By Jennifer Urmston Lowe
National Account Manager
Sports & Fitness Insurance Corp.
What are the primary liability exposures for fitness facilities?
There are four primary types of Liability exposure common to all health clubs, gyms and fitness studios:
First, premises liability. This relates to the facility itself and applies to any member, guest or visitor. Examples of premises liability injuries that can lead to claims include slip and fall on the sidewalk, over electrical cords or in the shower/wet areas. These are the most common insurance claims in health and fitness clubs and studios, as in other businesses.
Second, liability associated with damaged, broken or malfunctioning equipment. These types of insurance claims can either be the responsibility of the facility or the equipment manufacturer. Health clubs, gyms and studios, alike, should maintain all of their equipment per the manufacturer’s instructions with regular inspection and service. This includes everything from the steps, bands, balls and barbells used in group exercise classes to the strength training and cardio equipment. If a machine’s design is found to be at fault for an injury then the liability will shift to the manufacturer.
Third, health clubs, gyms, studios and all fitness facilities have exposure for sexual abuse and molestation claims. Since personal trainers and group exercise instructors frequently work closely with their clients, they are open to claims of improper touching, overly familiar language or inappropriate comments. If working with minor aged clients then this exposure increases dramatically.
How do fitness facilities protect themselves from Professional Liability claims?
Professional Liability Insurance (or “Errors and Omissions Insurance”) protects against claims filed by clients/members arising out of errors, negligent acts, or omissions during the course of rendering “Professional Services”. Fitness instruction is considered a “Professional Service” as it includes specialized knowledge.
Professional Liability Insurance coverage can be included on the General Liability Policy for a health club, gym or fitness studio or it can be purchased separately. If a General Liability policy includes Professional Liability, it is important to verify that the limit for the Professional Liability coverage matches the full policy limit. If the Professional Liability coverage is written with a lower sublimit then it might not be covered on an Umbrella or Excess liability policy. Always verify if an Umbrella includes coverage for Professional Liability. Review any exclusions related to the Professional Liability coverage on the General Liability. Nutritional counseling should not be excluded on the Professional Liability coverage of a fitness facility policy.
If Professional Liability is written on a separate stand-alone Professional Liability policy then it is critical to verify if it is written on an Occurrence Basis, like the General Liability, or if it is written on a Claims Made basis. Occurrence Based policies are strongly recommended for the fitness industry.
Why Should Professional Liability Insurance be written on an Occurrence Basis?
Professional Liability Insurance is provided either on an Occurrence basis or a Claims-Made basis. There are several important differences between the two, but the most important are:
- Timing of when the claim is filed triggers coverage
- How the Limits Work
An Occurrence policy protects you from any covered incident that “occurs” during the policy period, regardless of when the claim is filed. An occurrence policy will respond to claims that are reported even after the policy has been cancelled or non-renewed, as long as the incident occurred during the period in which the coverage was in force. In effect, an Occurrence policy offers permanent coverage for incidents that occur during the policy period.
Occurrence limits “restore” each year so that claims paid for incidents arising from one policy year do not deplete limits available to cover claims from other years. Each year an occurrence policy is in force represents a separate set of limits. Ten years of coverage under a $1M/$3M Occurrence policy could theoretically provide the insured protection for up to $30MM in claims (10 years X Annual aggregate limit).
Claims-made policies provide coverage for claims only when BOTH the alleged incident AND the resulting claim filing happen during the period the policy is in force. Coverage is provided as long as the insured maintains continuous, uninterrupted coverage. Each year the policy is continuously renewed, the “coverage period” is extended. Claims made after the “coverage period” ends will not be paid, even if the incident occurs while the policy is in force. A claims-made policy will cover claims after the coverage period only if the insured purchases extended reporting or “tail” coverage, which can become expensive.
Unlike Occurrence policies, Claims-Made policies do not “restore” each policy year. The limits in force at the policy’s inception are the only limits available to pay all claims for all years the policy is continuously in force.
When are instructors and trainers covered under the insurance policies of the fitness facilities where they work?
This is a very important question. If a personal trainer, group exercise instructor or any fitness professional is a direct employee or owner of the facility where they teach or train the clients of the health club, gym, or studio then they are most likely covered by that facility’s general liability and professional liability insurance policies. This needs to be verified for all policies.
If a fitness professional is an independent contractor and schedules and trainers their own clients in a gym, studio or health club owned by someone else then they are mostly likely NOT covered by the general liability or professional liability policies of the facility. Fitness facilities should require these independent contractors to show proof of obtaining their own liability insurance prior to beginning work in the facility. The limit for the fitness professional’s policy should match the limit for the facility’s policy. The health club, gym or studio should asked to be named Additional Insured on the trainer’s policy.
If a fitness professional is being paid as an independent contractor, however, the facility schedules the clients and/or classes that they teach, then they may be covered on the facility’s policy. This should be verified since the language of polices can vary.
All fitness professionals working inside a health club, gym or fitness studio should have Professional Liability coverage either through the facility policy or on their own individual policy with the facility added as Additional Insured.
In summary, all fitness facilities, including health clubs, gyms and fitness studios, as well as, personal trainers, group exercise instructors and other fitness professionals need Professional Liability insurance to protect themselves and their business from this liability exposure. The good news is that it is available and affordable in insurance programs that are tailored to the fitness industry.
This post first appeared on GamePOINTS - Your Resource For Fitness Studio Insurance, please read the originial post: here