Get a quote on General Liability Insurance
Businesses in the sports and fitness industry are particularly prone to third-party injuries and various accidents that pose liability risks. It is important to consider Commercial General Liability Insurance to protect your business against third-party incidents that you may be held liable for.
What is General Liability Insurance?
General Liability Insurance—also known as Commercial General Liability (CGL) Insurance—financially protects your business if you unintentionally cause bodily injury, property damage, personal injury, or advertising injury to a third party.
Given the nature of the sports and fitness industry, the liability exposures for these businesses are extensive. Patrons of your fitness facility are likely engaging in a number of physical hazards, and improper use of fitness equipment can cause various types of injuries. Your business may see hundreds of customers a day on your business property, and even with safety at the forefront, accidents simply happen.
Example:
- A patron of your gym is running on a treadmill when the machine malfunctions and abruptly stops, causing your customer to fall over and sprain his wrist. General Liability Insurance would cover the medical expenses related to this bodily injury and any legal fees if the customer decides to take legal action against your business.
Why do sports and fitness businesses need General Liability Insurance?
In the sports and fitness industry, businesses are particularly vulnerable to incidents covered by General Liability Insurance. Your business may receive heavy foot traffic on a day-to-day basis, increasing the likelihood of accidents occurring. If your facility houses locker rooms, showers, swimming pools, saunas, or pools, there is 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 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. For instance, if you are accused of copyright infringement in advertising, slander, or libel, General Liability Insurance provides financial protection against these claims. If your business engages in marketing or advertising, this type of risk coverage may prove beneficial.
What does General Liability Insurance cover?
General Liability Insurance covers bodily injury, property damage, and personal and advertising injury. Your CGL policy will assist with the medical expenses and legal fees associated with these third-party claims.
Bodily Injury
General Liability Insurance financially protects your business if a third party (who is not an employee) suffers a bodily injury while on your business premises or in the course of your business operations. CGL could cover costs related to the injury including medical expenses, lost income, pain and suffering, funeral expenses, and legal fees. For the sports and fitness industry, this component of coverage is particularly important given the high chance of accidents in these very physical environments.
Example:
- An elderly patron of your yoga studio trips on yoga mats that were not properly stored away and injures her hip. General Liability Insurance would cover any medical expenses related to the incident and any legal fees if she decides to sue.
Property Damage
General Liability Insurance offers financial protection when your business or one of your employees causes damage to the property of another person or another company. Many sports and fitness trainers travel to various locations and client sites as part of their services, which increases the likelihood of property damage to third parties.
Take note that this coverage does not apply to your own business property. In order to receive coverage for your own property, consider commercial property insurance. Additionally, General Liability Insurance does not cover any third-party property that is under your care, custody, or control. Coverage for that type of property could be provided under an additional endorsement for voluntary property damage.
Examples:
- You are onsite at a client’s office complex teaching a personal fitness class. During the class, you accidentally drop a heavy kettlebell and damage the floor of the client’s workout facility. The floor repair would be covered under the property damage component of your General Liability Insurance.
- One of your employees at your boxing gym sets up a punching bag too close to a mirrored wall. During a session, the punching bag hits and cracks the mirror. Unlike the previous example, this is damage to your own business property, and it would not be covered under General Liability Insurance.
- One of the lockers in your dance studio is broken into and a customer’s phone is stolen. Although this is a loss of third-party property, the property was under your care, custody, or control during the incident. As such, coverage for the item is excluded from General Liability Insurance.
Products and Completed Operations
Products and completed operations coverage offers financial protection from third-party claims of bodily injury or property damage resulting from work that you have completed or from a product you have manufactured, sold, or distributed. This coverage is essential if your business makes or sells fitness equipment or health foods. If a customer injures himself or becomes ill after using your products, your business could be held liable.
Example:
- Your pilates studio decides to manufacture and sell limited edition resistance bands. Many of your customers claim the resistance bands easily snap and cause injury. Your insurer would pay for medical expenses and damages if the injured customers sue.
Personal and Advertising Injury
Personal and advertising injury coverage provides protections for third-party non-physical injuries caused by you or your employees during the course of business. It is important to note that CGL covers personal and advertising injury claims only if the offenses were committed unknowingly.
In the sports and fitness industry, commonly covered claims include offenses such as privacy violations, copyright infringement in advertising, slander, or libel.
Examples:
- Your gym was visited by a professional basketball player and you snap a photo of him during his workout. In an effort to increase your customer traffic, you post the photo on social media as an advertisement. The basketball player sues your gym for using his image without permission.
- Your martial arts studio launches an advertising campaign using artwork that is similar to a competitor’s. Your studio is sued for copyright infringement.
Legal Defense
If your sports and fitness company faces a lawsuit for a reason covered by General Liability Insurance, your insurer will cover the costs to defend yourself against these liability claims no matter who is at fault. This includes attorney fees, court costs, expert witness fees, and other expenses. Your insurer will cover the cost to defend your case up to the limits of your policy. CGL policies typically do not subtract your legal fees from the limits of insurance.
Medical Payments
Regardless of who is at fault, General Liability Insurance will pay for medical expenses resulting from an injury that happens on your property, adjacent to your property, or as a result of your business operations. Your CGL insurance will pay medical expenses up to the policy’s medical expenses limit. It is important to note that this coverage is different from bodily injury coverage, which pays if your company is found to be at fault.
What are the exclusions to General Liability Insurance?
Common exclusions to General Liability Insurance are as follows:
- Your business property. General liability insurance only covers damage to the property of others. For coverage of your own property, you need to consider commercial property insurance.
- Damage caused intentionally. If one of your employees gets into an altercation with a patron of your establishment and knowingly causes damage to their property, your insurance will not cover the damage.
- Liability resulting from crimes or fraud. Consider commercial crime insurance to protect your business from financial losses related to employee crimes such as theft, burglary, robbery, forgery, and fraud.
- Professional errors. If an instructor at your gym suggests exercises that aren’t appropriate for a client’s abilities and cause a physical injury or trauma, your client could sue. General Liability Insurance would not provide coverage; instead, professional liability insurance would provide coverage for lawsuits related to your professional services.
- Employee injuries. If a fitness coach at your health center gets injured while on the job, General Liability Insurance will not cover those injuries. Instead, workers’ compensation insurance would provide coverage.
- Employee discrimination lawsuits. Instead of Commercial General Liability Insurance, employment practices liability insurance covers employment-related issues such as discrimination, harassment, and wrongful termination.
- Automobile crashes. If an employee of yours gets into a car accident while running an errand for work, commercial auto insurance can cover damages.
What are the limits of General Liability Insurance?
The limit of insurance is the maximum that the insurance company will pay in claims. In Commercial General Liability Insurance, there is often a limit per occurrence (the maximum amount that the insurer will pay for a single loss) and a limit per year (the maximum amount that the insurer will pay for the policy year).
Example:
- Your dance studio has a $500,000 per occurrence limit and $1 million per year limit. Two claims are filed against your studio in one year. The first settlement is for $400,000 and the second is for $800,000. Your insurer will cover the entire amount of the first claim because it is within the occurrence limit. It will pay $500,000 for the second claim, but it will not cover the remaining $300,000 because the claim is greater than the limit for a single claim.
Pricing and Quotes
AdvisorSmith found the average cost of General Liability Insurance for sports and fitness businesses was $477 per year. This average cost was based on sports and fitness businesses with up to $500K in revenue for coverage of $1 million per occurrence and $2 million in aggregate.
Pricing for General Liability Insurance is based upon the unique risks your business faces. Insurers consider factors such as:
- Business size
- Industry
- Location
- Number of employees
- Claims history
Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a gym with a history of multiple claims will probably have higher liability premiums than one with relatively few past claims. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.
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 General Liability Insurance:
| Provider | General Liability | Business Owner's Policy | Product Liability |
|---|---|---|---|
| CoverageSmith | ?? | ?? | ?? |
| CoverWallet | ?? | ?? | ?? |
| Hiscox | ?? | ?? | ?? |
| Thimble | ?? | ?? | ?? |
| Embroker | ?? | ?? | ?? |
Final Word
Commercial General Liability Insurance remains one of the most commonly purchased insurance types for businesses and for good reason. No business is completely accident-free and CGL protects your company from third-party claims of property damage, bodily injury, and advertising injury. The importance of this coverage for businesses in the sports and fitness industry cannot be overstated. The very nature of the work within this industry exposes businesses to countless risks, accidents, and bodily injuries. Make sure your business is prepared for these incidents with Commercial General Liability Insurance in place.
