City Probes Underindured Balloon Event

DOUG ALLEN/THE ENQUIRER FILE About 12 balloons were featured in the balloon illume in December, although flights had to be canceled because of the weather.

Battle Creek officials are investigating whether someone forged a document or lied about the required amount of insurance coverage for the winter hot-air balloon festival held in December at W.K. Kellogg Airport.

Ken Bell, risk manager for the city, said he is trying to answer a number of questions that have surfaced regarding the $5 million liability insurance policy that Holiday Balloon Fest Inc., which runs the event, was required to carry to cover any damages or injuries on the grounds.

Bell learned in late December, after the event, that the organization actually may have had only a $1 million policy.

Documents provided with a permit application in late November showed Holiday Balloon Fest had a $5 million policy, but Bell said a pair of certificates showing $5 million in coverage may have been altered from an original that showed only $1 million in coverage. He said an agent with U.S. Specialty Insurance Co., based in Dallas, confirmed that event organizers only had a $1 million policy.

"Certainly, if we were provided inaccurate information or verification of coverage, why, we would intend to take some kind of action for future events. But at this point, I don't want to say anything because we do think there was a problem, but I'm not sure where the problem lies," Bell said.

Battle Creek resident Derrick Jones, event director for Holiday Balloon Fest, told the Battle Creek Enquirer this week that he didn't have the required $5 million coverage, but said that's because city officials never told him he needed more than $1 million.

"We had $1 million coverage for our event," Jones said. "The city never required $5 million. No one told me we needed $5 million."

The fourth annual balloon event was held for the first time at the airport from Dec. 5 through Dec. 9, moving from the downtown location at Kellogg's Cereal City USA. All planned flights were canceled because of bad weather and Bell said he is not aware of any claims made against the event organizers or the city.

It's possible, Bell said, that city officials didn't explicitly tell Jones he needed a $5 million policy or specify the insurance requirement in writing. Bell said Tuesday he has not spoken to Jones about this matter.

But city officials believed Jones was complying with the $5 million requirement when he faxed copies of an insurance certificate to City Hall several days before the event, Bell said.

"We would not have issued him approval based on $1 million. The approval was provided after a certificate was provided by him showing $5 million," Bell said.

Bell said it's possible the insurance flap was an honest mistake. If not, however, the discrepancy could cast a shadow on the city's relationship with Holiday Balloon Fest and make officials reluctant to approve its event applications in the future.

Jones' application for a special event permit initially was denied Nov. 18 because the organization hadn't provided insurance documents. After Jones was notified in writing that the city couldn't approve the permit, Jones said he submitted two insurance certificates -- one showing $1 million in coverage and another showing $5 million.

Jones said he bought the $1 million policy, but also asked for an insurance certificate for $5 million from his agent, Rob Schantz, of the Schantz Agency in Jacksonville Beach, Fla. Schantz, and his wife, Jetta, are balloonists and write coverage for balloon events, including the Holiday Balloon Fest.

Jones said he told Schantz that if city officials required the $5 million at the last moment, he wanted to put such a certificate in their hands ahead of time and would notify Schantz later -- if needed -- to pay for and activate the higher coverage.

"I decided to do both in case something came up and we needed $5 million," Jones said.

But Jones didn't specify his plan to city officials. Plus, Bell said Jones did not submit a certificate for $1 million, but instead sent two certificates, each for $5 million, after learning that the permit was being denied.

"At one point, he had not provided us anything," Bell said. "We rejected his application and the next thing I know, there are two certificates here for $5 million. Based on that, I authorized him to issue the permit as far as I was concerned."

Schantz is out of the country until the end of February. His wife, Jetta, said last week she didn't have the file for Holiday Balloon Fest available and couldn't comment on conversations her husband had with Jones.

Jones insists he never knew he was supposed to have a $5 million policy until he met in early November with Barbara Haluszka, executive director of Battle Creek Hot Air Balloon Championships Inc., which operates the summer balloon event called Battle Creek's Field of Flight Air Show and Balloon Festival.

The two events are not connected, but Jones said Haluszka told him the summer event is required to have $5 million in insurance because it's held at the airport and that, by moving there, the Holiday Balloon Fest may need the same amount.

The city owns the airport and carries a $50 million insurance policy for its general operations. Organizers of special events at the airport are required to carry additional liability insurance.

Haluszka acknowledged she mentioned to Jones that the summer event had to have a $5 million policy and suggested he contact Burnham Insurance, which handles insurance for the summer event and also the city's coverage at the airport.

Instead, Jones said he went to airport manager Larry Bowron, but was told he didn't need more than $1 million.

"He told me, 'I can't see why you need it,'" Jones recalls Bowron saying.

Bowron said Tuesday he did tell Jones because his event was smaller and didn't have fireworks or other activities like the summer event, he might not need as much insurance.

"It was a philosophical discussion, comparing the amount of liability, but I said he should sit down with the city to discuss it. I told him that was not my decision and he had to talk to the city," Bowron said. "I told him I don't have the authority to waive the insurance."

"Maybe I should have called Ken Bell," Jones said this week. "But I didn't."

Bell said he is unsure when he will conclude his investigation.

Originally published Wednesday, February 19, 2003