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When Your Insurance Company Won't Pay

When a member sued one Georgia fitness facility, an appeals court determined its insurance company didn't have to pay.

It's scary, but true. Some liability insurance available for health and fitness facilities will not provide either a defense or indemnification from certain bodily injury lawsuits against those facilities. In one case [York Insurance Company v. Houston Wellness Center Inc. (2003) 261 Ga.App. 854], a lawsuit was filed by a fitness center member (Vandalinda) against the defendant facility. Vandalinda alleged that she was given instructions by one of Houston's employees on the use of various exercise machines. At the time of her injury, Vandalinda was using an exercise machine that develops the triceps. Vandalinda tried to release the machine using her arms, as she had been instructed to do by Houston's employee. However, the complaint alleged that the machine "improperly released from Vandalinda's control 'due to improper instructions' given by the employee and, as a result, Vandalinda experienced pain in her left arm, for which surgery was later required."

A language barrier

Houston Wellness Center apparently turned the matter over to its insurance carrier to defend the suit. But York Insurance Company, a commercial general liability insurer, sought a court ruling that it had no duty to defend the facility, based on the explicit language of the insurance policy it issued. The policy contained the following exclusion from coverage: "This insurance does not apply to 'bodily injury,' 'property damage' or 'personal and advertising injury' arising out of the rendering of or failure to render any service, treatment, advice or instruction relating to physical fitness, including services or advice in connection with diet, cardiovascular fitness, body building or physical training programs."
Facilities need to review their insurance policy coverage terms before claims ever arise.
Though the trial court ruled in favor of the facility, the insurance company appealed - and won. The case file by the member against the facility was determined not to be within the coverage of its liability insurance policy with the insurer. The facility was not provided with an insurance-paid defense or payment of any judgment that could be rendered in the case.

Review policies now

In support of this ruling, the appellate court noted that "an insurance policy is governed by the ordinary rules of contract construction. The hallmark of construct construction is to ascertain the intention of the parties (OCGA §3-2-3). However, when the terms of a written contract are clear and unambiguous, the court is to look to the contract alone to find the parties' intent. Under Georgia law, an insurance company is free to fix the terms of its policies as it sees fit, so long as such terms are not contrary to law, and it is equally free to insure against certain risks while excluding others. An insurers' duty to defend is determined by comparing the allegations of the complaint with the provisions of the policy." Exclusions from insurance coverage similar to those identified in the Georgia case may sometimes be contained within many health/fitness facility liability insurance policies. While it may come as a surprise to some that certain services normally carried out in such facilities may not be covered, once such gaps in coverage are identified, steps can then be taken to correct the deficiency. These steps might include securing additional and different insurance coverage, limiting service, employing alternative outside service providers that have the applicable insurance coverage, and usage of a waiver and/or express assumption of risk documents or other similar risk-management strategies. In any case, facilities need to review their insurance policy coverage terms before claims ever arise.

Reference Herbert, D.L. Picking the right liability insurance. Fitness Management 12(9):48, 1996.

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