Resources & Insights

The Risky Business of Insuring Health and Fitness Clubs

March 3, 2017

At least nine businesses that identify themselves as health or fitness clubs do business within just a few minutes of CCIG’s office in Greenwood Village. Yet another recently announced that it, too, would soon open its doors nearby.

business insurance
CCIG’s Andrew Mahoney.

Whether our immediate area can support quite so many clubs is an open question. What is more certain is that unless they’re properly insured, these businesses could easily end up hobbled by claims and worse.

Their “exposures,” as they say in the insurance world, are many. These risks arise every time a member hops onto a treadmill, dives in for laps in the pool or lifts weights.

Statistics from the Centers for Disease Control help illustrate the point:

  • More than 10,000 people are treated in ERs for injuries stemming from sports, recreation and exercise every day in the U.S.
  • Roughly 1.5 million people are treated in ERs for injuries from playing basketball and field sports every year.

Generally, clubs carry insurance to cover things like slip and falls, workers’ compensation, property, crime, auto and general liability.

Those policies cover the more obvious hazards. But there are at least three other big risks a club owner needs to think about.

First, trainers and instructors frequently work closely with their clients. As a result, they are open to claims of improper touching, overly familiar language or inappropriate comments. If they are working with clients younger than 18 years old, then this exposure increases dramatically.

In fact, abuse and molestation are one of the leading causes for claims at facilities that offer child-sitting, as well as one-on-one training with adult members.

A Maryland rock-climbing facility recently learned that lesson the hard way.

Its insurance company urged a judge earlier this year to rule that it shouldn’t have to defend the company in a lawsuit alleging that it negligently failed to prevent two of its coaches from sexually assaulting a teenage climber.

The insurer contended that its client’s commercial general liability policy doesn’t extend coverage for the underlying suit. The company, according to the suit, knew that the coaches had a history of sexually inappropriate behavior yet failed to take steps to prevent the pair from molesting a then-14-year-old girl. Both men later pled guilty to crimes in connection with the assaults, court records show.

So, what’s the lesson here? A general liability policy alone isn’t enough. Club owners need to consider sexual abuse and molestation coverage, which, depending on the insurer, can be added to their general liability policy.

Secondly, there’s professional liability coverage, which will cover the risks due to “errors and omissions” by fitness instructors and other staff members. Think, for example, about advice regarding an exercise regimen that leads to a client’s illness or injury. That would be covered by professional liability insurance.

The third big risk is in workplace discrimination claims, which have been skyrocketing.

Employment practices liability coverage protects clubs from lawsuits – including those filed by those who had been interviewed but not hired – for a litany of perceived wrongs. These include wrongful termination, breach of contract, disciplinary issues, sexual harassment, failure to promote, mismanagement of benefit plans, and more. These policies also cover a club owner’s legal costs whether they win or lose.

The bottom line is that an everyday business policy just doesn’t go far enough if you’re in the health and fitness game, not in an industry with so many risks.

Andrew Mahoney is a CCIG Insurance Advisor. Reach him at or 720-330-7925.

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