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 GYMS
Example 1: Gyms contain a lot of heavy equipment and weights. If a patron of your exercise facility gets injured on a piece of equipment, they could file a lawsuit in order to get compensation for their medical expenses. In this instance, your general liability insurance (GLI) covers certain related expenses to the injury and any associated lawsuits.
Example 2: Personal training and fitness classes are generally covered by the completed operations clause in your GLI insurance policy. In a patron slips and falls, your GLI policy may cover the costs associated with treating the injury. If a lawsuit arises from the covered event, your GLI policy may help cover lawsuit-related expenses, including settlements and attorney's fees.
Example 3: Gyms often seek out the newest and most effective pieces of exercise equipment, including stair-steppers, all-in-one machines, and weightlifting benches. In some instances, that new piece of equipment may be defective, and if a patron is injured on that defective equipment, you could be responsible for those injuries. Your GLI insurance may help pay for the injury-related expenses and expenses related to any lawsuits.
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 gym 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.
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OTHER TYPES OF COVERAGE GYMS 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 gyms should obtain:
Commercial Property Insurance
Commercial property insurance protects your building and the property inside your building if it is damaged by a covered event. Common events that are covered under this policy include fire, theft, and vandalism.
Workers’ Compensation Insurance
Workers’ compensation pays for employee injuries that occur while they are working. For example, if one of your employees is moving a piece of exercise equipment and accidentally pulls a muscle or drops the equipment on their foot, your workers’ compensation policy pays the medical bills associated with your employee getting treatment for his or her injuries.
TYPES OF COVERAGE SOME GYMS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your gym 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.
Commercial Umbrella Insurance
Commercial umbrella insurance is a type of supplemental policy that pays for insurance claim overages. For example, if your gym experiences a lawsuit and it exceeds your policy limitations, you could be held liable for paying the costs that are in excess of the maximum authorized payout amount.
Commercial Auto Insurance
If your gym provides vehicles for your employees in order to attend events or hold personal training sessions at other locations, you will need a commercial auto insurance policy. These policies pay for vehicle damage and medical expenses that occur while your employee is driving in the company vehicle on a work-related task.
Cyber liability insurance protects your business against claims that are the result of customers’ personal data being stolen by hackers.
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.