2. Proper Insurance Coverage
“What do Fitness Studios like mine really need?”
The Big Four General Liability Coverages:
1. Commercial Liability
2. Professional Liability
3. Abuse or Molestation
4. Medical Payments
3. Commercial Liability
Provides premises protection for any claims arising
from the facilities you own, rent or occupy. You are
indemnified for alleged negligence resulting in bodily
injury, property damage or personal injury.
Claim Example ~ General Liability claims range from
slip & falls on the sidewalk or shower, or off a treadmill
or due to activity in a “Group X” class.
4. Professional Liability
Protects you against injuries to a client resulting from
a failure to render “professional services,” defined as
“the providing of physical training, fitness counseling
and nutritional counseling for a fee.”
Claim Example ~ The most common Professional
Liability claims include clients who claim to be injured
because they were never given instruction on how to
properly use a piece of equipment or safely perform
a particular exercise.
5. Abuse or Molestation
Pays to defend the insured against allegations of
sexual misconduct.
Abuse & Molestation is the greatest exposure for
claims related to child watch programs, but it is also
important for one-on-one training with adult clients.
6. Medical Payments
Reimburses a third party for medical expenses incurred
as a result of bodily injury on a no-fault basis.
Fitness industry specific policies include coverage for
Athletic Participants. Most General Liability policies
exclude no-fault medical payment for athletic
participants.
7. Other General Liability Coverage
• Personal Injury
• Advertising Injury
• Limited Cyber Liability
8. Personal Injury
Protects against suits involving libel, slander and
wrongful invasion of privacy.
Libel is defined as defamation by written or printed
words or images (including electronic media).
Slander is defined as defamation by spoken word.
Invasion of Privacy involves the violation or a person’s
right to left alone. This may include harassment or the
improper sharing of client information.
9. Advertising Injury
Protects against claims arising out of misappropriation
of advertising ideas, such as the infringement of
copyright on established brands, titles or slogans
committed in the course of advertising your services.
10. Limited Cyber Liability
Provides Personal and Advertising Injury coverage for
incidents that result from an unauthorized person
hacking into your computer, computer network,
website or mobile device.
12. Property & Improvements
Business Personal Property
Coverage for all equipment, furnishings and any other contents
that can be removed (i.e. stolen) from a studio facility.
Tenant’s Improvements
Any improvements made to a leased space by the tenant that
become the property of the landlord at the end of the lease
are considered tenant’s improvements or leasehold
improvements and are to be insured by the tenant.
13. Building & Income
Building Coverage
Any owned building, or any permanent part of the building
structure installed by the owner, but required by lease to be
insured by the tenant (such as HVAC and glass) can be
insured as Building Coverage.
Business Income
Also, called Loss of Income, this coverage allows a business
owner to be reimbursed for lost income in the event of a
coverage property loss that either fully or partially closes the
business during the period of restoration commonly following
a 72-hour waiting period, or after a deductible has been met.
14. Common Extensions of Coverage
Available via optional policy forms with some carriers.
Property of others in your care, custody and control: Included in Business
Personal Property Definition
Building plate glass: Included in Business Personal Property Definition
Outdoor signs attached and detached: Included in Building Definition
Outdoor signs, attached and detached, if no building coverage: sublimit for
owned signs for which the insured has contractual responsibility due to lease.
Sewer, drain, sump back-up (other than flood): sublimit provided for
specified
premises (direct damage and lost income)
Equipment Breakdown: Automatically included by some carriers;
optional with others
15. Worker’s Compensation
Definition: State mandated insurance coverage
purchased by employers to provide protection for
employee injured on the job. Includes the payment of
actual medical bills, loss of work, and short/long term
disability payments.
16. Worker’s Compensation
Statutory Requirements: Check your State to know how
many regularly employed staff trigger your need for
coverage, some states are as low as two or three. Both
full and part time staff including employees and
contractors are included but owners or officers are not
included in the headcount.
17. Worker’s Compensation
Penalties: States that require worker’s compensation
coverage fine businesses for not carrying it when they
meet the requirement. Insurance carriers have to
report the coverage to the states. Letting coverage
lapse can also result in fines in some states.
Best Resource: The U. S. Dept. of Labor provides
website links to the correct department in all 50 States.
http://www.dol.gov/owcp/dfec/regs/compliance/wc.htm
18. Are my limits high enough?
General Liability:
• Lease Requirements
• Business or Personal Assets
• Specific Exposures such as child care or
product sales
• Sample Standard Limits
19. Limit Calculations
$1,000,000 Each Occurrence, Includes Professional Liability
$2,000,000 General Aggregate
$1,000,000 Personal and Advertising Injury Limit
$1,000,000 Products and Completed Operations
*Higher limits available of up to $1,000,000/$3,000,000 with
most carriers and even $2,000,000/$4,000,000 with some.
**Umbrellas increase the underlying General Liability limits.
20. Variable Limit Calculations
Limits for the coverage below vary by carrier and
option selected:
$100,000 - $1,000,000 Fire Damage Limit – any one fire
$0 – $1,000,000 Abuse or Molestation Defense Cost –
per occurrence
$0 to $10,000 Medical Expense – including participants
21. Commercial Property
Lease Requirements
It is common for the HVAC and any Plate Glass to be
insured by the tenant even though they are part of
the building structure. Read your lease. Make sure you
have asked for this coverage on your insurance.
22. Commercial Property
Leased Equipment
Equipment leasing companies require the fitness studio
to insure their leased equipment and provide proof of
the coverage, usually via a certificate of insurance or
they will force place the insurance and charge the
studio. Force placed insurance will almost always cost
more per dollar than adding the leased equipment
into the business personal property limit of the business’
own Commercial property policy.
23. Commercial Property
Replacement Cost Basis
The values of business personal property, tenants
improvements and building coverage should be
stated as replacement cost not actual cash value, as
this can put your business at risk for under insurance
and being unable to reopen after a loss.
24. Commercial Property
Deductibles
A small studio will usually want to select a $1,000
deductible as the savings for a higher deductible will
not be economical compared to possible small losses
since deductibles are applied per claim on property
policies.
25. Workers Compensation Limits
• Statutory Limits
Each Accident:
$100,000
Each Disease – Each Employee:
$100,000
Each Disease – Policy Limit:
$100,000
• Lease Requirements
• Umbrellas
26. Am I paying too much?
1.Review the details of your current insurance policies.
Ask as many questions as you can think of.
2. Compare your current limits with the limits we
discussed today.
Are they higher than you actually need?
3. Review your current client base and revenue stream.
If your numbers have gone down since you
last completed an insurance application,
then you may be paying too much.
27. Am I paying too much?
4. Consider obtaining a competitive insurance proposal.
Carrier’s rates differ and it is the best way to determine
if you are currently paying too much.
5. Is your program tailored to the fitness industry?
If not, then you could be paying additional premiums
for coverage such as professional liability—which is
always included in programs offered by carriers who
are truly committed to fitness.
28. How do I save money?
• Know your insurance needs and review them annually.
If your exposures change or you no longer offer certain
services, such as, child watch, massage or tanning, your
premium will be reduced accordingly.
• Give accurate but not overly optimistic client and revenue
projections to your agent at renewals.
• Use established Best Practices to prevent both claims and
losses throughout the year.
A claim-free loss history is the best way to reduce your
insurance cost over time. AFS is an outstanding resource
for best practices and as their insurance partner, Sports &
Fitness Insurance, provides loss control information.
29. How do I save money?
• Make sure you keep maintenance and cleaning logs on
equipment, and only use service technicians recommended
by the manufacturer.
Most carriers give credits for this on your premium now and if
there is a claim later, the expense is more likely to go back to
the manufacturer.
• Ask your insurance agent if there is any other credit specific to
your carrier that you might be eligible for.
Some carriers give credits for AEDs or for the number of full-time
vs. part-time employees or independent contractors.
30. Helping Your Business Grow
• Protecting your assets with appropriate insurance (not being
under-insured) ensures that a claim will not put you out of
business. You have to stay in the game to win!
• Carrying the right insurance limits (not being over-insured)
keeps you from spending valuable funds that could be put to
use marketing your business. You have limited assets, and
using them wisely helps you move ahead of your competition!
31. Helping Your Business Grow
• Understanding your insurance helps you make the right
choices to expand your business with programing
opportunities that will not drastically increase risk and raise
your premium. A healthier business stays stronger longer!
• Becoming a more savvy business person will help your business
grow and outlast the competition...the same way you use
your
fitness expertise to help your clients become more fit!
