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Thrills … and bills: Businesses that specialize in extreme sports can come with some extreme insurance costs

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Tim Walsh, left, and Lucas Kovalcik are co-founders of Gravity Vault.
Tim Walsh, left, and Lucas Kovalcik are co-founders of Gravity Vault. - ()

When Gravity Vault first opened in Upper Saddle River, every birthday party meant a packed house.

The crowds weren't an indication of the relative popularity of each birthday girl or boy — but rather of the supreme unease many parents felt about leaving their children at a party where the main activity was scaling 35-foot walls.

"They wanted to make sure we wouldn't be killing their kids, that they'll all be going home in one piece," said Lucas Kovalcik, one of the founders of the rock-climbing gym.

That was nine years ago, before rock walls were standard attractions at fairs and community events. Now, Kovalcik jokes, those parents barely stop the car when dropping off their kids for a party.

"Climbing isn't always this extreme dangerous sport but rather something that a 5-year-old could do and something that is safe in many environments," Kovalcik said. "We don't just send anybody off on their own."

Companies such as Gravity Vault are part of a growing category of businesses built around extreme activities, where physical harm is always an underlying possibility. Water parks, rock-climbing gyms, paintball arenas and trampoline parks are all prime examples. And all of them struggle with how to overcome that dangerous perception and help the business appeal not just to the adrenaline junkies and risk-takers but to the population as a whole.

And once you do that, how do you make sure you cover your bottom line in case those rare but still-possible accidents occur?

At Gravity Vault, which has locations in Upper Saddle River, Chatham and Middletown, that means asking customers to sign waivers and submit to a litany of questions about their level of experience. If they have never climbed before, they can start with classes. If they have some climbing experience, they can get a refresher course on how to belay. If they are regulars, they can hit the walls.

Gravity Vault also belongs to the Climbing Wall Association, a sort of governing body made up of about 250 indoor climbing facilities that imposes a set of standards and guidelines for its members to ensure safety. If a business complies, it can buy into the association's group insurance plan.

That keeps safety in check and rates down, which can be hard to accomplish for these kinds of businesses, said Glenn Tippy, president of Gerrity Baker Williams Insurance, located in the Flanders section of Mount Olive.

Tippy said there are far fewer insurance companies out there that are willing to insure businesses that carry inherent risks.

And the insurers in that very small pool won't take just anyone. A business still has to qualify, and a bad safety record can ruin a company's prospects of getting the necessary coverage, he said.

"Insurance companies, they're not trying to drive people off, and they're not trying to get any one person to subsidize them. They're trying to get a pool of people that's the best quality for what they're writing," Tippy said.

Inevitably, the cost tends to be higher for these businesses, but Tippy said the question is not so much how much your insurance plan costs, but whether your business can cover that cost with its fees.

"It may be too high for you," Tippy explained. "But it doesn't mean it's too high for what the problem is."

"You're facing significant exposure because you're doing something where a little kid can get hurt," he added.

At TopGun Paintball in Jackson, those kids can be as young as 8 years old.

That's two years younger than the previous minimum age of 10, and TopGun CEO Carl Atkins said the change came about because TopGun's safety record is so clean.

Each of its 400 guns is set to a specific pressure in the interest of safety. If someone brings in a paintball gun from the outside, it is tested to make sure it's safe, too.

In addition, everyone is required to wear full paintball masks that cover the eyes, faces and ears. And no one is left alone in the field. Players are always accompanied by referees, Atkins said.

With only about five or six insurance companies in the country willing to underwrite paintball facilities, those safety precautions have been critical in allowing TopGun to keep its coverage and make it consistently affordable, Atkins said.

That also prompted his insurance company to acquiesce when, about a year and a half ago, he asked if the minimum age for paintball playing could be lowered, from 10 to 8.

"That's become industry standard now," Atkins said.

For some companies, however, there is even more that goes into running a thrill-seeking business than just the cost of insurance.

Sahara Sam's Oasis, an indoor and outdoor water park in the West Berlin section of Berlin Township, said state regulations and engineering requirements — which, for water parks, come from the carnivals division of the Department of Community Affairs — present another hurdle, said Ilya Girlya, the company's president and CEO.

Ilya Girlya is president and CEO of Sahara Sam’s Oasis and Diggerland USA.
Ilya Girlya is president and CEO of Sahara Sam’s Oasis and Diggerland USA.

Because Sahara Sam's also falls under the category of public bathing facility, it must comply with New Jersey's bathing code. It needs certified lifeguards and first- aid responders and people familiar with pool chemistry to maintain the safety of the water, too.

"New Jersey is considered to be one of the toughest in the industry (for these kinds of businesses to operate)," Girlya said. "(And) there's nothing wrong with having a state that's tough because that's ensuring that the operator is going to follow all the operating guidelines."

That all comes with a cost, adding to the already sky-high expense of energy consumption at a place that must maintain an air and water temperature of around 85 degrees even in the coldest months.

But the potential for profit is there. Girlya declined to give revenue numbers for Sahara Sam's but said the company welcomes more than 365,000 visitors a year, each of whom pays around $20 to $30 for admission.

And the company is growing. Last year, it added an outdoor water park to its existing indoor facility. It has built new waterslides and a four-story ropes course. And just last week, the company broke ground on a brand new construction-themed amusement park called Diggerland USA to be located on an adjoining property.

"It's a huge operation on the back end to make sure that you comply," Girlya said.

But "there's no such thing as an easy business," he added. "We've been very happy with the growth."

E-mail to: maryj@njbiz.com
On Twitter: @mjohns422

Fighting to play
The history of paintball in New Jersey is relatively brief and traces back to Raymond Gong, the founder of TopGun Paintball in Jackson. In the mid 1980s, paintball guns were considered firearms in the state, and firing one at another person — even if that person was in on the game — could have been considered assault and battery.

So Gong filed a lawsuit in 1987 in an effort to convince the state that paintball was a perfectly acceptable recreational activity — and that paintball guns were nothing like real guns except in name and underlying function. He won when the judge in the case ruled that paintballs were not — for very technical reasons — firearms.

The ruling was signed on May 2, 1988, an act that made New Jersey the last state in the United State to legalize paintball.

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