The Santa Fe New Mexican reported this week that the state’s only motocross park – a 55-acre area that offers roads and trails where residents can drive ATVs and motorcycles – has closed because of insufficient liability insurance coverage. The coverage shortage has more than a few citizens rankled and raises important safety concerns for the city.
While the Buckman motocross park has been in the works for years, its official, state-sanctioned opening happened only last fall. Shortly thereafter, in January of this year, the park locked its gates and has yet to announce when (or whether) it will reopen.
Risks of Insufficient Liability Insurance
It seems that people closely connected with the park are upset by the closure for two major reasons:
- In 2008, voters approved a $450,000 measure to improve access to the park by updating its surrounding facilities. Now that news of the reason for the closure has come to light, residents are asking why some of the allotted funds were not used to secure adequate liability insurance.
- On the park’s entrance, officials noted that the closure was due to winter weather that made the trails dangerous, when the real reason was the lack of adequate liability insurance.
So what are the risks associated with insufficient liability insurance for a motocross park? They’re fairly significant, and liability would fall on the city of Santa Fe if anything would go wrong. Without adequate insurance coverage, the city could be liable for…
- Injuries sustained by park users. Considering the risks associated with motorcycles and ATVs, these injuries could be significant.
- Property theft that occurred on the park’s grounds.
- Damage to vehicles caused by the track or its accoutrements (including ramps and jumps).
Could Insufficient Liability Insurance Force Your Business to Close?
In practice, it’s unlikely that regulators will force a small business to close down for having insufficient liability insurance. Not having enough protection, however, could indirectly cause your business to shut down.
If, for example, you’re hit with a lawsuit and you’re responsible for damages that exceed the limits of your General Liability policy, you could have to drain your business or personal assets to cover the difference. Without your assets in place, you could face serious difficulties in securing loans or other forms of business capital, which could bring your operations to a standstill.
If you haven’t reviewed your liability insurance policies in a while, it’s probably a good idea to check in with your insurance agent. Especially if your business has changed significantly since you last renewed your policy (by growing, shrinking, moving to new offices, or adding new products or services), you may have new coverage requirements.