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1950-51 Theatre Catalog, 9th Edition, Page 260 (240)

1950-51 Theatre Catalog, 9th Edition
1950-51 Theatre Catalog
1950-51 Theatre Catalog, 9th Edition, Page 260
Page 260

1950-51 Theatre Catalog, 9th Edition, Page 260

More About Insurance for Drive-Ins

Additional Light Is Shed on the Problems Involved

In Seeking Proper Coverage for Many Contingencies

Today, as a year ago, the most important obstacle confronting a comprehensive survey of the insurance needs for the average drive-in theatre is the comparative infancy of the industry and the consequent lack of underwriting experience information available to the insurance companies. Without any guiding principles, insurance executives are loathe to quote rates and accept liability on risks which do not have sufficient experience rating to indicate what premium income is necessary to produce a safe underwriting margin. On the other hand, drive-in operators are fully cognizant of the inherent financial suicide that permeates any big business venture that attempts to operate without adequate protection against the unforeseen uaccidentsll that make insurance necessary. Our biggest problem, therefore, is to devise an insurance schedule that is acceptable to both the theatre owner and the insurance underwriter.

It is not the intention of this article to burden the reader with the problems of underwriting that beset the insurance companies. However, where practical, we shall mention the possibilities of installing safety devices or alarm systems in order to reduce the incidence of losses that is expected. The iiounce of prevention/i applied this early in the career of the drive-in, can have a far-reaching and long-lasting effect on the rates that will prevail in the years to come.

Fire and Allied Lines

The first type of insurance to be considered in any survey is Fire and its allied lines. The basic fire policy, written for an amount not less than 80% of the total value of screen, projection room, oiiice, concession stand, and all other real property, both buildings and contents, should be endorsed with special riders for comprehensive coverage. The rates naturally vary according to the construction and infiammability of buildings and their contents, the fire fighting equipment available, water supply, nearness to a fire house, susceptibility of the area to Windstorm, and a host of other conditions that are far too numerous to mention here. Regardless of cost, the value of a fire policy cannot be over-rated when We consider that one carelessly discarded match can wipe out thousands of dollars worth of valuable buildings and equipment.

Use and Occupancy

Unfortunately, the ravages of a fire do not end when the last stubborn flame has at last succumbed to the blanket of chemical from an extinguisher or the red hot ashes finally hiss out their last bit of defiance at the conquering stream of water, for the operator faces weeks or months of inactivity while his gutted


President and Insurance Manager, respectively. Fuss A: Wolper, Inc.

BRIEF: Although insurance underwriters . . . understandably enough . . . have not been able to match entirely as yet the phenomenal pace of drive-in construction . . . in the formulation of policies designed to cover all types of losses in this relatively new type of outdoor entertainment enterprise . . . considerable progress has been made in providing protection for the ozoner with its special problems . . . Even a year ago . . . as exemplified by the discussion on pp. 290 and 291 of the 1949-50 Edition. of THEATRE CATALOG . . . a good bit of attention had already been given to drive-in insurance matters.

During the past 12 months, interest on the part of the insurance industry . . . in the unique aspects of the outdoor theatre protection question . . . has steadily grown . . . The following article . . . written by two theatre insurance specialists . . . clearly indicates the latest thinking in this field . . . and covers such important forms of insurance as: fire and allied lines . . . use aml occupancy . . . liability . . . compensation . . . burglary . . . and rain.

buildings and equipment are being repaired or replaced for a re-opening.

This naturally leads us to a type of insurance that is often overlooked or discarded as unnecessary by all too many operators-Use and Occupancy, or Business Interruption Insurance. Use and Occupancy Policies insure against the loss of earnings resulting from interruption of business by any of the perils insured against. Net profit is covered to the extent that it is prevented from being earned. The salaries of officers and key employees are also covered as well as all necessary continuing expenses. The ordinary payroll of secondary employees may be covered for a period of 90 days by endorsement.

If an outside source of power is used, it is important that the Off Premises Power Endorsement be added to all Use and Occupancy Policies.

A number of years ago, we succeeded in collecting loss of revenue and cost of operation for one of our customers owning a theatre in Detroit. The loss of busi* ness was occasioned by the riots in downtown Detroit. The loss reimbursement under the policy was directly due to proper endorsements on the Use and Occupancy Policy.

Here again, the rates vary depending on the particular drive-in and the extent of coverage required.


Liability insurance poses the biggest problem of all to both the drive-in operator and the insurance carrier. Here we have the real unknown quantity. How many people will get hurt while attending a particular theatre next year? How much will each one sue for? How much will it cost to defend each suit? What will be the amount of any verdicts which may be handed down in favor of these plaintiffs? If we could answer these questions, the cost of liability insurance and its desirability to the insurance companies would be an easy matter of a few arithmetical calculations. To date We do not have all the answers, but the majority of the companies we have approached all seem willing to go along on the basis of established rates applicable to indoor theatres, provided that the management is sound and experienced and a few safety rules are adhered to. Experience Rating credits or debits can be applied to these policies after a period of time.

A Comprehensive Liability Policy (C.P.L.) should be secured after all leases and agreements have been discussed with a representative of the insurance carrier. This precaution is advisable in order that any "hold harmless" or iicontracted liabilityli clauses may be uncovered and the operator properly protected against them.

We recommend that every operator planning to take control of a drive-in site through lease confer with his insurance broker to make certain that the insurance clauses that he obligates himself to under the terms of the lease can actually be fulfilled by contract.

The Liability policy should be written with a lower limit of at least $100,000 for bodily injury and an upper limit depending on the theatre and the willingness of the insurance carrier to afford a high degree of protection. Medical Payments in a limit of at least $10,000 should be written along with the bodily injury insurance.

Under the property damage section of the C. P. L. it is important to remember that the policy does not cover any losses to a patron,s property while it is in the care or custody of an employee.

If any contracts are entered into after a C. P. L. is effective, a copy of the contract should be forwarded to the insurance carrier at once in order that the proper coverage may be added.


Workmenls Compensation Insurance is generally covered by state law, and there is no need to expand on it here. Disability Benefits Insurance must be carried in some states, and it would be well for the drive-in owner to check to

1950-51 Theatre Catalog, 9th Edition, Page 260