HOW TO FILE A LIABILITY CLAIM
HOW TO FILE A PROPERTY CLAIM
INSURANCE AND RISK MANAGEMENT
THE PROS AND CONS OF USING INDEPENDENT CONTRACTORS AT YOUR CLUB
WHAT INSURANCE COVERAGES DO I NEED

• Once a member or guest has been injured, the following steps should be followed.
• Provide medical attention as needed. 
• Document Everything: The acting manager is to complete the Incident Report immediately, regardless of how minor the incident appears. It is not necessary for the injured party to fill out the Incident Report. However, if this is something that they request, let them fill out an incident report and attach it to yours.
• Fax the Incident Report as soon as possible along with a copy of the injured person’s membership agreement to your insurance agent.
• You may want to write and include separate letter detailing the events or other information that may concern this claim.
• Be sure to follow up with the injured person the next day to see how they are doing. Common courtesy can go a long way in protection your relationship with the injured party and help retain them as a long-term member. 
• Document all conversations with the injured party and attach to the members file.

• Once you have experienced a loss or damage to your building and /or business property, the following steps should be followed.
• Contact your insurance agent ASAP to let them know that you need to file a property claim.
• Take immediate steps to limit the damage to your property. For example: If you have had water damage, contact an emergency service provider to come in and clean up the area.
• Document Everything. Keep records of all costs associated with the clean up and detail what was done to eliminate further property loss. It is also helpful to take pictures of the damage.
• If you loss involved a theft, you will want to obtain a copy of the police report to forward to your insurance agent.
• Do not throw away damaged equipment or property until an adjustor has had an opportunity to survey the loss.
• Document your conversations with the claims adjustor as well as all contractors who will be providing you with the repair estimates.

• Make safety and risk management a part of your health club’s internal operations. Club owners should discuss risk management issues during regular staff meetings. Some topics of discussion should include equipment maintenance, problem wet areas and child care procedures.
• Have members sign a separate Waiver & Release Form. A lot of waivers are combined with the wording of a membership agreement form or on the back for the agreement. By having members sign a separate Waiver & Release Form, you not only have some additional protection from a lawsuit, but you also have taken the additional steps to warn your members of the possible dangers of working out.
• Immediately follow up with a member if they have been injured in your club to confirm that they are OK.
• Complete an incident report to send to your insurance company. Make sure to document all correspondence with the injured party and advise the insurance company of such.
• Maintain your equipment and keep it updated. This includes replacing older pieces of equipment and cables.

One of the most frequent subjects discussed with club owners involves liability and workers compensation issues surrounding the use of independent contractors vs. employees. Many club owners want to try and reduce their exposure, both from employment related costs and their potential liability, by utilizing independent contractors rather than employees. This is most common with personal trainers, but also includes group exercise instructors and massage therapists. There are advantages and disadvantages no matter what method of payment the club owner decides to use to compensate their people.

A common misconception that club owners have, is that if they “1099” their trainers and/or instructors rather than have them on the payroll, they do not have to carry workers compensation coverage. Most of the time, the “independent contractor” status does not hold up in the eyes of the states that regulate workers compensation laws. The fact that club owners are booking or monitoring appointments, telling instructors when to work, and how to dress, constitutes an employee/employer relationship. Most club owners do not have written agreements with their independent contractors that clearly separate the clubs business from theirs. This is something that all club owners should have with their contractors. This agreement should also contain a waiver or hold/harmless wording separating the liability issues between the club and the trainer or instructor.

Some clients will not engage in independent contractor relationships because it can potentially be bad for business. Since personal training is the most common problem area confronting club owners as to how to compensate the trainers, let’s address the pros and cons of the independent contractor issue.

The Pros

• It is easier for the club to compensate the trainer. By paying a trainer a flat fee or predetermined split on services, the club is compensatingthe trainer only when revenue is being generated.
• Saves on employment taxes and workers compensation costs. This is true only if there exists a clear agreement signed by the club and thetrainer that recognizes the relationship as an independent and separate entity.
• Reduces the club owners liability for the actions of trainer. The club owners insurance carrier may be able to subrogate against the negligent act or error created by the trainer, but it only works if the club maintains current certificates of liability insurance from the trainer that names the club as an “additional insured” on the trainers policy.
• Easier to terminate an independent contractor than terminate an employee. Again, this is only true if there is a written contract that demonstrates this relationship.

The Cons

• Lack.of control. In a true independent contractor relationship, the club owner has very little say about how the trainer conducts their business. Strange teaching techniques and attitudes are tougher to monitor if the trainer is not an employee.
• The club owner is often still responsible for the trainers workers compensation benefits. It depends upon individual state statutes and/or how your contractor agreement is written.
• Loss of revenue. Many independent contractors up-sell their clients for personal training off premises and most will also sell their clients supplements and diet plans. The club owner usually receives no compensation for these areas of service.
• You may be creating a competitor. Independent contractors, by nature, are more entrepreneurial than employees. A great trainer can
• turn into your toughest competitor. They know the clubs strengths and weaknesses. They also often have access to the clubs entire membership roster. There are many clubs that operate quite successfully utilizing both methods of compensation. In the areas of massage therapy, physical therapy and day spa operations it can be better to utilize independent contractor or even subcontractor relationships.  Again, it only works if a well-written contract exists and is signed by both parties. Some of the key elements that should be part of the independent contractor agreement are a) a clear understanding of the separate relationship; b) a requirement that the contractor maintain their own insurance; and c) a hold/harmless statement or waiver that indemnifies the club for the negligent acts of the contractor.

• Check your lease for insurance requirements. The industry standard for commercial general liability limits are $1,000,000 per occurrence with a $2,000,000 aggregate. (the total of all liability claims) However, some landlords may require higher limits of liability. The additional limit of liability can be covered with an umbrella or excess liability policy. Umbrella or excess liability policies can be written for limits up to $10million. •    
• When considering Property Insurance, you will need to consider the following:
  • CONTENTS – The replacement value of all of your equipment, inventory, computers, phone systems, and furniture. Do not make the mistake of choosing a low limit to save on premium costs as you may be penalized at the time of loss.
  • TENANTS IMPROVEMENTS – Whether or not you or your landlord paid for your “build-out” costs, you may want to include this in your property insurance coverage. Your lease may require that you are responsible for any “interior improvements” in the event of a fire or other property loss. Therefore, you will need to estimate this cost and advise your agent
  • LOSS OF BUSINESS INCOME – This is the amount of protection that will replace your income in the even your club would have to close due to a covered property loss (fire, roof collapse, etc) We recommend that you try to protect at least 4 months of revenue. However, only you can determine how much coverage you want to purchase.
  • BUILDING COVERAGE – Should you own your building you will need to determine the replacement value to rebuild from the ground up. This figure can vary depending on the type of construction and the area you are located.
  • WORKERS COMPENSATION – Most states REQUIRE that you purchase workers compensations insurance to protect your employees in the event that they are inured as a result of a job related injury. Please keep in mind that Independent Contractors may be considered as employees and therefore are entitled to Workers Compensation benefits.
  • EMPLOYMENT PRACTICES LIABILITY – It is important to be aware that claims brought against you by an employee for sexual harassment, discrimination, or wrongful termination are NOT covered under a standard general liability policy. You can obtain this coverage from purchasing an Employment Practices Liability policy.
  • BONDS – A bond is not an insurance policy. It is a financial guarantee and is underwritten in much the same way as a bank loan. Many states now require health clubs to be bonded if they collect any payments prior to service or for any long-term contracts. The law varies by state. You will need to contact your state’s Department of Consumer Affairs to determine what amount you are required to be bonded for.