What is Gym Insurance & Why Do You Need It?

Traditional gyms and fitness centers of all sizes are just like other businesses in that they operate with risk. In fact, the risks are even more prevalent in gyms given the elevated risk of injury associated with exercise and the use of fitness equipment. This makes having a robust gym insurance policy essential.

Membership safety is foremost, but client injury is only part of what your gym’s insurance protects you against. Employees may also become injured in the workplace. Fire, theft, storms and other events can damage or destroy your gym’s equipment—or whole sections of your facility. Lawsuits, medical bills, building repairs and equipment replacement are all costly, and the right gym insurance protects your business from financial losses that result from unforeseen events.

It’s not always possible to avoid every risk, no matter how responsible and dedicated a business owner you are, and that’s where your gym insurance policy comes in. Below, we’ll cover some of the most common insurance types, why you need them and how much they cost on average.

8 Common Types of Gym Insurance Policies

It may not be fun, but shopping for insurance is all part of starting a fitness business. Gym insurance, like all business insurance, usually includes a combination of policies, which depends on the size of your fitness facility, the services it offers and the number of employees you have.

The type of insurance you carry is up to you and based on perceived risks. It can be a single policy, such as general liability insurance, or a combination of policies like a Business Owners Policy (BOP). Most small businesses have a BOP policy that bundles business property & business liability insurance. Gyms can then customize their BOP to help meet their specific needs by adding optional coverages.

Some of the most common types of gym insurance coverage include:

General Liability Insurance

General liability insurance is one of the most important to carry. It covers your gym for claims resulting from bodily injuries to members or damage to a member’s property.

Look around your gym. There are opportunities everywhere for members to potentially injure themselves. From flying off a treadmill or tripping over cables & weight plates, potential danger abounds in fitness centers. Not having general liability coverage means you are legally liable for these incidents and responsible for the costs associated with them, such as medical expenses. General liability insurance also covers defamation, advertising injuries and damage to rented property.

Professional Liability Insurance

Mistakes are made in the workplace. We are, after all, human. Professional liability insurance covers injuries and damage caused by errors that you or your employees made in your professional services.

Imagine if a member became injured because one of your personal trainers had them using weights that were too heavy. Or, what if one of your yoga or Pilates instructors pushed them to stretch too far? Commonly called errors and omissions, professional liability insurance is essential if you employ fitness instructors and offer fitness classes onsite. It ensures that your staff is covered for any mistakes in the services they provide. Without it, you’ll have to pay for claims out of pocket.

Commercial Property Insurance

Often one of the key coverages in your Business Owners Policy (BOP), commercial property insurance covers your gym’s building, outside fixtures like signs & contents such as furniture, computers or any inventory you carry. It covers property damage and the cost of item replacement in case of theft, vandalism, burst pipes, fire, storms, explosions and other incidences. For people who rent a certain space inside a larger building, it is possible to buy coverage for that space.

Worker’s Compensation Insurance

Worker’s compensation insurance covers employee injuries or illnesses that happen while they’re at work. Coverage pays for medical expenses, lost wages from any time off work, potential rehabilitation or survivor benefits if a team member were to die in your gym. Worker’s compensation insurance is often referred to as workman’s comp, or worker’s comp. Most states require employers to carry worker’s compensation coverage, and not doing so can lead to severe fines & penalties.

Employee Dishonesty Coverage

Some insurance types can seem a bit vague, but this one is exactly what it sounds like. Employee dishonesty coverage protects your gym against theft or other fraudulent actions perpetrated by an employee. It can reimburse you for stolen money, equipment or property.

Business Interruption Insurance

There are many things that can cause a business to close temporarily. A global pandemic is one fine example, though a tree falling through your gym’s roof is more likely. Business interruption insurance may supplement your gym’s lost income if an unforeseen event forced you to close your doors. A Business Owner’s Policy (BOP) may bundle business interruption insurance with commercial property and general liability insurance. In addition to lost revenue, it can help cover operating expenses such as employee payroll, taxes, mortgage or rent payments and relocation costs.

Pro Tip: Check your policy’s fine print for specific exclusions and policy limits. Closures caused by communicable disease are typically excluded from coverage, something many gym owners didn’t realize when COVID-19 hit.

Business Equipment Insurance

Your gym’s commercial property policy may cover the building itself and its contents, but not gym equipment. Equipment breakdown happens. Outfitting your gym with top-of-the-line equipment is expensive, so imagine what it costs to replace it when it is damaged or stolen. That’s what this insurance covers, in addition to equipment repair & replacement if it’s not functioning properly.

Business equipment insurance gives you peace of mind knowing that your equipment will always be there and functioning properly. If you take equipment outside of the gym for classes, house calls or any other reason, your plan should include coverage for that as well.

Data Breach Insurance

Also called cyber liability insurance, data breach insurance protects your gym in the case of personal customer data being hacked or stolen. This includes your members’ names, addresses, phone numbers, email addresses and stored payment information. If you offered wellness services such as massage or acupuncture onsite, detailed client SOAP notes could also be at risk. Data breaches like this can be costly and seriously damage your gym’s reputation. In addition to covering legal fees and expenses, data breach insurance may help notify members about a data breach, recover their compromised data and repair damaged computer systems. This coverage is also recommended if you live stream classes or offer a digital fitness platform.

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How Much Does Gym Insurance Cost?

This can be a tricky question to answer because the cost of your gym insurance policy will vary based on several factors, including:

The type of gym or fitness studio: Personal training gym? MMA gym? CrossFit box? HIIT studio? There are many gym types, and each carries their own degree of risk.
Your gym’s size: The amount of liability coverage needed, unsurprisingly, grows quite a bit as your gym does.
Your gym’s services: Martial arts classes will increase the likelihood of injury. Moreover, those smoothies you sell can result in illness or allergic reactions in members.
Your gym’s location: Gyms in large, densely populated (and expensive) cities will have greater insurance costs.
The number of employees: More employees mean more people who need to be covered by worker’s compensation insurance.
The estimated value of your gym & assets: The more successful you are, the more you are worth.

Cost also depends on the insurance company you choose. There are several that offer coverage specifically for the fitness industry.

Small to Medium-Sized Gyms

Based on numbers compiled by fitsmallbusiness.com, general liability insurance for small to mid-sized gyms (2,000–2,500 square feet; $100,000 worth of gym equipment) usually starts at around $1,500 per year. Adding commercial property protection, worker’s comp and professional liability insurance places the hypothetical premium at about $3,500 annually. This is a starting point from which you will add coverage based on need.

Starting minimums include:

General liability: $1,500/year

Commercial Property: $1,000/year

Professional Liability: $1,000/year

Worker’s Compensation: $950/year

Business Owners Policy BOP: $360–$8,500, depending on size. (Deductible $500–$1,000)

If you plan to open a large gym or move your current operation into a bigger facility, you can expect to pay higher insurance costs.

Sources:

Gym Insurance: Cost, Coverage & Providers. https://fitsmallbusiness.com/gym-insurance/#2

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Gyms, health clubs and fitness studios carry more risk than many other types of businesses. The right gym insurance policy safeguards you from lawsuits and financial losses resulting from member injury. It protects your physical business, assets and employees in the wake of unforeseen events. Gyms can tailor their BOP to help meet their unique needs, so start thinking about exactly what's needed for your own business.

It’s wise to get the perspective of other gym owners, and to speak to an insurance agent. Now that you generally understand what your business’s most probable risks are based on its size, location, services & other factors, shop around for the right policy. The Vagaro fitness scheduling software does not insure your gym, but it ensures that you have all the tools you need to run an efficient, safe and successful business. These include secure employee and client management tools, liability forms, payment processing and reports that track your growth and overall value.

If you’re ready to take your fitness business to the next level, sign up for a free 30-day trial and discover everything Vagaro can do for you!