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

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.

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.

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.

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.

Other General Liability Coverage

• Personal Injury

• Advertising Injury

• Limited Cyber Liability

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.

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.

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.

Commercial Property

• Business Personal Property

• Tenant’s Improvements

• Building Coverage

• Business Income

Property & Improvements

Business Personal PropertyCoverage for all equipment, furnishings and any other contents that can be removed (i.e. stolen) from a studio facility.

Tenant’s ImprovementsAny 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.

Building & Income

Building CoverageAny 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 IncomeAlso, 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.

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

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.

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.

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

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

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.

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

Commercial Property

Lease RequirementsIt 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.

Commercial Property

Leased EquipmentEquipment 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.

Commercial Property

Replacement Cost BasisThe 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.

Commercial Property

DeductiblesA 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.

Workers Compensation Limits

• Statutory Limits

Each Accident: $100,000

Each Disease – Each Employee: $100,000

Each Disease – Policy Limit: $100,000

• Lease Requirements

• Umbrellas

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.

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.

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.

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.

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!

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!

Thank You and Questions

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