If your head starts to swim in legal jargon when considering the various types of insurance for your cheer gym, you’re not alone. “About 90 percent of gym owners don’t have a grasp on the types of insurance they need to carry, and they’re not always attuned to what can happen,” says Ray Snyder of Snyder Insurance Services, which specializes in insuring cheer, gymnastics, and other amateur sports gyms. “In gymnastics, no one in their right mind goes without cover, but cheer people often don’t renew [their policies] because of economics.”
Yet insurance is an investment most cheer gym owners can’t afford not to make. Just like locking the front door and screening your employees properly, knowing how to properly protect your business liability-wise is of utmost importance—otherwise, you could be leaving your program vulnerable to devastating financial loss. See if you subscribe to any of these common insurance myths and learn the realities below:
MYTH #1: Forming a corporation protects me from liability if my business is sued.
The Truth: Incorporating may protect your personal assets (such as your home and personal finances), but it may not provide absolute protection. In some circumstances (such as fraud or co-mingling of personal and business funds), a judge may permit “piercing of the corporate veil” and hold officers of corporations personally responsible—making your house, savings, and other assets susceptible. This exception is seen more commonly in smaller privately held businesses than publicly traded corporations, making it a very real concern for small businesses.
According to Sandra Mihaloff of Markel, consulting a lawyer can help you pinpoint which type of corporation can provide the best protection for your specific needs. “Only your business attorney can advise you on the entity that suits your business best, and whichever type you choose will be indicated on the declarations page of your policy,” says Mihaloff.
MYTH #2: My landlord has insurance, so I’m covered.
The Truth: According to Snyder, most landlords will carry “lessor’s risk only insurance,” which covers liability and property coverage for building owners only. On top of that, “in most cases, the landlord would like you to cover their liability as an additional insured on your own general liability policy; some companies may charge an additional cost for this purpose,” advises Mihaloff.
To cover your own business bases, Snyder recommends that cheer gym owners obtain a dual-purpose liability policy, which provides an umbrella of both no-fault and at-fault coverage.
MYTH #3: Nobody would sue me.
The Truth: Why? Because you’re so nice? Because you run your business so safely that nothing can go wrong? Or because you’re not rich? Think again—cheer gyms are often sued for everything from injuries to sexual abuse allegations to discrimination, and no cheer professional is exempt from the possibility. “As a gym owner, to think you will never get sued is a myth,” says Mihaloff. “There have been cases where best friends sued each other over an accident or incident.”
Snyder agrees, adding that “in times of recession, claims go through the roof on an alleged basis.” According to Snyder, going uninsured and taking that risk can be a costly mistake. “It costs me an average of $100,000 to get you off an alleged negligence situation,” says Snyder. “The minimum premium we offer is $350/year. Who in their right mind would chance $100,000 out-of-pocket expense over $350?”
And finally, when you do obtain insurance coverage, be sure to take the time to thoroughly understand the contents/extent of your policy, and have it reviewed regularly by a competent and trusted business insurance agent or lawyer. Mission: protection complete!