As we settle into February and the January rush becomes a memory, it's time for some strategic planning. Tax season gives us a natural prompt to review our business operations, and insurance coverage deserves careful attention. Let's walk through some of the critical areas you should examine to ensure your fitness facility stays protected.
Many gym owners don't realize that independent contractors can represent a significant liability exposure. Your standard liability policy typically covers your employees, but 1099 contractors often fall into a gray area. This becomes especially important when you consider the dynamic nature of fitness instruction – instructors might come and go throughout the year, and each one needs proper coverage.
Take time to create a current roster of all your independent contractors. For each instructor, you have two viable options: either list them as additional insureds on your policy or require them to carry their own professional liability coverage. If they maintain their own insurance, you should be listed as an additional insured on their policy – this protects you if a claim arises from their activities.
Think of it this way: if a client is injured during a class led by an independent instructor, both you and the instructor could be named in a lawsuit. Without proper coverage alignment, you might find yourself handling defense costs alone.
Most gym insurance policies auto-renew, which can feel convenient but might not serve your best interests. Mark your calendar for 45 days before your renewal date – this timing is crucial for several reasons. First, insurance markets change continuously, and rates can vary significantly between carriers. Second, your business likely evolves year over year, whether through adding new equipment, expanding class offerings, or changing your client base.
During this 45-day window, review your current coverage against your actual operations. Have you added any new services? Purchased expensive equipment? Expanded your space? These changes should be reflected in your coverage. This is also the ideal time to shop rates and ensure you're getting competitive terms.
Workers' compensation coverage presents unique challenges for fitness facilities because payroll can fluctuate significantly throughout the year. Almost every business owner will face an annual audit for their workers’ comp policy, so it’s good to be prepared. This audit reconciles your actual payroll against the estimates used to calculate your premium.
Start gathering your payroll records now. Include:
Consider switching to a pay-as-you-go workers’ comp billing cycle if you haven't already. These programs adjust your premium payments based on actual payroll rather than estimates, helping to reduce the surprise of a large audit bill or refund at year's end. We offer pay-as-you-go workers’ comp billing at Gym Insurance+.
Remember, insurance isn't just about meeting legal requirements – it's about protecting the business you've worked so hard to build. Taking time now to review your coverage ensures you'll be ready for whatever challenges arise throughout the year.