There are countless risks to owning and operating a business within the sports and fitness industry. To simplify the confusing process of purchasing multiple business insurance policies, consider a Business Owner’s Policy, which combines several common insurance coverages into a single package.

What is a Business Owner’s Policy?

Designed for qualified small and midsize businesses, a Business Owner’s Policy (BOP) combines several common types of insurance into one package. In general, BOPs include general liability, commercial property, business income, and extra expense coverage. If you find that your company requires additional coverage, it is possible with some insurers to customize your BOP by adding specific endorsements. BOPs are especially helpful for smaller sports and fitness businesses because premiums are typically less expensive than buying each type of insurance individually. 

Example:

• A faulty wire sparks a fire in your dance studio, which causes damage to the building and injury to a customer who trips and falls and she is running out of the building. The commercial property portion of your BOP would provide funds to repair or replace the damaged property, and the general liability portion of your BOP would provide for medical expenses for the injured customer. 

Why do sports and fitness professionals need a Business Owner’s Policy? 

For many small and midsize sports and fitness companies, the process of researching multiple insurance policies can be a confusing and lengthy ordeal. Business Owner’s Policies exist to simplify insurance options for smaller companies as many of them share the same types of risks. Insurers can also tailor their offerings for the sports and fitness industry to help avoid coverage gaps. Additionally, for the same coverage, BOPs are generally more cost-effective for small businesses than purchasing multiple insurance policies.

Example:

• A patron of your Crossfit gym trips over some barbells that were improperly stored and sprains his wrist during the fall. The general liability portion of your BOP would cover any medical expenses related to this bodily injury and any legal fees if he decides to sue. 

What does a Business Owner’s Policy cover?

A Business Owner’s Policy typically provides the following coverage: general liability coverage, commercial property coverage, business income coverage, and extra expense coverage.

General Liability Coverage

General liability insurance financially protects your business if you unintentionally cause bodily injury, property damage, personal injury, or advertising injury to a third party. Your business may receive heavy foot traffic on a day-to-day basis, increasing the likelihood of accidents occurring. Your fitness facility may house locker rooms, showers, swimming pools, saunas, or pools, creating a greater risk for slip-and-fall incidents.

Perhaps your business requires your trainers, instructors, or employees to travel to client locations to conduct their work. In doing so, your business is at risk of damaging third-party property. If your business sells products—such as fitness equipment or health supplements—you are liable for the harm that your products may cause your customers. In addition to these types of risks, General Liability Insurance can protect your business from lawsuits based on non-physical injuries.

Example:

• Your Jiu-Jitsu academy rebrands itself by creating a new logo and slogan. However, a competing Jiu-Jitsu gym believes your slogan is too similar to theirs and sues your academy for copyright infringement. The general liability component of your BOP would cover the costs to defend yourself against these claims.

Commercial Property Coverage

Commercial property insurance provides financial protection for your business property, including buildings, equipment, furniture, and inventory. Your business may rely heavily on fitness equipment, so any damage to this equipment can have direct impacts on your ability to operate. If your company’s business property is damaged or destroyed by a covered peril, your insurer will provide financial support to assist your company in repairing or replacing your property.

Example:

• A severe windstorm damages the roof of your yoga studio, and you’ll need to get it repaired. The commercial property portion of your BOP would cover the costs of repair. 

Business Income Coverage

Many sports and fitness businesses rely heavily on physical locations and equipment to function effectively. As such, damage to your property could mean an interruption of business. Business income insurance would provide coverage for loss of income and operating expenses (such as rent and payroll) if your business is interrupted or temporarily shut down due to property damage. It is particularly important for sports and fitness businesses to consider this additional insurance. After all, a majority of revenue likely comes from the physical location being open to customers.

Example:

• Vandals sneak into your spin class studio and damage all your exercise bicycles. Your commercial property coverage would provide the funds to replace the damaged property while your business income coverage would reimburse you for your income and operating expenses until you can resume operations with new bikes in place.

Extra Expense Coverage  

Extra expense coverage can protect your business from shutting down in the case of an extraordinary situation by providing necessary funds. After a disaster, these funds can be utilized to avoid or minimize business closures by renting replacement equipment or moving to a new location while repairs are completed. Extra expenses coverage will cover anything beyond your normal day-to-day operating costs.

Example:

• The roof and glass windows of your taekwondo studio are damaged during an intense hailstorm. While repairs are being done, you rent a temporary location to hold classes and sessions. Under the extra expense portion of your BOP, your insurer would pay for the cost to rent the temporary location and any necessary equipment to continue operating. 

Who needs a Business Owner’s Policy?

Business Owner’s Policies are beneficial for small and midsize businesses, but factors such as the size of the location, the number of employees, and revenue determine whether or not your business is eligible for a BOP. Eligibility is often determined by the following criteria:

• You own or lease a physical business location or office
• Most of your business is conducted on your business premises
• You have fewer than 100 employees
• You make less than $5 million in sales (this figure may vary depending on the insurer)

What is excluded from a Business Owner’s Policy?

A Business Owner’s Policy covers the common insurance needs of small to midsize businesses, but there are some key exclusions that should be highlighted. Types of insurance that a BOP does not cover include:

• Commercial Auto Insurance
• Professional Liability / Errors & Omissions
• Workers’ Compensation Insurance
• Group Health, Life, and Disability Insurance

What coverage can be added to a Business Owner’s Policy?

Depending on your insurer, your Business Owner’s Policy can be customized to ensure your policy best suits your needs. Some additional forms of coverage, known as endorsements, may be added to your BOP to provide your business with comprehensive coverage. Some endorsements you can add include:

• Professional liability insurance can help protect your business against lawsuits related to your professional work, covering legal fees and judgements that may result from these claims.
• Data breach or cyber liability insurance covers your business against liability and property losses caused by cyberattacks such as hacks, data breaches, denial of service attacks, and viruses.
• Mechanical breakdown covers the repair or replacement of malfunctioned or damaged equipment and many of the costs associated with the breakdown of equipment, including spoiled inventory and losses to business income. 
• Employment practices liability insurance provides financial protection for your business against lawsuits by current, past, or prospective employees accusing your business of wrongful treatment such as discrimination, harassment, or other employment-related issues. 
• Bailee’s coverage is a type of inland marine insurance that covers your business for losses to customer property in your care, custody, or control. 
• Commercial crime insurance can help protect your business against financial losses resulting from crime such as theft, burglary, robbery, forgery, and fraud.

What are the limits of insurance for a Business Owner’s Policy?

BOPs typically have separate limits of insurance for each area of coverage. This means that there are individual limits of insurance for the liability, property, business income, and extra expense portions of the policy.

General liability limits are typically divided into per year and per occurrence maximums. Your policy will list a maximum amount your insurer will pay for each individual incident, plus a maximum amount that your insurer will pay for all incidents over an entire year. For example, your policy might have a limit of $1 million per occurrence and $2 million per year.

Property insurance limits are the value of your insured property. It’s common for policies to list the value of your building and all other property separately. For example, your company could have a building valued at $100,000 and other property valued at $300,000.

Business income limits are typically bound by a “period of restoration,” or the time it would take for your business to get back up and running. Loss of income payments are generally capped at 12 months after direct physical loss or damage, and expenses like payroll are capped at 60 days.

Extra expense limits are also bound by the “period of restoration,” with payments limited to only expenses that occur within 12 months after the direct physical loss or damage.

Do Business Owner’s Policies have deductibles?

For most Business Owner’s Policies, only the property coverage portion includes a deductible. The liability component of a BOP doesn’t typically have a deductible, so the insurer will pay any losses or legal fees up to the limit of insurance without expecting any financial contributions from your business.

The business income insurance portion of a BOP does not have a deductible, but it does usually have a typical waiting period of 72 hours when a loss occurs. The insurer will not pay for any losses to business income incurred during this waiting period.

How much does a Business Owner’s Policy cost?

The premiums on a Business Owner’s Policy vary depending on a number of factors. Though prices can range between a few hundred dollars to a few thousand dollars a year, much of the final pricing will depend on your company’s risk to insure.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer Business Owner’s Policies:

Provider	Business Owner's Policy	General Liability	Commercial Property
CoverageSmith	??	??	??
CoverWallet	??	??	??
Embroker	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Many small businesses can end up paying as little as a few hundred dollars per year for a BOP. However, even if your pricing ends up being closer to a few thousand dollars, keep in mind that you are most likely benefiting from significant savings over purchasing each of the liability and property insurance policies separately. Also, remember that not everyone can qualify for a Business Owner’s Policy. Your business will need to meet certain requirements, including maximum sales levels and employee counts, in order to take advantage of this type of policy, which is mainly geared for small businesses.

Final Word

As a small or midsize business, a Business Owner’s Policy may be the perfect choice to obtain the most amount of coverage with minimal premium costs. The risks involved with owning and operating a sports and fitness business are vast, and it is important to make sure your coverage reaches a wide range. With crucial types of insurance bundled together, a Business Owner’s Policy makes it easier for your business to stay protected on all fronts.