Choosing Insurance: A guide for Independent Gyms and Fitness Clubs

Here at Gym Owner’s Forum we have covered a lot of the fundamentals of running an independent gym or fitness club in these blogs, leveraging our 25 years of experience to ensure that gym owners, management and staff have easy access to high quality resources on a variety of topics.

But for the most part, they have been focused on what happens inside the gym, whether it is to do with infrastructure, software, access controls, membership retention, social media engagement or a host of other topics.

Today we are looking at something that trends towards being a little more abstract.

Insurance

Perhaps if Benjamin Franklin (or the person he was most likely quoting, Daniel Defoe) was alive today and had to set-up a business, he would update that transcendent quote on inevitabilities from ‘Death and Taxes’ to ‘Death, Insurance and Taxes’. 

Because while Franklin was an advocate of insurance and even started his own insurance company, it was not the all-consuming industry it is today. His particular company was a city-wide fire insurance scheme for Philadelphia. A far cry from the government mandated multi-billion pound industries of the 20th and 21st century. 

But now, as then, sensible people like Franklin advocated for insurance because it made good and responsible sense. It may seem like an abstraction at the time of purchase but when something goes wrong (as things sometimes inevitably do in a gym or fitness club) and the protection and reassurance suddenly doesn’t seem quite so abstract. 

Running a gym or fitness club is a fantastic venture, but it is not free of risk. Some of those risks are unavoidable, the sort of risk that comes with any suitably complex business venture. 
But others are not, and with the right insurance for the right fitness facility, independent gym and fitness club owners can enjoy a much greater peace of mind knowing that everyone involved, whether it is the staff, the membership or even the building itself, are all firmly protected. 

So how does a new gym owner go about selecting which insurance will be the best suited for their gym or fitness club? Which types of insurance are required? And how many?

Well thankfully we don’t intend to pose these hard questions and then disappear, so today we will be continuing our look into the fundamentals of setting up and running an independent gym or fitness club.

How necessary is Insurance for an Independent Gym or Fitness Club in the UK?

While we may have tipped our hand a little early in the introduction regarding our stance on this question, the necessity of insurance is still a question worth asking.

Of course some insurance products are a legal necessity to operate a business and as such are excluded from this. But others are still optional. And when something is optional, it can be a temptation for business owners to skip over or ‘do without’. 

We would always urge caution to independent gym and fitness club owners when entertaining this line of thought. Insurance is not wasted money, it is reassurance and it is a critical outlay, an investment in the security and future of the gym in an industry that is not always risk-free.

This is not to imply that gyms and fitness clubs are particularly unsafe. As we said above, these insurances aren’t just to protect members (though that is of vital importance). The insurances that we will be looking into today are as necessary to protect equipment, staff and the facility itself. Top of the line Gym equipment is a prime example of a significant expense should it become damaged. Equally, the presence of weights and water from pools and saunas is more likely to cause injury to both members and the facility than other purposes.

With everything going on in the average gym or fitness club, the peace of mind that protection can allow a gym owner is worth a significant amount. 

There are a hundred things that could go wrong, opening the gym up to expensive repair bills, complex investigations or even legal action. These are the incidents that insurance is designed to protect a gym owner against and as such we would recommend erring on the side of caution. 

Starting on the right foot is important, members and staff alike want to be assured that their interests are being looked after and that the gym environment they are signing up to will look after them. While an independent gym or fitness club owner can attempt to shoulder these responsibilities themselves, we would earnestly recommend that each of the insurances that we will cover today be considered carefully. 

What Insurance is necessary for an Independent Gym
or Fitness Club?

As we said above, the right insurance is vital in order for an independent gym or fitness club owner to have well-founded peace of mind. But it is also important to consider what coverage is actually required, the budget that can be set aside to pay for the insurance and the offers available to the gym or fitness club at the time.

Our guide is here to ensure that any plan has the maximum chance of surviving contact with reality. The fitness industry, the insurance industry and the economy as a whole is in a tumultuous period at the moment and events (as we saw with the Covid-19 pandemic and the energy crisis prompted by the Russian invasion of Ukraine) can escalate quickly. 

As such, while it is important for a gym or fitness club owner to understand what types of insurance they would like and the prices they would like to obtain it for, it is also key to keep in mind that the market, and therefore insurance will fluctuate. Insurance underwriting is a complex process, deduced (or perhaps that should be divined) by a series of risk assessment calculations. 

In addition, the purchasing of insurance policies can also be a highly specialised and specific process. This topic could be an article in and of itself but to keep things brief we will just say that many policies, especially for larger amounts and depending on the insurance and underwriter may be subjected to significant change prior to the final agreement.

Of course this process will vary depending on the different types of insurance, and independent gym and fitness club owners may need coverage across a variety of sectors. Liability insurance, Indemnity insurance, Insurance as an employer, Asset Insurance. Some insurers and underwriters can provide more than one of these, and even two insurance policies with the same title by two different insurers/underwriters will cover different things.


As such it is important to keep in mind that the answer to ‘What Insurance is necessary’ doesn’t have a straight-forward answer.

For example, we will recommend, both here and later, that public liability insurance is very necessary. However different public liability insurance policies will vary, some may contain coverage that is not necessary to an one independent gym or fitness club, but is very pertinent to another

As is often the case, the correct answer isn’t always satisfactory or brief. Which is why we will be delving into the different types of insurance and what coverage to prioritise within those insurance policies. 

Which types of Insurance should interest an Independent Gym or Fitness Club Owner?

Whether a gym hasn’t opened its doors for the first time or it has been running for a decade, we hope that this list, breaking down the various types of insurance that may be financially interesting to an independent gym or fitness club will be of some use.

In this list we will try to give a brief summary as well as any potential benefits or pitfalls commonly associated with the insurance in question from our lengthy experience in the fitness industry.

First we will start with the insurance we have talked joint-most about during this blog so far, Contents Insurance, followed by Public liability insurance.

 

Contents insurance

Does an independent Gym or Fitness Club Need Contents insurance?

Different sectors will always prioritise different types of insurance. As we said above, even different gyms will prioritise different insurances depending on a variety of factors, ranging from location to the services provided and the number of personnel.

However, one type of insurance with near universal application and appeal is Contents Insurance. Unless the fitness facility in question happens to consist of just an empty studio room, the contents of an independent gym or fitness club will be some of the most prized possessions.,

Whether it is the equipment itself, the electronics and computers or even the access controls (something we know all about), there is a plethora of expensive and hard to replace equipment that makes up a good portion of the initial investment into a gym. 

While the initial setup phase is a time where no gym owner wishes to spend more than necessary, the potential of having expensive equipment damaged long before it has been able to help pay itself off is a catastrophic situation to be in for any new independent gym or fitness club owner. 

The maths here becomes very simple. If an event that caused a significant amount of damage, say half or even a third of the equipment and/or assets within the gym are taken out of commission due to say a fire or flooding. Could the gym comfortably afford to replace them?

Even if the answer is yes, that is a significant amount of money to burn. As such, we would nearly always recommend Contents insurance for all but the most spartan of fitness club setups! 

 

Public liability insurance

Does an independent Gym or Fitness Club need public liability insurance?

While there is a massive and compelling case to be made for public liability insurance, we will not be making it quite as emphatically as the others?

Is it due to fatigue? No, we could talk about insurance for gym and fitness clubs all day. It is simply because public liability cost is a legal requirement for nearly any business substantially dealing with the public. Which, of course, a gym or fitness club falls under.

But while being a necessity, does not mean that it should be begrudged. Public liability insurance is one of the most effective insurances available on the market. It can cover (again, factoring in things like excesses) legal costs that occur due to allegations and instances of injury and property damage.

With things like weights, water and movement commonplace in a gym or fitness club, public liability insurance is a very smart purchase. As we don’t need to recommend a gym or fitness club owner get it (as it is mandatory), we would recommend that they do not ‘cheap-out’ on it.

As per our example above, large excesses on public liability insurance will significantly diminish the returns from multiple smaller public liability claims. This will, in turn, result in much higher payouts for the gym or fitness club in question.

Often public liability claims are either for a very small or significant amount. As such, it is best to go for a policy that has a high overall coverage with a low excess, to cover off both of these angles.

Asset/Equipment insurance

Does an independent Gym or Fitness Club need asset insurance or specialised gym equipment insurance?

This insurance is, for many underwriters and insurers, a variant of contents insurance. Though some offer their often specialised ‘Equipment insurance’ to facilities within the fitness industry.

As per the rationale we went through in Contents insurance, gym equipment represents a significant investment to any gym, let alone an independent gym or fitness club.

As such, it is pertinent, especially close to opening, that equipment be suitably protected.

The reason that equipment insurance may be preferable to generic contents insurance is as follows.

Within the insurance industry, there are several governing principles. To reduce one of them to a core and usable sentence. Specificity reduces costs.

The reason may be apparent. The most specific a policy, the less risk it presents. As such, these policies can often represent the greatest value. 

Contents insurance is a good example. Contents covers a broad range of items, especially within a gym or fitness clubs. This means that the underwriters will determine that the risk on this policy is high relative to say, a policy that only specifically covers equipment.

Even under normal circumstances, equipment will slowly degrade. Such is the nature of the repetitive motions and high-weight loads. As such, the desire to specifically protect equipment for a gym or fitness club owner should be strong. Either because they want to ensure it lasts until the point where it has ‘paid itself off’ or alternatively because some money may be put towards its replacement.

It is worth saying that many insurers will deduct money from the payment amount based on the age of the equipment, so it may not always be possible that insurance will provide a like for like replacement.

Like many of the pieces of insurance advice within this blog however, this will vary from insurance to insurance. It is always important to read the policy. Even after purchasing the policy, insurers must legally give you a period of time to read it and ensure you are satisfied with the coverage. 

 

Buildings and commercial property insurance

Does an independent Gym or Fitness Club need Commercial property insurance?

Perhaps one of the most self-explanatory and well-known insurances, due to its appearance in nearly every sector of the economy. 

Unsurprisingly, it covers the building itself.

If the building is owned in some capacity by the gym owner, usually the type of insurance required is called something akin to ‘Building Insurance’ or ‘Commercial Property Insurance’.

Conversely, if it is a rented commercial building or area, this is usually not necessary as the landlord or company responsible for the property will be the ones who are required to have it insured.

It may be prudent for new independent gym or fitness club owners to liaise with their landlord/letting company to understand the nature of this arrangement, lest any significant damage occurs to the building during their occupation. 

 

PI (Professional Indemnity) Insurance

Does an independent Gym or Fitness Club need professional indemnity/PI cover?


In some ways the other side of the coin of Public liability insurance, Professional Indemnity cover, sometimes known as PI Cover or PI Insurance.

This is insurance to cover something key that public liability insurance does not. The professional obligation that an independent gym or fitness club has to their members.

This can cover a wide range of responsibilities that otherwise fall to a gym owner.

Again, policies will vary depending on the quality and price of the insurance. It usually covers errors by staff and personal trainers, personal injury sustained while under their guidance, negligence claims instigated against the gym and the staff and much more.

Some policies even offer protection against broader issues, such as how a certain service or piece of advice was delivered and the outcome, or even broader legal issues not involving injury. 

Given the broad protection and peace of mind that this insurance gives, we believe it to be a very important consideration for independent gym and fitness club owners.

This sort of legal expenditure can become expensive and it can be stressful for staff to know that they have either caused significant hardship or that they are not suitably protected within the environment. As such, we believe that Professional Indemnity Insurance/cover is the best way for a gym owner to protect their staff, allowing them to deliver the best service possible. 

Employers liability insurance

 

Does an independent Gym or Fitness Club need business interruption insurance?

In a similar vein to the PI and Public Liability Insurance, Employers liability insurance is just as it sounds. What if a staff member experiences an injury they sustain at work?

And like Public liability, we won’t do much convincing here because Employers liability insurance is another legal requirement.

This is very prudent, and much like our section on public liability insurance all we will say here is that we heavily recommend that independent gym and fitness club owners purchase a quality, high-coverage policy.

These policies are heavily regulated and for good reason. The right type of policy with the right coverage will protect not only the business but also the staff from a significant amount of financial hardship.

We can only reinforce our endorsement that significant attention and focus should go into the purchase of employers liability insurance.

 

Fidelity Bonds/Fidelity Guarantee Insurance 

Does an independent Gym or Fitness Club need Fidelity Insurance?

While all insurance inherently leaves a bit of a bad taste to talk about, as it pertains to things going either wrong or drastically wrong. Fidelity Bonds or Fidelity Insurance is perhaps one of the most unpalatable to consider warding against. 

It is an insurance designed to protect a business, in our case an independent gym or fitness club, against theft or loss caused by dishonesty behaviour by either staff, partners in the business  or management.

As we said, it is not something that people like to consider. But the nature of all insurance is to protect us all against the unpleasant and the unthinkable. As such, it is hard not to recommend it as a prudent insurance for independent gym and fitness club owners, we earnestly hope it is one that goes unclaimed on. 


Management Insurance

Does an independent Gym or Fitness Club need Management Insurance? (Sometimes known as Directors and Officers Insurance)

The necessity of this insurance will heavily depend on the structure and size of the gym or fitness club in question.

However, in the right organisation this could be vital. Being part of the management of a business carries with it legal and fiscal implications.

These implications are broad and we will not explore them exhaustively here, perhaps in another blog on gym and fitness club insurance. Irrespective, for a suitably developed independent gym or fitness club, this type of insurance could very well offer significant protection for the highest level of staff and management.

 

Business interruption cover

Does an independent Gym or Fitness Club need business interruption insurance?

And finally we end our list on a unique type of cover.

We say that because BI cover, often called Business Interruption insurance, is something that usually only activates during another insurance claim.

Over the course of this article we have covered what will happen from an insurance perspective while a series of costly disasters unfold, but what happens if this causes the fitness facility to close? In another term, what happens if business is interrupted?

Well, if a gym or fitness club owner has been prudent, that is where their business interruption cover would kick in. Depending on the quality and coverage of the policy, this will cover expenses such as wages and fees that will persist despite the fact the business is closed. As with some of the insurance types we have covered today, it can seem like a niche and irrelevant insurance until it very much makes the difference in a crisis.

What should an independent gym or fitness club expect to pay for their Insurance?

And is it worth it?

In the same vein as our answer to what insurance is necessary. The correct answer to this question is as unsatisfying as it is nuanced. But the outcome, peace of mind and an important investment in the financial security of a gym or fitness club, is entirely satisfactory, we promise!

Ultimately, as we covered when going into different insurance types, the amount of money an insurer/underwriter decides to charge a gym or fitness club will be entirely dependent on factors such as the size of the facility, the size of the membership, the number of staff, the location, the equipment, the services offered and the broader market. 

To take an example, insurance for employers’ liability is usually calculated either based on the exact number of employees or within a bracketing system. Other insurances, such as contents can either take into account the assets within the gym or fitness club or set a premium and resultant liability cover for a set amount.

While we won’t go into the specifics here (there are other articles from insurers that cover this), we will reiterate that many of the types of insurance we covered above represent a significant investment in the financial security of a gym or fitness club. They come at a price, but we assure you that some will be prices worth paying.

And paying a little more upfront can save a significant amount later on down the line. For example, many policies, irrespective of what they cover, come with an excess. This is a sum of money that needs to be paid to the insurance company in order to process the claim.

A trap that many fall into across various different insurances is to pick a lower price insurance with a high excess. This seems (correctly though deceptively) to represent a saving. A precious amount of money saved from a necessary expense. That must be a win, correct?

Yes, perhaps. Until you need to claim that is. In our twenty five years of experience in the fitness industry, we have heard many tales of high excess insurance policies resulting in either an inability to use the policy effectively for the claims that the gym wanted to make or a significantly diminished payout.

An easy way to conceptualise this is by taking the excess as an implied minimum limit on the minimum an independent gym or fitness club can claim. If our theoretical fitness club has two claims they need to submit on their contents insurance, one for £4000 and another for £2500. But they agreed to an insurance policy with an excess of £3000.

Well that means if they are allowed to file collectively they are only receiving £3500. If they have to file separately, that could mean as little as £1000 on a collective £6500 claim!

So while it might be tempting for independent gym and fitness club owners to save £50 on their premium, it is vital to keep in mind that this could result in a substantial deduction on the total payout from the policy later on. 

How to understand if an insurance is correct for an independent gym or fitness club

Much like researching and purchasing insurance in a domestic setting, purchasing insurance for a business can take time and effort. But we here at Ashbourne are convinced it is a case of ‘if something is worth doing, it is worth doing correctly’.

Because of the nature of insurance, there is a temptation to gamble. Pay less now in the hopes that nothing needs to be paid later.

As we mentioned earlier, there is a temptation to pay the lowest premium, take the highest excess, opt out of certain areas of cover? Anything to make that payment number go down and down and down. 

It is, we hate to say, a false economy in many cases. Over our twenty five years experience in the fitness industry we have seen many independent gym and fitness club owners fall foul of ‘thinking’ they were appropriately covered.

Each insurance policy has to be basically as good as the next right? Unfortunately not. And the fitness industry is a place where that sad fact gets proven regularly.

So we will start to close off this article with a quick guide on how to understand whether the insurance a gym owner is looking at, irrespective of the type of coverage, is the right one.

1. What does the gym or fitness need covered?

Something we always recommend doing for each category is understanding what coverage is desired.

We recommend independent gym and fitness club owners undertake an informal (or perhaps formal) risk assessment.

Certain things will be necessary as we covered above, public liability insurance, employers liability insurance etc. 

But even within those remits, a gym owner should think about what they would be comfortable paying as an excess.

Remember, taking our excess mantra from above, an excess essentially represents ‘what is the minimal amount you are comfortable paying’.

It is an uncomfortable question, but that is good. When buying insurance we often feel too comfortable. I mean the things we are trying to insure against haven’t happened yet, they might never happen. It is an important mindset to shift. 

For example, the next priority after public liability and employers liability insurance would most likely be equipment. High excesses on equipment might be tempting. After all, equipment is expensive anyway and so a gym owner is likely to always get some payout.

But that logic feels slightly less sound when the calculations show that the gym owner ends up paying over half of the cost himself each time. 

With that being said, we don’t recommend that independent gym or fitness club owners go policy mad, buying every type of policy and always going for the most expensive policy. Down that road lies madness and not an insignificant amount of immediate fiscal discomfort. 

There are insurances that it may be easier for a gym owner to identify as not necessary, especially if they are a new gym or fitness club owner just setting up shop.

For example, directors and officers insurance or fidelity insurance may not be necessary initially given the presumably low number of management. 

Insurance is a balancing act between what is prudent and necessary, and what is an acceptable risk. It is a perennial question and one that we will never truly know the answer to. But that should never stop us from attempting to make the best estimation with the resources and knowledge available to us

2. Finding the right insurer for the right insurance

Whether it is a generic insurer on a search engine or a specialised insurance broker that requires calling up, finding the right insurer can feel like a bit of a maze, especially at first.

But like all things that feel insurmountable initially, exposure and understanding will gradually bring confidence and assurance.

Understanding what each insurer offers, does well and their respective price points are a good start. Despite their reputations, brokers can be good allies in finding the best deals. With that being said, we would also recommend gym owners do their own research.

There are several specialist insurers and brokers that work and specialise around the fitness industry and those who operate in the sector. These are a good port of call, and as we said above, one of our mantras is that specificity often brings good value.

But again, a caveat is that this does not mean a specialist will always give the best deal for an independent gym or fitness club owner. 

4: Finding the right Policy

Finding the right insurer is, however, only half the battle.

After that there is also the policy itself. These can vary dramatically, even within the same brokerage or insurer.

If step one was followed, independent gym and fitness club owners will have a list of risks and scenarios that they wish to be covered. Equally, it is important to keep in mind that if something is covered, it still matters to what extent it is covered. Both in terms of claim limits and excess.

Ultimately pressing the button or saying yes over the phone and finalising the purchase of insurance is a process where many moving parts come together. We hope that with our guide, any independent gym or fitness club owner will have made significant headway in understanding what is necessary, prudent and unwise. 

Conclusion

And so concludes our guide for independent gyms and fitness clubs on what to prioritise and what is required in the world of insurance.

It is a complex and interesting topic, one where a lot of money can be saved or lost for an independent gym or fitness club, depending on how it is handled. And despite the significant amount of text above, we have only just started to scratch the surface. 

Like many aspects within the fitness industry, it ultimately comes down to expertise and experience. And luckily that is something that Ashbourne has to spare.

Here at Ashbourne Membership Management we have spent over twenty five years guiding new and veteran independent gym and fitness club owners through the fitness sector. Whether it is dealing with access controls, direct debits, BI reporting or membership management software, we have helped hundreds of owners take their gyms to the next level!

If your interest was piqued by either our insurance guide or any of the other services we provide, please don’t hesitate to reach out and book a demo here! A member of our team will take you through what we can do for gyms, irrespective of size or experience. 

We’re bringing together the expertise of hundreds of gyms from across the UK and Europe, to help gym owners grow their business.

Copyright © Gym Owners Forum 2024, Design By Unturned Stone Creative

We’re bringing together the expertise of hundreds of gyms from across the UK and Europe, to help gym owners grow their business.

Copyright © Gym Owners Forum 2024, Design By Unturned Stone Creative

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