Owners can better protect their business by understanding the following five hidden risks and working with their agent to close any gaps in coverage:
1. Disaster-related losses – A lawsuit or a natural disaster can put a fitness center out of business, unless they have the right insurance coverage. Most businesses do not. Studies show that 60 percent of businesses are underinsured. It’s no coincidence that the same percentage of businesses never reopen after a disaster.
A business continuity plan is essential to ensure a business can withstand even the most cataclysmic event. Disasters strike without warning, so it’s important to be prepared before a disaster takes place.
2. Injuries on treadmills – Treadmills are the number one injury risk in fitness centers. The average cost for a treadmill-related accident is $250,000.
Members who use them typically do other things at the same time; such as texting, talking, reading, or watching television. Make certain all members are properly trained to use the equipment and that the training is documented. Monitor treadmill use regularly and take action when risky behavior takes place.
Whenever an incident involving equipment takes place, investigate it immediately, document it, and take corrective action.
3. Breach of member data – Nearly half of all companies have experienced a data breach, yet only one business in 10 has cyber liability coverage. Cyber liability risk is especially high at fitness centers, because they typically have a large amount of personal and financial data on file.
To reduce the risk of cyber liability, physically secure all electronic devices with access to member data, lock file drawers containing hard copies of member data, and shred sensitive documents,
Require passwords and set systems to log out after 15 minutes of inactivity. Use data encryption software to encrypt member data, and keep anti-virus and anti-malware protection up-to-date. Employees should be trained to understand the importance of information security.
4. Liability from personal trainers and members – Personal trainers have been involved in liability suits for issues such as sexual harassment, and physical injuries. A trainer was even found responsible for a member’s death because of inappropriate dietary advice.
When trainers are sued, so are the clubs they work at, as owners can be held liable for their trainers’ behavior. Contracted fitness instructors are not automatically covered under the owner’s liability policy, Owners should ensure that their insurance policy automatically includes “additional insureds,” such as instructors, trainers and members.
5. Losses from emergencies – Explosions, acts of violence, shootings, sexual abuse and outbreaks of diseases have taken place at fitness centers. Such incidents can have a major financial impact and damage the reputation of the business.
Emergency event management insurance typically covers loss of business income, public relations expenses to restore your reputation, and expenses such as medical care, counseling and funeral expenses.
Steps should also be taken to ensure that the fitness center is as safe as possible, such as installing surveillance cameras and making certain the parking lot is well lit.