What sort of insurance do I need?

From our Fitness Founders series, Mehdi Elaichouni of Carpe Diem Jiu Jitsu Singapore shares his top business tips.

You’ll learn how Mehdi navigated challenges and seized growth opportunities. All in plain English and actionable tips you can put in place right now. Today, Mehdi walks us through his thought process for taking up business insurance. Skip ahead to:

• Gym insurance mandated by landlord
• Renovation insurance for your gym renovation
• Other requirements in your fitness gym

As a new business owner, you are going to be making decisions all the time, and this will be on top of the daily tasks you need to complete. I use a risk matrix to help prioritize decision-making. A decision becomes a high priority if it could have a negative impact on the business, even if the chances of it happening are low. 

On the other hand, a high probability but low impact business decision could be deprioritized to make time for more urgent tasks.

Source: nasa.gov

With all that is going on, it may be tempting to overlook insurance or put it on the back burner. But not having any insurance coverage leaves you vulnerable to lawsuits and brand damage. In short, it falls into the low probability high-risk category. The chances of you needing to activate your policy are low, but the repercussions from claims can devastate your business.

Gym insurance is made up of a combination of policy types that you can tailor to your business needs. Insurance can be confusing but I have grouped it into three categories to guide your planning.

Skip ahead to:

• Gym insurance mandated by landlord
• Renovation insurance for your gym renovation
• Other requirements in your fitness gym

1. Gym insurance mandated by landlord

Some landlords require gym owners to sign up for certain insurance policies as part of the tenancy agreement. This is commonly referred to as commercial rental insurance. It’s meant to protect the property owner from issues arising from tenants. Property owners would have purchased their own real estate insurance, but that doesn’t cover them for incidents that happen within your business. These are a few common policies landlords often ask for.

General liability policy

One of the most common policies required in a commercial lease. This gives peace of mind to you, in the event you have to pay for damages and injuries your actions may cause to a third party. It can also cover advertising injuries, defamation, and property damage.

This is the most important policy to have, especially if you are operating a customer-facing fitness business. If a member gets injured using your facility, general liability will cover medical costs and lost wages that you may be liable for.

Business interruption policy

Business interruption policies protect against nonpayment of rent due to loss of business income. For example, flooding caused by a burst pipe forces you to close your business for renovations and repairs. A business interruption policy will help to cover your monthly rent and other operational bills.

Workers compensation policy

Workers’ compensation focuses solely on your employees, and you must have it if you are hiring staff. It pays for employee injuries in the workplace and can cover medical bills, lost wages, rehabilitation, and even death. 

2. Renovation insurance for your gym renovation

Some property owners may mandate your contractors to take out renovation insurance with specific Third Party Limits. Even if it is not mandated by the property owner, most contractors or interior designers will take have renovation insurance to protect their own business against unforeseen circumstances that could result in physical or financial losses. The main purpose of renovation insurance is to cover:

• Physical damage to property or renovation materials: This allows a renovation project to be completed even in the event of additional costs incurred by repairs or replacements.
• Losses incurred by a third party: This is third-party liability coverage, in case a third party gets injured or causes damage to the renovation unit.

You don’t need to purchase renovation insurance yourself, but it is good practice to make sure your contractor has one in place so that your project (and your capital) will not be affected by renovation issues.

3. Other requirements in your fitness gym

Now that you have location, staff, and renovations covered, think about what other business assets you would like to protect. 

Business equipment insurance

Business equipment insurance works a lot like your home contents insurance. This could include IT equipment such as computers, TVs, and gym equipment. Include all items that would cost a potential fortune to replace if it gets damaged or stolen.

Cyber insurance

Many fitness gyms today operate on digital platforms, which serve to streamline functions such as;

• Membership payments
• Customer data management
• Marketing
• Scheduling
• Payroll

Digital operations help streamline day-to-day tasks but it may leave your business vulnerable to cybercrime. With all the customer data you have in your system, it could be worthwhile to consider cyber liability to protect your business from customer claims for data being hacked and stolen.

In Summary

While no single insurance solution fits all, the benefit is you can customize a plan specific to your needs and budget. I hope this helps you prioritize getting your insurance sorted out. Now it’s time to write a checklist of your needs, then speak with two to three insurance companies to choose the best option for your business.