- To help independent fitness professionals who want to open their own studio.
- To understand the insurance needs of a fitness facility.
- To learn how to include insurance in a business plan for a studio.
Most fitness professionals have at least considered opening their own studios.
For many fit pros, the dream of opening their own studio is their career goal. For others, their goal is to grow their business as an independent trainer or coach, working with their own clients inside other facilities. Some fit pros’ career paths include moving into management at the health club where they have trained.
If a trainer or coach is considering opening their own fitness facility, whether that is a personal training studio, group exercise studio, cycling studio, yoga studio, Pilates studio or a hybrid model facility, insurance is a key factor in the business of running a fitness facility. It is a piece of the business puzzle that fit pros frequently express a desire to learn more about because the difference in insurance coverage for an independent trainer and a facility can be confusing.
Insurance coverage is different for a fitness facility verses an individual fitness professional.
An independent fit pro will need to carry their own individual fitness professional liability policy to protect themselves for what they say and do in working with and coaching their clients. That policy will travel with the fit pro everywhere that they train. The fitness professional liability policy is not, however, intended to cover the premises liability for the health clubs, recreation centers, or other places where the fit pro works with their clients. Those facilities carry their own General Liability Insurance that covers the specified premises for liability. Premises liability is the primary difference between the coverage for the trainer verses the studio.
General Liability Insurance includes premises liability and liability for the fitness equipment.
Premises liability typically includes the entire space the business occupies plus any common areas that the patrons use to access the space, such as the parking lots and sidewalks. Premises liability also includes changing rooms and wet areas, such as showers, Jacuzzis or saunas and swimming pools. Slip and fall claims are the most prevalent liability claims in health clubs. These can take place in any of the spaces listed above and can have nothing to do with exercising at all. Members slip and fall in parking lots, on sidewalks, in showers or on stairs all the time. An individual fitness professional would have no liability for the client walking through the facility on their own but the studio owner does.
The fit pro using other facilities also does not usually have liability for the cleaning and maintenance of the fitness equipment. Studio owners do have liability for the upkeep of their equipment. Claims involving equipment are the second most common source of liability claims for fitness facilities. These include everything from a member falling off a moving treadmill to a member pulling a T/A pull-down bar on themselves.
The typical Professional Liability Premium for an independent fitness professional will run under $200 for the whole year. A minimum General Liability premium for a small studio will be nearly $1,000 per year due to the differences in exposure with the premises liability and liability for the fitness equipment.
Property Insurance protects a studio from property loss.
Fitness facility owners can also have a significant investment in their equipment plus the other contents of their facility and the tenant’s improvements that were made to the space after they signed their lease. Even small studios can still have over $100,000 of business personal property and $50,000 of improvements that need to be insured on a Commercial Property Insurance policy to protect the studio from a property loss. Damage to ceilings, flooring, equipment and electronics from any number of perils are common and can put a studio out of business, if there is not insurance in place to protect the business’ investment. Things like lightning strikes, broken water pipes, falling trees and automobiles hitting the building are out of a business owner’s control but appropriate insurance can offer peace of mind.
Most independent trainers or coaches do not carry a Commercial Property Insurance policy. That may be because their computers, phones and small portable equipment can be covered on their personal home owners or renter’s insurance policies. It may be that the value of their fitness equipment does not total the deductible of a stand-alone Commercial Property Insurance policy, which is usually $500 to $1,000, so they choose not insure the mats, balls, or hand held weights that they carry to meet clients. This means that a Commercial Property policy will be a new business expense when they open their own studio. Minimum property premiums will usually be around $500 per year for a small studio. Premiums are based on the total amount of property coverage requested and the construction type and age of the building where the studio is located.
Workers Compensation Insurance protects a studio from injuries on the job.
State law determines when a business needs to carry a Workers Compensation policy to protect employees from injuries on the job. Typically, having three or more employees will trigger the need for a Workers Compensation policy. Full-time, part-time and independent contractors are included in that number; however, owners and officers are not included. For example, if a trainer opens their own studio and has another full-time trainer plus two part-time group exercise instructors working for them, then the business would need a Workers Compensation policy. Premiums are based on payroll. Minimum premiums usually run around $1,000 per year.
Developing a business plan is imperative when opening a studio.
There are many considerations to developing a business plan that will help a fit pro open their own fitness facility successfully. Having good estimates for insurance premiums is one of the items that needs to go into an effective business plan.
Estimating Insurance Premiums:
In order to have a reasonably accurate estimate of insurance premiums for a business plan, the following information is needed:
- Size of the facility in Square feet
- Estimated number of members or clients in the first year
- Projected annual revenue
- Will there be wet areas (showers, swimming pool, etc.) or tanning beds?
- Will childcare be offered?
- Amount of Tenant’s Improvements ($)
- Amount of Contents and Equipment ($)
- Number of employees
- Projected Annual Payroll
An insurance agent who specializes in fitness business insurance should be able to provide good estimates from this information that can be used in the studio’s business plan.
Once a lease for the space the studio will occupy is signed, then it is time to complete a full insurance application and obtain a firm quote. The lease will help determine what limits of liability are needed and how much tenant’s improvements or any other property coverage might be required. A lease can specify a General Liability limit and a Workers Compensation limit. It can also require that items such as glass, signs or HVAC units be insured or repaired by the tenant. It is important to review the lease closely and recommended to have an attorney and an insurance agent review it as well.
Setting goals and growing professionally are important for fitness professionals.
Whether a fitness professional’s goal is to open a studio or become the best independent trainer/instructor/coach they can be, continuing to learn and grow professionally throughout their career is important for themselves and their business. Understanding how insurance helps fitness professionals and fitness facilities can help a fit pro to protect themselves and is an important part of an individual’s ongoing education. PTontheNet and PTA Global are committed to providing education and resources to help personal trainers grow professionally and succeed in achieving their goals.
Insurance Discounts for PTontheNet Members
PTontheNet is proud to partner with Sports and Fitness Insurance Company to offer the best in Fitness Professional insurance. Through PTontheNet’s exclusive partnership, PTontheNet members can save $15 annually on their insurance premiums.
Not a PTontheNet member? You can still save $5 on your annual premium through the PTontheNet friends and family discount.