About General Liability Insurance
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A GYMNASTICS CLASS
Example 1: A new student is practicing when she over rotates and falls, breaking her wrist. Her mother decides to sue your business. While your company may ultimately be exonerated because participants assume a certain amount of risk, you still need to defend yourself with an attorney. Your general liability insurance will pay for your legal fees, including the cost of a settlement if one is necessary.
Example 2: The competing gymnastic business across town has sent you a letter, telling you that they are suing you for libel. The general liability insurance you have will cover your legal defense fees.
Example 3: You are throwing a welcoming party for a group of new students. One of the parents decides to get up on the balance beam and demonstrate his skills. He slips, falls, and breaks his leg. He asks that you pay for his medical treatment. Your general liability insurance will likely cover this expense.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
COST OF GENERAL LIABILITY INSURANCE
The average gymnastics class in America spends between $400-$1,100 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
OTHER TYPES OF COVERAGE GYMNASTICS CLASSES NEED
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all gymnastics classes should obtain:
Commercial Property Insurance
It took a considerable financial investment for you to acquire all of the gymnastic equipment and supplies necessary to open your studio. If you were to lose most or all of that equipment in an unexpected event like a fire, you might struggle to replace it all. But if you have commercial property insurance, you can file a claim with your insurer and likely get compensation for replacements if the damage was caused by a covered event.
Professional Liability Insurance
Professional liability insurance is designed specifically for businesses to protect against liability based on mistakes or failure to perform. For example, if one of your students hurts herself performing gymnastics at school and claims that your instruction was responsible for her injuries, your professional liability insurance will cover your legal fees. It will also pay for a settlement if you need to settle out of court.
TYPES OF COVERAGE SOME GYMNASTICS CLASSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your gymnastics classes may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Workers’ Compensation Insurance
Most states require businesses with employees to carry workers’ compensation insurance. Workers’ comp is designed to protect employees when they are hurt on the job. If an employee sustains an injury that requires medical care while performing work-related duties, the policy will pay for their medical treatment. It will also help to pay for lost wages while the employee is recovering.
Commercial Umbrella Insurance
An umbrella policy is designed to protect your business if your general liability insurance policy limits are exceeded—like if you were to lose a major lawsuit. Once the limits of your general liability insurance are reached, the umbrella policy kicks in to pay damages.
ADDITIONAL STEPS TO PROTECT YOUR BUSINESS
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
FREQUENTLY ASKED QUESTIONS
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.