Santa Claus should be “making a list” and “checking it twice.” But this important list has nothing to do with who has been “naughty and nice.”
Instead, before “comin’ to town,” Santa should focus on everyone’s favorite holiday topic – insurance, of course – and carefully create a list of all insurance policies that he needs to cover his extraordinarily complex operations. Whether it is making a billion-plus gifts in his workshop, employing more than 100,000 elves, or driving a sleigh 6,880,123 miles (give or take), Santa certainly faces plenty of risk. How he handles and mitigates that risk could set a meaningful example for good businesses across the United States (and around the globe).
While a “white Christmas” certainly would be nice, Santa Claus – and his insurance broker(s) and insurance-coverage counsel – really should be dreaming of a “covered Christmas” – just like the one any good businessowner would like to know.
To make that dream come true – and to best protect himself and his operations – Santa should consider obtaining and maintaining a number of different insurance policies. For example:
- Property Insurance: By at least one estimate, Santa’s workshop spans 1.2 million square feet. That same estimate supposes that Santa also requires a 60-million-square-feet warehouse. Therefore, according to that estimate, Santa’s “total footprint [equals] 61.2 million square feet, or 1,400 acres, or about 2.2 square miles.” While property values in the North Pole are not easily determinable, there is no doubt that Santa requires a substantial amount of property insurance.That insurance should protect against “direct physical loss of or damage” to Santa’s property. Santa will, however, want to carefully review the scope of this coverage, as it may not apply, for example, to loss or damage to the inside of his property “caused by rain, snow, sleet or ice whether driven by wind or not,” except, perhaps, in certain limited circumstances. Coverage, for example, also may not be available for loss or damage caused by “rain, snow, … ice or sleet to personal property in the open,” except, again, in certain limited circumstances perhaps.
- Commercial General Liability Insurance: Clearly, Santa runs a large-scale operation. It is unclear, however, how many people other than Santa, Mrs. Claus, and the elves ever get to set foot on his property. At least one source postulates: “His exact house and workshop are in a location in the North Pole that is unbeknownst to … common folk. Were we to even get close to sneaking a peek at Santa’s workshop, magic would prevail and we would not be able to find him or Mrs. Claus.” Another source, however, promotes a train ride to the North Pole, promising: “Children’s faces show the magic of the season when the train arrives at the North Pole to find Santa Claus waiting.” (Presumably, in his application for insurance, Santa would have to provide additional detail about the number of visitors he welcomes each year.)Assuming that at least some guests are able to visit him in the North Pole, Santa – being risk-adverse, obviously – also should consider obtaining commercial general liability (”CGL”) insurance to cover potential third-party clams for “bodily injury” and/or “property damage.”Santa also may benefit from a CGL policy to the extent that it covers “advertising and personal injuries.” This coverage potentially could apply, for example, to claims alleging that Santa slandered or libeled someone by putting them on the “naughty list.” It also could potentially apply to claims alleging that Santa has somehow infringed on “another’s copyright, trade dress, or slogan.”
- Product-Liability Insurance: Some CGL policies also provide coverage for claims involving product liability and completed operations. Whether as part of a CGL policy(ies) or through a separate, standalone policy(ies), Santa should make sure – for obvious reasons – that he has obtained product-liability insurance, which should cover third-party claims alleging that one of Santa’s products caused “bodily injury” and/or “property damage.” That way, if a child were to, say, shoot his eye out playing with a Red Ryder BB gun (distributed by Santa), Santa could be protected.
- Workers’ Compensation and Employment Practices Liability Insurance: Santa should make sure that he has workers’ compensation insurance that satisfies the North Pole’s statutory requirements.Moreover, with the expansive workforce that he employs, Santa also should consider procuring employment practices liability insurance (“EPLI”), which may be included as part of a policy that also provides professional liability and/or directors and officers’ coverage – other coverages Santa may want to consider. EPLI coverage in particular could be a valuable asset if an elf were to sue for Santa for – just as examples – wrongful discharge, excessive discipline, or national-origin discrimination (note that the origins of “Christmas elves, which are distinct from other elves,” may trace back to Germany, Scandinavia, and/or the United Kingdom).
- Cyber Insurance: Santa has gone digital. In fact, com reports that “Santa gets millions of letters, cards, texts, faxes and emails” (emphasis added). As a result, Santa receives and presumably maintains a significant amount of personally identifiable information – such as children’s names, ages, and e-mail addresses. Apparently, sometimes, Santa even requires credit-card information if he is sending a little boy or girl a special personalized letter.As such, Santa would be well advised to consider procuring cyber insurance, which can provide both first-party coverage and third-party coverage. That way, if Santa experiences a data breach, he could be covered for breach-response costs and/or crisis-management costs, as well as third-party liability claims. Moreover, cyber insurance also could provide Santa coverage in the event he is the target of a ransomware attack. In other words, if the Grinch gores high-tech and attempts to steal Christmas by launching a cyber-attack, insurance could be available. Cyber-insurance policies may provide coverage for, among other risks, “cyber extortion.”
- Commercial Auto Insurance: Santa is driving for approximately 36 hours straight on Christmas, which the American Safety Council calls one of “the six most dangerous holidays to be on the road.” Unfortunately, accidents do happen. One year, for example, “grandma got run over by a reindeer walking home [on] Christmas Eve.” If “a man who drives a sleigh and plays with elves” is in fact able to obtain a license, he should also seriously consider obtaining commercial automobile liability insurance, which could provide, among other coverages, liability coverage in the event of an accident. Insuring a sleigh and eight reindeer, however, may not be simple; Santa may want to explore the London market.
Of course, Santa should not purchase just any insurance policy(ies) offered to him. Instead, he should carefully review each potential policy, considering the relevant insuring agreements, exclusions, and other terms and conditions. For example, Santa will obviously require worldwide coverage. And, he likely will want to avoid any snow-, ice-, or reindeer-related exclusions.
Further still, Santa – and his brokers and lawyers – also will want to make sure that he has sufficient policy limits. Given his sophisticated operations, thousands of employees, billions of presents, and vast property, he likely will need to obtain umbrella and excess policies, in addition to primary policies. Given those needs, Santa would be well advised to begin the process to obtain and/or renew insurance well before Christmas each year.
However, if Santa does his due diligence and obtains the necessary insurance policies than he can rest easy and have a merry Christmas and a happy new year!
For assistance with determining what coverages your business requires, and/or addressing any other insurance coverage-related issues, please contact Michael H. Sampson, who leads Leech Tishman’s Insurance Coverage Practice Group. While they have not been formally retained – yet – to represent Santa Claus, Mike and Leech Tishman’s other Insurance Coverage attorneys represent many other policyholders across multiple industries. Mike can be reached at firstname.lastname@example.org or 412.261.1600.
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