Insuring Martial Art Schools
Every business needs liability insurance to stay in business, and that’s especially true for a martial arts school. Teaching people how to kick, punch, and block represents unique risks; however, that’s not the only risk a martial arts school should consider. It’s often what happens after a class is over and even when the owner isn’t physically at the school that’s the bigger problem. Child molestation, a bad assistant instructor, and even burglary can be hidden problems that could leave you underinsured.
To understand the insurance risks of owning a dojo (or wuguan, dojang, or akhara), you really need to start by understanding how you operate your business.
What kind of school do you run?
There’s a big difference between owning an MMA style kickboxing school versus a school geared toward teaching children basic moves and stretching. Elite-level sparring and caged combat can involve a lot of risk. But, participants are also older and can also sign waivers that release your school from sizable portions of liability. That’s not as easy with younger participants whose parents expect you to reduce risk for their children. For children, liability waivers may not work in court.
Consider those risks by understanding how your customers use your service. For instance, a school geared toward children might have large groups of students with a main teacher and several support teachers.
For each teacher, you need a checklist to review what you did to hire that person:
Did you do a background check?
Did you request references and contact each reference?
Did each teacher sign a liability waiver and other legal waivers that could protect you in a lawsuit?
Having a procedure for hiring, firing and monitoring employees will go a long way to managing risk. That means you need legal advice and possibly even advice from an HR consultant.
Working strictly with adults, on the other hand, might prove less complicated. You still need to have the right protocols and legal paperwork in place to protect your school; however, liability waivers tend to have more sticking power in court for students who are over 18 years old.
How you protect your school all depends on how you’ve chosen to run your school.
Understanding Your Liability
With policies and procedures in hand for hiring staff and monitoring customers, your insurance exposure is your next big challenge. How much coverage do you really need?
By talking with other martial arts schools and understanding your industry rate of accidents, you can estimate the number of claims you might have and the level of coverage you might need. You can start with standard liability limits using the following rule of thumb:
$1,000,000 per occurrence (single claim) and either $2,000,000 or $3,000,000 annual aggregate (total of all claims in a given year)
Or $2,000,000 per occurrence and $4,000,000 aggregate.
Higher limits are available through purchasing an Umbrella or an Excess Liability policy.
You should also consider how you own your space. Do you rent or do you own? If you rent, a landlord will typically require a certain liability limit per occurrence that the tenant must meet to lease the property. The lease might even govern the level of liability coverage you’ll need for your business.
Finally, consider your assets, both personal and professional. The more you own means the more you might have to insure to protect in a lawsuit. And if you own your school as a partnership, then you’ll need to consider the assets of your partners as well.
Always realize that unless your business is structured as a corporation, your personal assets are in jeopardy. Insurance should cover personal assets as well.
Coverage for Loss of Income
You may also need to consider your coverage needs to guard your income. For instance, if you get sick and can’t operate your school, you’ll need income to cover your loss as you get well. And if you are injured you may need a specialized policy that ensures you won’t lose the school because you need to heal.
You should consider using insurance to cover up to four months worth of income.
Workers Compensation Insurance
If you’ve evolved from a sole proprietor to a business that hires staff, then you will also need to consider carrying Workers Compensation Insurance. Currently, only Texas doesn’t require Workers Compensation Insurance and only Oklahoma allows for workers to opt out of the insurance.
If you operate in the 49 states that require workers compensation insurance, then you can be fined by the state for not carrying the insurance. However, you won’t be required to pay workers comp premiums. That comes out of their own payroll in most states, with annual payroll being the standard to calculate Workers Comp premiums.
Use a Reliable Insurance Broker
Insurance for martial arts schools is complicated. If you have questions, contact the experts at Loomis Insurance. We provide custom, speciality insurance for unique organizations like yours.