As Hong Kong summer brings in the intense heat and sun- It’s time to get out of the city and enjoy some water adventure sports.
Water sports in Hong Kong include wakeboarding, sailing, kayaking, windsurfing and many more. There are countless water sports companies and instructors that help customers learn new water sports and supervise their customers.
Although these companies and their instructors (employees) are always at-risk of instructor negligence. At any point, a customer can blame an instructor and the company for their injuries and poor experience during the water sports activity.
This case study will explain how professional indemnity insurance helped a water sports company cover a. instructor negligence claim. Additionally, it also saved the company from hefty financial losses.
Client Background -Water Sports Company
Our client is a water sports company in Hong Kong that provides several services related to water sports and activities. Their services include professional instructor lessons, leasing equipment and water sports supervision (guide). Water sports companies count down the months until summer to promote their services to the public.
They deal with thousands of customers over the summer. They are liable for their customer’s safety while teaching or supervising them. Water sports can be risky without proper instruction, training, and supervision.
Water sports companies like our client must know all the risks and have a professional measures to deal with them. Therefore, the company’s main risk management method is providing an instructor or supervisor for the more dangerous activities, no matter how experienced the customers are.
Although minor instructor negligence can result in injuries and lawsuits against the company and instructor.
Client Problem – Instructor Negligence Claim
One of the most popular water sports right now is wakeboarding. The sport involves (standing) riding on a specific board while being towed behind a motorboat. The aim of the sport is to stay on the board and ride the water as the boat moves with speed.
The company’s employees/instructors mainly drive the motorboat. Their first duty is to instruct customers about the safety procedure and the best way to perform the sport.
In this case, the instructor did not keep a close eye on the wakeboarder as much as he should have. As a result, a customer fell off his board and held on to the towing rope. Even though the instructor informed them to leave the rope as soon as they fell off the board.
The instructor stopped as soon as he noticed and rushed to the customer for medical attention. The customer had a deep cut on his head and had to be rushed to the hospital.
In the hospital, he got stitches, and the doctors also found water in his lungs, which had to be treated instantly.
Consequently, he sued the company and instructor for medical and mental damage. Claiming the instructor’s negligence almost caused him to nearly drown, and the company did not sufficiently supervise or safely instruct the customers.
How Does Professional Indemnity Insurance Cover the Instructor Negligence Claim?
The company had to pay settlement costs for his medical and mental trauma. As he claimed that the accident caused him to fear water and may need therapy. Additionally, the other group members claimed the instructor only noticed the accident and stopped – due to the group’s noise (yelling to stop).
Unfortunately, the company could not prove that the instructor informed the customers about ‘leaving the rope’.
Fortunately, the water sports company had purchased professional indemnity insurance beforehand. Professional indemnity (PI) insurance provides liability coverage for professionals and businesses to protect against negligence claims from clients or customers.
PI insurance was the perfect solution against this instructor’s negligence claim. The insurance helped reimburse costs related to the lawsuit, medical compensation, and settlement.
Therefore, PI insurance assisted the water sports company in dealing with and recovering from this negligence.
The following amount was reimbursed by PI insurance:
- Legal Costs: HKD 30,000
- Medical Compensation: HKD 15,000
- Settlement Costs: HKD 80,000
Total Costs: HKD 125,000
Professional Indemnity insurance (PI) is an insurance that can save a professional and a business from various claims and unfortunate incidents. Mistakes and errors claim can arise at any point and in any industry; it is crucial to be protected, just in case.
Unfortunately, such instructor negligence claims are very common for adventure sports companies and professionals. Even if the sued party is not at fault, the lawsuit can still be costly and ruin the water sports business.
Therefore it is better to be covered before it’s too late and your company has to deal with all the costs alone.