Buying escape room insurance is easier said than done, especially for escape room owners.
Not only do escape room owners operate small businesses; they do so in a brand new industry that insurance companies often fail to grasp.
Below are a few escape room insurance tips to help you navigate this potential minefield:
Table of Contents
What are my escape room insurance options?
General Liability Insurance
In a nutshell, liability insurance protects a business in the event it gets sued. For example, if a customer gets hurt in your escape room and brings a personal injury lawsuit, liability insurance should cover the legal fees needed to mount a defense, as well as damages awarded to a successful claimant. General Liability policies typically protect you from claims of bodily injury, property damage, and product liability. Some policies also cover advertising injuries, such as libel, slander, invasion of privacy, copyright infringement, and misappropriation.
Commercial Property Insurance
This type of insurance protects against damage to your building and contents from things such as fire, theft and natural disasters. Some policies may even cover the loss of income that results from the property damage.
Equipment Breakdown Insurance: This is a subset of Commercial Property Insurance that covers losses incurred due to mechanical/electrical breakdowns of specific covered equipment. For example, you could ensure the computers used to control your game. The policy covers the cost to repair or replace said equipment. Many policies also provide coverage for loss of business income due to the equipment breakdown.
Business Interruption Insurance: This type of insurance covers the loss of income that a business suffers as a result of a disastrous event (such as a fire or a natural disaster). Specifically, it replaces business income lost during the rebuilding period.
Workers’ Compensation Insurance
The majority of jurisdictions require businesses to have workers’ compensation insurance. It covers medical expenses and lost wages for employees that sustain injuries as a result of their employment. In most jurisdictions, workers give up their right to sue, and instead receive automatic compensation regardless of fault.
Employer’s Liability Insurance: This type of insurance protects employers from financial loss in cases where a worker’s job-related injury/illness is not covered by Workers’ Compensation. It covers compensation costs and legal fees when a worker sues for a job-related injury/illness.
Employment Practices Liability Insurance: These policies common in the USA provide coverage to employers when an employee makes claims alleging discrimination, wrongful termination, sexual harassment, retaliation, and other wrongful employment practices.
Cyber Liability Insurance
This fairly new type of insurance is applicable to escape rooms because they gather customer’s personal data and credit card information (typically online). Cyber Liability Insurance policies cover a business’ liability for a data breach that releases their customers’ personal information.
An umbrella policy is simply extra liability insurance. It is designed to cover major claims and lawsuits that fall above the limits of your General Liability policy.
How much does escape room insurance cost?
Unfortunately, there is no magic number! Various factors affect insurance costs, including: the location/age of your property, industry classification, revenue, and the number of employees. Moreover, costs will vary depending on your desired coverage limits and deductible. For example, if you want a policy with lower deductibles the policy will typically be more expensive.
In addition, the different types of insurance policies listed above have different costs associated with them. For example, General Liability policies are relatively cheap because they cover simple lawsuits like slip-and-falls. By contrast, Employment Practices Liability Insurance can be very expensive, because it covers more complex lawsuits like discrimination, that involve higher legal fees. Moreover, in the case of Worker’s Compensation Insurance, costs vary significantly depending on what country or which state you operate in.
Insurance discussions in escape room forums suggest that owners are paying anywhere from $500-$3,000 a year, but rates vary significantly.
What are some ways to get a good deal when buying escape room insurance?
First, a good way to minimize costs is to bundle various types of insurance into one package. For example, many insurance companies offer an overarching “Business Insurance” policy, that includes things like General Liability, Commercial Property, and Workers’ Compensation insurance as a packaged deal. Insurance companies should be willing to work with you, and if necessary tailor-make a package to suit your needs.
Second, try to find an insurance company that understands the escape room industry. Many insurance professionals do not understand the inherent risks/lack of risks involved. For example, some companies unfairly put escape rooms in the same category as sports arenas or theme parks (where there is obviously a higher risk of injury). Below are a few links for companies that offer policies specifically for escape rooms:
Third, shop around as much as possible to make sure you are getting the best deal. You may also be able to get insurance companies to match/beat a competitor’s offer.
This blog article does not even begin to cover all the complexities of insurance, but hopefully, it helps you begin your discussion with insurance professionals. Good luck!
Is There A List of Companies That Specialize In Escape Room Insurance?
We want this list to be all inclusive. Feel free to send us a message if you know of a company we should add to this list.
Laura Kendall is the Co-Founder and Marketing Director of EscapeAssist Software. The EscapeAssist team has designed an all-in-one escape room software—game manager, booking system, website builder, digital waiver, leaderboard, and automatic player follow-up all in one app! Laura is a licensed California attorney with experience in various areas of law, including civil litigation, employment, insurance defense, and intellectual property. She is an escape room enthusiast who has played over 50 games around the world. Laura is very active in the escape room industry as a blogger, top Quora writer, and contributing author for the escape room trade magazine “The Last Lock.”