Think you pay a lot to insure your home or your ride? Think again. Poor Santa's mail carrier needs an extra knapsack just for all of his insurance premium statements.
Before Santa Claus slips on his red velvet suit or harnesses up his reindeer for his worldwide holiday tour, he should make sure he's covered. What if a snowball breaks his sleigh's windshield or one of his elves makes a crude comment to a co-worker?
"In this litigious society, even Santa needs to manage risk," says Frank N. Darras, an insurance lawyer in Ontario, Calif., and a founding partner of DarrasLaw.com.
Of course, it's hard to estimate exactly what Santa pays for his insurance; he's very private about his finances. So we asked a team of insurance experts to prepare rate quotes they'd expect Santa to pay if they could lure his insurance business to their companies.
Santa's sleigh
Next to his red suit and white beard, Santa's sleigh is his most prized asset. After all, without it, how would he make it to all those houses in just one night?Because it is so valuable, his primary form of transportation isn't a place to cut insurance corners.
Typical auto coverage won't do for this jolly old elf. "Santa needs aircraft hull and liability insurance for all the flying he does," says Jeff Graber, an aviation insurance broker and president of Alexander Aviation Associates in Apopka, Fla.
The liability portion of the aircraft insurance policy would cover bodily injury or property damage that could arise out of his flight. Were he to land just a bit too hard on someone's roof or if Donner accidentally kicked over a chimney, Santa could put through a claim to get everything repaired.
The price tag: Santa's annual premium would run around $30,000.
The team of reindeer
Because they're part of his flight apparatus and attached to the sleigh, Graber says Dasher, Dancer and the rest of the gang would be considered "engines" and insured as such under a special endorsement to the sleigh's policy.The price tag: $12,000 annually.
The workshop
Because Santa's workshop is considered part of his home, Tim Gaspar, owner/agent with Timothy Gaspar Insurance Services in Encino, Calif., says coverage for its structure is a bargain. "It costs roughly the equivalent of 150 chocolate chip cookies."He'd need to add a rider to his homeowners policy to cover the workshop. And the toys and machinery inside? "That's a separate policy," he says.
The price tag: about $75 a year.
The toys
Here's where Santa's budget takes a big hit. The product liability cost on Santa's toys, which covers things like a defective Barbie Dream House or missing bricks in a Lego set, would be based on his gross annual "sales." Based on supplying each of the 50.4 million children in the U.S. age 11 and under one toy with an average value of $25, the premium for about $1.26 billion worth of dolls, trucks and trains would be massive. "Santa's premium would be larger than Mattel or Disney," says Gaspar.The price tag: about $15 million a year. Too bad Santa didn't have more kids on the naughty list so he could scale back the toy production to have a value of around $5 million. Then, Gaspar says, he'd pay only $5,000 a year.
The elves
Employment practices liability insurance is a relatively new form of liability insurance, but one that no Santa should be without. Gaspar says this would provide protection for an employer (elfin or otherwise) against claims made by employees, former employees or potential employees.It covers Santa's business, as well as Mrs. Claus and his board of elfin directors in the event an elf claims discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment or other employment-related allegation.
The price tag: About $2,500 a year based on 50 elves working year round. That would give Santa $1 million in coverage with a $10,000 deductible.
Santa's castle
Most carriers measure the risk of insuring homes in a given geographic region, in part, by the claims experience from other homes in that region."The risk of damage to the home from frozen pipes is high, but that risk is more than offset by the historical absence of hurricanes, tornadoes and wildfires in Santa's locale," says State Farm agent Dick Luedke.
And even though it appears the Claus home, particularly around this time of the year, would be attractive to burglars, available statistical data shows a very, very low level of crime in his neighborhood.
The price tag: About $1,200 a year.
The Santamobile
Of course, Santa doesn't fire up the sleigh to take Mrs. Claus to dinner or to go out for reindeer food. He drives his red four-wheel-drive SUV. He is a senior driver, but he has a clean driving record and hasn't filed many claims in the past 200 years.And given that auto theft is at an all-time low in the North Pole, Gaspar says Santa's automobile insurance premium would be comparable to the average American's.
The price tag: About $1,200 a year.
The bottom line
Like Santa, you should be sure you're fully covered in the event of a disaster -- reindeer induced or otherwise. Insurance carriers offer free annual "checkups" to make sure you don't have too little (or too much) coverage.Published Dec. 23, 2010
