The Cost of Having Fun - Paying To Take A Risk

Weekend daredevils may encounter a variety of insurance problems, depending on the pastime and the danger involved. People who participate in extreme sports and high-risk recreational pursuits may find themselves forced to pay high rates for insurance coverage or be unable to get such coverage at all. When approached by persons who participate in risky activities, insurance companies may decline to insure them, exclude accidents related to the dangerous activity, postpone coverage until after a specific event, or require a physical examination to renew such a policy. In some cases, they may deem the activity and relative risk as negligible or slight and offer the policy at no additional cost.

Some insurance companies have added questions about high-risk behaviors to their applications for prospective policyholders. Participation in extreme sports can add hundreds or thousands of dollars in annual premiums. Pursuits that involve great speed—auto, motorcycle, and boat racing—tend to make insurers most apprehensive. Disability insurers are more likely than other carriers to reject such high-risk applicants. Disability claims have increased sharply, with some insurers losing money and others leaving the business.

Sports associations sometimes step in to provide insurance when other carriers will not. The Professional Association of Diving Instructors offers certified scuba divers medical insurance. The U.S. Hang Gliding Association has a $1 million liability policy to cover a glider who sails into bystanders. The American Motorcycle Association offers its racers some medical coverage and accidental death and dismemberment insurance.