Risk Management in the World of COVID-19

Now that most club owners have discovered their insurance policies provide no coverage for business interruption claims due to being forced to shut down as a result of the COVID-19 crisis, they are also learning they are not protected from lawsuits from members who claim they contracted the virus after visiting the gym. Most insurance policies have an exclusion for any property, loss of business income, and liability claims due to viruses or bacteria. Furthermore, club owners are finding out that coverage is not even available from claims arising out of viruses — especially now.

So, if a club owner is not covered for COVID-19, what do they do to protect themselves as their clubs are reopening? Until the insurance industry creates new policy forms to provide coverage, clubs must follow all current CDC guidelines, and go above and beyond with their cleaning and sanitation protocols. Club owners should also update their waivers and assumption of risk forms, along with their club policies and guidelines.

It is important to consult with your attorney about the enforceability of your waiver, but the new form should have wording that addresses not only COVID-19, but any viruses or bacteria. The new waiver should also address any liability associated with training occurring off-site, including virtual or online training. The member needs to acknowledge there are certain risks associated with working out in the gym. In addition to the member waiving their rights to sue for bodily injury associated with working out, they now need to understand there are risks associated with exposure to viruses such as COVID-19.

Even when club owners are completely in compliance with CDC guidelines and maintain impeccable sanitation protocols, there is always the possibility a member returning to the gym will claim they contracted COVID-19 from the club and file a claim accordingly. Again, since there is no coverage for such claims under the policy, the club owner is on their own to defend themselves. At this point, there have not been many cases of these types of claims, but eventually this could become a problem.

The club owner is left with the dilemma of eliminating the risk of lawsuits by remaining closed until there is a vaccine or opening the club to survive financially. At the end of the day, there is little choice — permanently close the gym and get into the liquor distribution business, or get back into the business of changing lives and making America healthy again.

If there is any good news surrounding the liability issues with COVID-19, it’s that everyone is in the same boat. We all have business insurance, but this pandemic is not covered. As much as plaintiff attorneys are looking to come after businesses with lawsuits involving COVID-19 claims, the fact that there is no insurance company deep pocket becomes somewhat of a deterrent. It would also be extremely difficult to prove where their client contracted the virus to begin with.

Ken Reinig is founder and president of Reinig Insurance Solutions. He has specialized in risk management and insurance for the health club industry for 30 years. He can be contacted at ken@theinsurance.com. If you would like to obtain our latest recommended waiver, assumption of risk, and club policies and guidelines, please let him know.