In many respects a gym or health club will require the same essential business insurances as most other companies. A health club will need to insure its property, loss of income and its potential liabilities.
Some of the considerations needed by a health club, and the specific aspects of insurance cover recommended, are as follows:
Buildings If you own the buildings or are made responsible under the conditions of the lease you will need to insure these. The sum insured will be the cost of rebuilding including an allowance for professional fees and removal of debris.
Tenants’ Improvements The amount that you have spent improving or converting the landlord’s building needs to be covered. This may include the costs of studio flooring, partitioning, changing rooms, wet areas etc. Allow for inflation and don’t forget any tenants’ improvements made by previous occupants may need to be covered (depending on the lease arrangements).
Stock Insure for the maximum amount of stock held at any one time based on the “cost price”. If you hold any wines or spirits these will need to be specified separately.
General Contents The total replacement cost of all gym equipment, carpets, furniture, kitchen equipment, office contents etc.As insurers offer policies on a “New for Old” basis you will need to insure these for the value of replacing them as new. It is essential that the sums insured are adequate as underinsurance may adversely affect claims settlements.
Loss of Income Insure your Gross Income against loss following a fire, water damage etc. The maximum indemnity period needs to allow not only for the anticipated period of rebuilding but also the time required to regain customers etc. The maximum indemnity period is usually a standard 12 months however you should consider a longer period (18, 24 or 36 months) if you think that it might take this long to get back to the same financial position.
Employer’s Liability You are required by law to insure Employer’s Liability for a minimum £10,000,000 Limit of Indemnity. This covers your liability at law for death, bodily injury or loss to all employees. The premium is based on the annual wages.Even if people working for you are not PAYE employees, they may be considered as employees depending on the nature of the relationship you have with them (e.g. if you supervise their work or supply their equipment).
Public Liability This covers your liability at law for bodily injury or loss of or damage to property of members of the public (not employees). We recommend a minimum Limit of Indemnity of £2,000,000 increasingly a £5,000,000 Limit is becoming the norm.Any policy arranged for a health club should provide cover for wrongful advice and member to member liability. It is also important to check that your policy covers all the activities of the business such as classes away from the premises, children’s activities or beauty treatments.The premium is based on the annual turnover or number of club members.
Money Insurance You should have cover for stolen cash. You will need to use a safe for high limits of cover.
Glass Insurance This can cover all internal or external glass (automatically included if the Buildings are insured).
Loss of Licence You may like to insure against loss of your alcohol licence.
Legal Expenses Legal expenses cover can cover legal costs in making or defending an action for Employment Disputes, Contract Disputes, Debt Recovery and Tax Investigation. It also includes a free legal advice helpline.If you do opt for this cover please be aware of the conditions that apply in terms of referring issues to the insurers and following their advice.
Directors’ and Officers’ LiabilityThis protects directors or managers of a company in respect of claims brought against them in their personal capacity. The law is increasingly seeking to hold individuals liable where there has been management failure though legislation such as the Companies Act, Health and Safety at Work Act or Corporate Manslaughter Act.
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