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Liability Insurance Know-How

Minimize your business risks by knowing what type of and how much liability insurance you should have for your fitness center.

Unfortunately, fitness industry work carries some unique risks. If you own or manage a fitness-based business, it is important to ask yourself one question: Am I protected against liability if a client or participant were to incur an injury while I am providing services, training or instruction to them? Possessing appropriate liability insurance provides security that will offer you peace of mind and protect yourself, your clients and your business in the event of known risks and unforeseen situations.

What is an insurance policy?

Navigating the insurance maze can be pretty daunting. One of the tricky aspects of finding the insurance you need is understanding the basic premise of an insurance policy and what it covers. In the simplest terms, an insurance policy can be described as a legally binding contract between an insurance company and the person or company who buys the policy (referred to as the policy holder). In exchange for payment, called the premium, the insurance company agrees to pay for certain types of loss or damage as specified by the policy.

When a loss occurs that meets all of the requirements described by the terms of the policy, the loss is said to be covered by that policy. Exclusions and limitations are options that can remove some of the coverage of the policy; however, the law requires that what is "taken away" from insurance coverage through these exclusions and limitations be clearly written and very specific. For example, your fitness equipment may be protected within your policy against fire damage, but is excluded from damage caused by flooding.

What constitutes liability?

Specifically, liability insurance is a policy under which the insurance company agrees to protect the insured against liability arising from some act or failure to act by the insured, which causes injury to a third person or to the third person's property. For example, group exercise instructors and personal trainers have a legal duty to clients and members to conduct themselves at the level of a certain standard. That standard generally refers to how other group fitness instructors or trainers would conduct themselves in a similar situation. This is also referred to as a "standard of care," and can be subject to review by a court of law to determine if fitness professionals are acting within or outside of the standard. Failure to conform to such a standard may lead to liability. Defending a lawsuit can be a costly and time-consuming process. Liability insurance acts to protect you and your personal assets in the event that you are sued.

What liability coverage should you consider?

Liability insurance coverage should be in place to protect the facility ownership/management and all staff members. Independent fitness contractors who teach classes or train clients should also have liability insurance that covers such activities. Understanding what liability insurance does and does not cover is important for those with a liability exposure in their capacity as fitness professionals. If your facility provides massage therapy, tennis lessons or tai chi classes, work with your agent to be certain that all the services you offer are covered under the policy.

Possessing liability insurance does not take away your chances of being sued; it simply acts to protect your assets in the event that you are sued. Says Susie Schmitz, certified insurance counselor and director of sales and operations for the National Health Club Association, "A common question I am frequently asked by fitness professionals is, 'How much coverage do I need?' As a professional insurance agent, my response is, 'You never know until you are sued.'" According to Schmitz, fitness facilities are recommended the following minimum liability limits of insurance:

General aggregate $3 million
Products --
comp/ops aggregate $1 million
Personal and advertising injury $1 million
Each occurrence $1 million
Fire damage (any one fire) $100,000
Medical expense (any one person) $5,000
For fitness instructors, personal trainers or group exercise instructors who operate as independent contractors, the following minimum professional liability limits are recommended:
General aggregate $1 million
Products --
comp/ops aggregate $1 million
Personal and advertising injury $1 million
Each occurrence $1 million
Fire damage (any one fire) $100,000
Medical expense (any one person) $5,000

Depending on the basis for the lawsuit, you may be covered by a policy that will pay for both the cost of your defense and any judgment that you may owe (up to the amount of your coverage). "Go with an insurance company that will cover you outside the limits," recommends Schmitz. "Outside the limits" refers to a policy that covers you above and beyond your policy limits to include your defense fees and court costs. For example, you may have a policy that covers you up to $1 million, but your court costs are $10,000. Having liability insurance that covers you "outside the limits" means that your policy will cover these costs, but will not erode your $1 million worth of liability coverage in the process. Simply put, you will not have to absorb the cost of your defense and court fees "inside the limits" of your insurance coverage.

Get insurance that protects fitness professionals

Obtaining liability insurance from an insurance carrier familiar with the health and fitness industry is critical to a fitness business' long-term success. "Calling your local insurance agent is not the best way to find a carrier for your fitness business...," explains Schmitz. "Not only are the costs for a policy through a non-expert too high, it is important to have someone who can explain the facts and details of your particular risks and exposures." It is also important that coverage is placed with an A-rated (AM Best) carrier. The rating of an insurance carrier is based on its financial stability and ability to pay claims.

Schmitz recommends making sure terminology used in the policy being considered is clearly understood: "If you have questions about any terms or coverage allowances, don't hesitate to ask your agent." Finally, customer service is a key factor. If a client files a liability claim against you, "you need to be confident your agent will be available and will be of service," says Schmitz.

Assess the risks

Obtaining liability insurance is a step in the right direction for any business owner to protect their interests proactively, and at minimal cost. However, it is also the responsibility of each facility owner/manager to create a safe environment. Creating and implementing risk-management policies in your facility can be the difference between steering clear of or facing liability claims.

"A ... comprehensive risk-management program should begin with an evaluation of the facility," says attorney David L. Herbert, senior partner of Herbert & Benson in Canton, Ohio. "Look closely at all activity areas, equipment, programs and services offered by the facility.... [C]onsider the space dedicated for exercise, ceiling height and ... appropriate electrical wiring.... Even assessing the emergency response time by the local EMS ... is important when assessing your liability...."

You can learn more about taking practical steps toward improving your facility's risk management through organizations such as the American College of Sports Medicine, which publishes standards and guidelines addressing risk management. Additionally, the International Health, Racquet and Sportsclub Association has established standards of care for the appropriate delivery of services within a fitness center setting. Fitness facility owners/managers should consider these guidelines as baseline standards of care.

Risk management not only includes assessing facility spaces, but also clients and members. Members, one-on-one clients and fitness class participants should at the very minimum complete a participant activity readiness questionnaire (PAR-Q); read and sign a release/waiver document that outlines the assumption of risk, including an informed consent; and complete ahealth history form or health screening that can be used to reasonably reduce foreseeable risks. Identified risks should be explained to them, and the health history should be discussed in a positive manner before fitness or training services are rendered. A physician's "OK" for the client to train may assist the instructor or trainer when implementing a training program, particularly if risk factors that alert the trainer to the need for a physician's approval prior to beginning exercise are identified, as well as acting to protect the trainer in the case of an accident or injury.

Get legally fit

In the end, fitness professionals can trust that insurance coverage can protect them in the event of a lawsuit. But the strongest line of defense a fitness professional can establish is acquiring appropriate liability insurance to protect against claims and suits that risk-management techniques and adherence to the proper standards of care cannot eliminate.
Association Insurance Group
800 985-2021,
Fitness Pak Club Insurance
800 873-3725,
Fitness and Wellness Insurance agency
800 395-8075,
K & K Insurance Group
800 426-2889,
National Health Club Association Insurance
800 765-6422,
pugliese (andrea) insurance services
800 664-5489
Sports & Fitness Insurance

800 844-0536,

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