Hidden Risks Faced By Fitness Centers

August 1, 2013

A majority of fitness center owners are underinsured and exposed to hidden risks that could ruin their business. With this in mind, Wood Gutmann & Bogart Insurance Brokers announced the five key risks that fitness center owners face.

“Even the best run fitness centers are vulnerable, because of the nature of their business,” according to Kevin S. Bogart, CPA, CPCU, president and partner at Wood Gutmann & Bogart. “Fitness centers exist to help people stay healthy, but ironically they also expose members to potential injury. Personal trainers add to liability exposure, and member data can make the business a target for cyber theft.”

The five hidden risks are:

1. Disaster-related losses.Studies show that 60 percent of businesses are underinsured. It’s no coincidence that the same percentage of businesses never reopen after a disaster.

2. Injuries on treadmills.Treadmills are the number one injury risk in fitness centers. The average cost for a treadmill-related accident is $250,000.

Members who use them typically do other things at the same time; such as texting, talking, reading or watching television.

3. Breach of member data.Nearly half of all companies have experienced a data breach, yet only one business in 10 has cyber-liability coverage. Cyber-liability risk is especially high at fitness centers, because they typically have a large amount of personal and financial data on file.

4. Liability from personal trainers and members.Personal trainers have been involved in liability suits for issues such as sexual harassment and physical injuries. A trainer was even found responsible for a member’s death because of inappropriate dietary advice.

When trainers are sued, so are the clubs they work at, as owners can be held liable for their trainers’ behavior. Contracted fitness instructors are not automatically covered under the owner’s liability policy, owners should ensure that their insurance policy automatically includes “additional insureds,” such as instructors, trainers and members.

5. Losses from emergencies.Explosions, acts of violence, shootings, sexual abuse and outbreaks of diseases have taken place at fitness centers. Such incidents can have a major financial impact and damage the reputation of the business.

Emergency event management insurance typically covers loss of business income, public relations expenses to restore the business’ reputation, and expenses such as medical care, counseling and funeral expenses.

Source: Wood Gutmann & Bogart

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