Snowmobiling:The New Craze Offers a Mountain of Opportunities

The snowmobile: fun and safe family transport vehicle, or the motorcycle of the Great White Outback?

It all depends on whom you talk to. Snowmobilers in Canada and the United States spend more than $9 billion on their sport each year, according to the International Snowmobile Manufacturers Association (ISMA) in Haslett, Mich. This includes expenditures on equipment, clothing, accessories and snowmobiling vacations-but often it doesn’t include the cost of a good insurance policy.

Sue Bassett of Snohomish, Wa., is one such snowmobiler. Her family owns three of them-two Polaris and one Yamaha-and does not have a snowmobile policy.

“It’s hard to get insurance coverage because they get crashed so much,” Bassett said. “There are always claims because people ride the way they do. Guys that like snowmobiles like power-they have no fear.”

Bassett guesstimated that 99 percent of snowmobilers in Washington don’t have insurance, comparing it to “insuring a snowboard.” Some of the activities that make insurers cringe include: the “side-hill”-riding on the side of a hill at risk of the heavy snowmobile rolling over; and “high-marking”-riders go straight up the hill to see who can get to the highest
point without tipping over.

Getting them covered

Fortunately, the “side-hilling,” “high-marking” daredevils are only one type of snowmobiler. Insuring the rest of the market is a profitable and growing niche. Minnesota-based Program Managers Inc. and its affiliate IMC Agency Inc., are leading writers of snowmobiles and other recreational vehicles such as ATVs, motorcycles and hot air balloons. The company started writing snowmobiles in 1994 and now sees about $750,000 in premium volume in the market.

Ronald Wimberly, president of Program Managers, said one factor in the program’s success was creating a partnership with Polaris Industries, one of the major manufacturers of snowmobiles.

“We started advertising in magazines in 1995, and Polaris saw our ad,” Wimberly said. “We are now the approved insurance agency for Polaris-we work through their dealership and do multiple things for them.”

The advantage of working with the manufacturer, rather than going to the insured, is being able to write business at the point of sale.

“What happens is the customer comes into the dealership and he wants to buy a snowmobile but doesn’t know if he can get insurance,” Wimberly explained. “We give him insurance at the point of sale right there by him calling up on the phone. We talk to him, we can bind coverage, and he can go out the door with his unit and start riding.”

Like many specialty coverages, the difficulty lies in getting the word out that the coverage is available and in fact, recommended. Many snowmobilers may assume that they are covered by their auto or homeowners policy when in actuality they are not, potentially leading to an errors and omissions claim against their agent.

Getting coverage for policyholders’ expensive toys should be just as crucial as getting coverage on their home or car, especially for high-end clients. But not many buyers will come looking for it-it’s often up to the agent to suggest the coverage.

Policy nuts and bolts

The average snowmobile policy is about $350-$425 for full coverage with standard limits and liability.

Many snowmobile policies are still written as endorsements on homeowner or auto policies. But Wimberly said that stand-alone policies are gaining in popularity along with the sport. “In 1995, there were probably only three or four people actually writing a stand-alone policy on a snowmobile, not tying it to your home or car…Now what has happened is the large companies like Progressive have started to come in the marketplace-they’ve seen how profitable it can be and how it ties in with your motorcycles, your ATVs.”

Snowmobiles may be a profitable niche, but it’s not one without losses, by any means. “We do experience big losses,” Wimberly said.

“You have your normal losses, small accidents, someone hits a rock…Insurance companies mandate that if you have a loss you call the police department and file a report. Once that report gets filed there’s no way of tracking it-there’s no system like with auto.” This lack of regulation can
add difficulty to the claims-handling process.

Another problem area is what Wimberly calls the “rubber-band theory.” “You have someone who’s 20 years old, he finances a $10,000 sled, puts insurance on it-say $1,500-then at the end of the year just before the snow leaves, he would just line up the snowmobile into a group of trees, put the throttle wide open and let it hit the tree. And then because there’s no reporting system, the insurance company pays off the bank loan and the customer walks away free.”

These scenarios tend to result in increased rates for policyholders.

Everyone can play

As the use of snowmobiles becomes more widespread, the range of users is also increasing.

Bassett, her husband, teenage son and eight-month-old baby all enjoy the fresh air and powdery fields on their snowmobiles. Wimberly, who has four machines, packs up the whole family for regular treks. “It’s taking it from the racing side to a family sport,” he said.

“You can take your family with you and drive sleds with your kids in the cart behind you, spend the night in a motel, stop along the way and grill hot dogs and hamburgers.”

The idea may sound far-fetched to residents of the Southwest, but for much of the U.S., snowmobiling is a way of life.

“In the last few years, the snow has been at a minimal amount, but it’s the upcoming thing that everybody has a snowmobile…there are people out there 60-70 years old doing as many miles
as someone in their 30s,” Wimberly said.

“Skiiers get old and they get a snowmobile,” Bassett said. “Snowmobiling is less dangerous to other people than it is to the machine. You don’t get hurt, the snowmobile does.”

Safety in the snow

Well-designed and maintained trails and riding areas are key components of reducing the likelihood of injuries and damages, according to ISMA. “Inadequate riding and trail facilities increase the risk of snowmobile accidents,” the group reported. “Just a few of the risks include: cables and guide wires, fences, barbed wire, unsafe ice and ice ridges, hidden rocks, tree stumps, low-hanging branches and other obstacles.”

Safe trails and use areas remain a top priority and concern of the snowmobile community. “The manufacturers are very into safety,” Wimberly said. “Right now some of the laws coming in the states are saying anybody under 16 must have a safety-approved program certificate…those things are making snowmobile riding a lot better.”

Snowmobiling laws are different in each state. Although there are currently no state laws requiring insurance, “some of them are starting to look at the liability side,” Wimberly said. In Washington, all snowmobiles must be registered through the Department of Licensing (DOL), and similar registration requirements exist across the U.S.

Most states offer snowmobile operator safety training programs, and many states have mandatory training courses for youths and under-age drivers. The Snowmobile Safety and Certification Committee (SSCC), a nonprofit organization, sponsors a comprehensive snowmobile machine safety standards program. Under the SSCC program, snowmobiles are certified by an independent testing company as being in compliance with all SSCC safety standards.

ISMA launched its Safe Riders! You Make Snowmobiling SafeTM campaign, an international effort to promote safe snowmobiling. Information on the program is available by request from the ISMA
office.

Other resources include: the Snowmobiler’s Safety Handbook, published by the SSCC, and Snow Pro,
a computer-based interactive snowmobile safety tutorial developed by CCSO/CCOM.

Regardless of who is buying them-the young “no fear” male or the family on vacation-the numbers are going up. According to Forbes magazine, Americans purchased 148,000 snowmobiles in 1999, twice as many as ten years ago.

With that many riders zipping around without insurance, an agent would have to be snow-blind not to see the opportunity.

Topics Auto Manufacturing