Does your website or gym use a waiver or release form? Does it fully protect you like you think it does?

Regardless of how good your waiver or a release form is, you really should look into more protection.

Most fitness professionals are or should be aware of the potential for lawsuits. A lawsuit can have a devastating effect on anyone’s bottom line regardless if you win the lawsuit or not. The purpose of this article is to help you understand that while waivers (and releases) can protect you against liability, they have their limitation, and a business should evaluate its risk management strategy by looking at whether the type and amount of insurance is adequate. 

Express Assumption of Risk

A waiver (and release) form, as many of you may know, are contractual agreements made in advance and protects against liability when or if someone is injured due to ordinary negligence. In a vast majority of courts, waiver and release forms (express assumption of risk) are likely to be upheld; however, as previously mentioned they are not without their limits.  Waivers are governed by state law, which unfortunately varies somewhat from state to state.  But Arizona, where I practice, highlights why fitness professionals should never rely on waivers for protection.

Phelps v. Firebird Raceway, Inc.

The Arizona Supreme Court addressed the limitations of waivers (and releases) in Phelps v. Firebird Raceway, Inc. This case revolves around a professional racecar driver who had participated in many races at Firebird Raceway. Prior to this particular race, Phelps and other drivers signed a release (not to sue) form and a release and waiver of liability. As many of you can guess, there was an accident and Phelps sued Firebird claiming their employees were negligent and failed to rescue him more quickly. Firebird quickly raised the waiver and release forms that Phelps signed to defend itself against Phelps. One would think the story ends here, but it does not.

Phelps appealed.  While the trial and the Court of Appeals agreed with Firebird Raceway, the Arizona Supreme Court agreed with Phelps, who argued whether a waiver/release shields a business from liability is a question of fact that goes to the jury.  So the fate of whether a business will have to pay damages is left to the whims of random people with varying backgrounds and biases.  And exorbitant legal fees are incurred just building the case up to the trial stage let alone the fees incurred to actually go through trial.  Summary judgment, which is much cheaper and is granted by a judge, is not an option on these critical issues.  And fitness related businesses, especially gyms and training centers, require that members and guests sign some sort of waiver and release.  So this case is critical to be aware of and understand.  As mentioned in my online workout post, liability insurance pays for your legal fees for covered losses.  And Philadelphia Insurance is a company that offers insurance products specifically tailored to health and fitness businesses.

Health and Fitness Liability

I recently interviewed David Leshner, a Regional Sales Manager for Philadelphia Insurance and Nancy Draper-Clark, an insurance broker with Mahoney Insurance Group.  According to David, Philadelphia Insurance Company focuses on niche markets, and creates packages for sports, recreation/entertainment and health & fitness.  The CEO has competed in the Ironman and other triathlons, while a number of other Executives played collegiate sports.  That passion is why they developed these products to fit businesses that promote an active lifestyle.

A typical policy in health and fitness is a commercial general liability (CGL), professional liability (errors and omissions), and many will add on cyber policies and internet policies.

According to Nancy, a highly knowledgeable and well respected insurance broker maintaining a cyber policy is critical for fitness and training businesses, such as gyms or online stores, where customer information is stored. Data security breaches can cost a business tens of thousands of dollars in fines.

A Few Common Problems

1) Underinsured Property – The typical fitness and training insured is underinsured on property.  A business has over $100,000 in equipment, but only a $25,000 sublimit on property.  If you have expensive equipment be sure to go over this with your insurance broker to determine whether limits are sufficient.  And if you lease equipment be sure to review your lease obligations to determine whether the risk of loss is on you and whether you are obligated to insure the equipment for a certain amount.   Otherwise, you may be in breach of contract.
2) Failure to secure event coverage. Philadelphia Insurance offers event coverage if you are sponsoring an event. If a participant is injured, and the event is off the premises, standard general liability coverage likely won’t cover you.
3) Selling Apparel and Products:  If your business is selling a significant volume or product, apparel or other merchandise, than a standard CGL coverage may not cover the loss. A distributor may need a vendor’s broad form endorsement to make sure they’re covered. A standard CGL policy may cover “personal injury” arising from the advertising of merchandise and product if it’s incidental to the business. But if advertising and selling is a significant part of your business, than the injury may not be covered.

A Lawyer’s Role in Risk Management Strategy

Lawyers play a critical role in developing a risk management strategy for businesses.  Nancy, who is licensed in all fifty states, works with the insured’s lawyer to craft contracts and liability waivers that are required or fit into the overall risk management strategy.  One example, she mentioned was a big corporate client that maintained a gym on premises. Trainers were hired as independent contractors, and if a trainer is injured while working in the four corners of the gym, they could make a claim for no-fault medical payments under the general liability policy. Since the trainer is an employee, the workers compensation bar is inapplicable, and there’s nothing stopping the trainer from making and collecting on a claim. does not preclude independent contractors from making a claim against the policy, she recommended that the corporation and its lawyers draft a provision in the independent contractor agreement limiting the trainer’s right to recover no-fault medical payments.

While waivers and releases are necessary, there are limitations and they won’t help cover potentially damaging litigation costs regardless of a winning outcome or not.  I highly recommend that every business reevaluate its risk management strategy with a reputable and knowledgeable insurance broker like Nancy Draper-Clark to evaluate risks to determine whether the type and amount of insurance coverage is adequate.  And insurance companies like Philadelphia have developed packages toward the fitness and training niche that generally cover many of the most common encountered risks.

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