing It Up

> Business-interruption coverage requires a direct physical loss, so many clubs are finding that their claims related to the disruption caused by the pandemic do not qualify.
> Clubs should consider additional coverage for event cancellations, which can be purchased as relatively small policies that can be obtained on either a one-off or blanket basis.
> Employees working remotely has heightened the focus on clubs’ cybersecurity.

C+RB