Insurance provides a safety net for businesses, financially protecting them against lawsuits, facility damage and unforeseen events that may impact operations. Given the physical nature of gym activities, the risk of accidents is higher, making insurance especially vital.
Below, we explore the ins and outs of gym insurance, helping you choose the best insurance option for your business.
Why Is Gym Insurance Important?
Every business, including gyms, operates with a certain amount of risk. No matter how diligent you are, accidents happen. If someone gets hurt or property gets damaged, insurance covers the cost, protecting your gym's financial health.
JD Powers, CEO of Powers Insurance & Risk Management emphasizes the importance of insurance for all small businesses saying, "Small Business insurance is important to protect the assets of the business against financial loss. This includes damage to buildings, company vehicles, personal property and injuries to employees. Small businesses are already on tight budgets, so in the event of a claim, it is important to have financial protection from that loss with the appropriate insurance policies."
Falls and injuries can happen even in the most controlled circumstances, let alone when clients are swinging kettlebells or trying to hit a bench press PR. With sports and recreational injuries on the rise, gyms have an increased risk of facing injury claims.
On top of potential injuries, gyms also face the risk of theft, building damage, cyber-attacks, and negligence. Without insurance coverage, these events could lead to significant financial losses, potentially jeopardizing your business.
Understanding Gym Insurance Coverage
Gym insurance is a form of business insurance designed specifically for the needs of gyms and fitness centers. This typically includes a combination of different policies to ensure your business is protected against a variety of risks.
Listed below are seven types of insurance recommended for gyms and fitness facilities.
General Liability Insurance
What is covered:
- Bodily injury
- Property damage
- Copyright infringement
- Reputational harm
- Advertising injury
What is not covered:
- Employee injuries
- Auto accidents
- Professional mistakes
- Theft or damage of business property
Nearly every business can benefit from general liability insurance. This type of insurance protects your gym from a variety of claims including bodily injury, damage to customers' property, reputational harm, copyright infringement and advertising injury. It may also cover the cost of damages to your landlord's property.
Covering these claims without insurance can quickly become expensive. For example, the average cost for a slip and fall claim is $20,000. Without insurance, gyms have to pay that out of pocket, but if you have general liability insurance, you're covered if someone slips in the sauna.
Commercial Property Insurance
What is covered:
- Building
- Tools and equipment
- Inventory
- Furniture
- Personal property
What is not covered:
- Business vehicles
- Employee theft
- Damaged customer property
- Damages outside your building
- Equipment breakdown
- Environmental damage
- Wear and tear
Commercial property insurance covers damages from events like burst pipes, storms, theft, vandalism, and fires. However, for locations prone to floods or earthquakes, additional discussions with your insurance provider are essential, as these events are usually not covered by standard commercial property insurance.
Business Income Coverage
What is covered:
- Employee wages and payroll
- Mortgage and rent payments
- Tax payments
- Loan payments
- Loss of profit
What is not covered:
- Select operating expenses
- Undocumented income
- Losses from closures not included in the policy
- Closures from power lines
- Losses from partial closures
Unforeseen events, like a fire, may force your gym to close its doors for a time. While you're waiting to reopen, your revenue can take a significant hit. Business income coverage helps cover lost income and some operating expenses like payroll and property payments.
Like other types of insurance, not all situations are covered by business income coverage. For example, extreme weather like earthquakes and floods aren't typically covered.
Professional Liability Insurance
What is covered:
- Professional negligence
- Misrepresentation
- Defense costs
- Breach of contract
- General professional misconduct
What is not covered:
- Bodily injury
- Property damage
- Employee lawsuits
- Fraud or criminal action
It's generally recommended that all businesses that provide services for a fee, like gyms, have professional liability insurance. This type of insurance protects your business if a client files a lawsuit over alleged poor advice or professional mistakes.
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Workers’ Compensation Insurance
What is covered:
- Work-related injury or illness
- Employee medical costs and care
- Lost wages
- Disability benefits
- Ongoing care
What is not covered:
- Employee driving to or from work
- Intoxication
- Intentional act
- Illegal activities
- Policy violations
- Terminated employees
- Injuries suffered off-duty
While specific requirements vary by state, most businesses with employees are required to have worker's compensation insurance. This type of insurance provides financial and medical support to employees who suffer work-related injuries or illnesses.
Cyber Insurance
What is covered:
- Notifying customers about a data breach
- Legal fees
- Meeting extortion demands
- Recovering compromised data
- Repairing damaged computer systems
- Hiring computer forensics experts
What is not covered:
- Preventable security issues caused by humans
- Pre Existing/ prior cyber events
- Loss of intellectual property
- Employee/ insider cyber attacks
- Infrastructure failures not caused by attacks
- Cost to improve technology systems
Cyber attacks don’t just impact massive companies like Sony. They’re also a huge threat to small businesses. According to the Identity Theft Resource Center, 73% of small businesses reported cyberattacks in 2023.
Gyms often collect and store sensitive customer information, including personal details and payment data. In the event of a cyber attack, such as a data breach or ransomware, cyber insurance can help cover the costs of investigating and addressing the breach, notifying affected individuals, providing credit monitoring services, and handling potential legal liabilities.
Umbrella Insurance
What is covered:
- Claims not covered by underlying policies
- Claims beyond the limits of underlying policies
What is not covered:
- Criminal activity
- Errors and omissions
- Property damage or loss
Commercial umbrella insurance provides an additional layer of protection for gyms beyond their existing policies. If a lawsuit or liability claim surpasses the limits of the standard policies (such as general liability or commercial property insurance), the umbrella insurance can help cover the additional costs.
Factors to Consider When Choosing a Gym Insurance Provider
With so many types of business insurance available, it can be hard to know what policies your gym does and doesn’t need. Working with an experienced gym insurance provider helps remove the guesswork and ensures you have the right policies in place to protect your business.
When selecting a gym insurance provider, consider the following factors to find the best fit for your business.
Coverage Options and Limits
Before beginning your search for a gym insurance provider, it's important to assess your business's unique risks. Understanding these risks provides the foundation for choosing a provider who can adequately address your gym's specific needs.
After identifying risks, explore coverage options and limits from potential providers. While evaluating coverage options, keep your gym's risks in mind. This can help you establish whether or not a provider is a good fit.
For example, if you know your gym is at risk for flooding, you need a policy that provides protection from floods. However, some providers may not offer policies that cover flood damage. Understanding your risks and evaluating coverage options and limits allows you to narrow your search and remove these providers from your list.
Gym Experience
The fitness industry comes with its own set of risks and nuances, so it's important to choose an insurance provider who has experience working with gyms. This expertise helps them evaluate risks in your business, suggest appropriate coverage, and navigate industry regulations.
Before scheduling a call or meeting, streamline your search by visiting the provider's website to find information about the industries they specialize in serving. If they don't list gyms or fitness centers, they may not be the best option for your business.
Customer Service and Claims Process
Accidents are stressful enough as it is. When disaster strikes, you want to avoid a cumbersome claims process and a lackluster customer service experience.
Choose insurance providers that are always available to assist with questions and guide you through the claims process when accidents happen. Look for those with a 24/7 customer service team or a self-service portal for convenient assistance.
Professional Guidance
Don't settle for a subpar provider who’s just trying to sell you an insurance plan. Instead, look for a company ready to partner with your gym and guide you through the insurance process. The ideal insurance provider takes the time to get to know your business and help you assess your gym's risks. From there, they'll work with you to determine the best policies for your business.
Scalability
If you plan on opening another fitness location, expanding your services, or hiring more staff, you need an insurance policy that can grow with you. Look for providers that offer flexible, scalable insurance plans that can quickly evolve with your business.
Comparing Gym Insurance Providers
Once you've compiled a list of potential providers, it's time to evaluate which option is best for your gym. Use the following strategies to make an informed decision.
Request Quotes From Multiple Insurance Providers
Like any business decision, it's important to gather quotes from different providers before making your final choice. But the cheapest insurance option isn't always the best.
Eric Reingen, CFO of NEXO Insurance, encourages gym owners to work with providers who prioritize comprehensive coverage and value over simply offering the lowest price, saying,
"Many times, the least expensive option is also the most restrictive with its coverage. It's important to work with a company who understands the marketplace and who can communicate the tradeoffs being made between price and value."
Jayme Hamilton, Commercial Lines Manager at Leif Assurance, echoes this sentiment saying,
"Insurance isn’t about price, it’s about finding a stable solution to cover the exposures and risk for your company."
Read Customer Reviews
It’s hard to know what it’s like working with a provider before you’ve become a customer. Exploring customer reviews can offer valuable insights into the typical customer experience.
Note reviews that highlight positive experiences with claims processing, communication, and overall satisfaction. Additionally, pay attention to any recurring themes or concerns customers raise, as this can help identify potential issues that may affect your experience with the insurance provider.
Bottom Line
Gym insurance isn't a luxury–it's a necessity. Choosing the right insurance coverage ensures your gym isn't out tens of thousands of dollars when the unexpected happens. When evaluating insurance providers, choose a partner with experience in the fitness space who can help you determine your gym's needs.
As your business evolves, your insurance needs may change, so we suggest periodically meeting with your provider to review and update policies. Doing so helps ensure your gym is protected against new risks.
Investing in comprehensive gym insurance not only protects your business's financial wellbeing but also fosters a secure environment for your members and staff, ensuring the continued success of your gym.
More Advice for Gym Owners
- The Ultimate Guide to Opening a Gym
- How to Increase Gym Membership Sales
- Grow Your Gym: Capitalize on Fitness Business Trends
- Best Fitness Industry Events for Fitness Professionals
- How Much Does it Cost to Open a Gym?
- Best Point of Sale Systems for Gym Owners
Resources
- National Safety Council. Sports and Recreational Injuries
- The Hartford. What Does General Liability Insurance Cover?
- National Employment Law Project. State Workers’ Compensation Laws and Administrations
- Identity Theft Resource Center. Identity Theft Resource Center 2023 Business Impact Report Finds Record Level of Attacks Despite High Confidence in Defense
