By Jim Vitale
People undertake the task of teaching martial arts for many reasons. For some, it is for financial gain. For others, probably most, their experience and expertise in their art took years, and tremendous effort to acquire. To them, the skill and knowledge they possess is a very valued possession; much the same as any material asset they own; a restored classic car, an article of rare art, or a sizable estate. Most anyone who possesses such material treasures wants to see their possessions passed on; to their children, nephews and nieces, or to anyone who appreciates it's value. Teaching provides a way to increase the instructor's skill and knowledge, while providing a way to perpetuate their knowledge.
While the reasons stated above are apparent to any instructor; it is, I imagine, obvious to anyone that filling the pockets of the local insurance agent with cash is not a major motivating factor when one endeavors to begin teaching the martial arts. Rather, with many instructors, their desire to spend their time and money on insurance ranks somewhere between saving the planet from global warming, and attending a local town hall meeting to express their concern over the slow cycling of the traffic signal at the corner of Fourth and Main.
From my personal experience I've learned that a lot of instructors operate their schools having never given a thought to the need for insurance; and many of those who do have it, don't know how or if their policy matches their needs. Personally, I have been friends with, or acquainted with several instructors, who taught without the benefit of insurance protection. At least two of them operated highly visible schools; the kind commonly located in strip malls. Operating a school of this kind creates considerable liability and property risks for the owner of the school (This is not to say that those who teach from their home, or have other teaching arrangements are not at risk).
The people that I've known who've taught without being insured would not for a moment consider driving their car, owning a home, or operating a business without insurance. This leads me to believe that theirs is not a lack of responsibility, but rather a lack of understanding of the risk they incur when they teach.
Understanding that most people do not consider dealing with insurance to be fun, I will address, as briefly and simply as possible; what coverages are available and why insurance is needed.
Many a defendant, plaintiff, and attorney have been left shocked, and scratching their head at the end of their cases, in which they thought the outcome was a "no brainer" in their favor. It is for this reason that insurance was invented; to take potentially huge risks, and transfer (spread) that risk equally to all the members of a group who all share a common risk. This is done by collecting premium dollars from all of the members of the group, pooling all the premiums together, and paying the claims of members who suffer financial loss.
There are too many different kinds of insurance coverages to mention here; however, there are three types which make up the majority of coverages on most commercial policies. They are "liability", "medical", and "property" coverage.
Liability coverage pays the amount of money required to financially indemnify (restore to the same financial condition which existed prior to the loss) any person (referred to as "claimant") who has suffered a financial loss caused by the negligence of the policy owner (referred to as "insured"). There are two basic types of liability; they are "Bodily injury liability", and "Property damage liability"; they are however, usually sold together as a package. An example of a bodily injury liability loss would be to reimburse a claimant for the cost to treat a medical injury that occurred accidentally during training; or reimburse a person injured by tripping over an extension cord which the policy owner had strung across a floor, where a person would not normally expect to find such an obstacle. An example of a property damage liability loss would be to reimburse a student for his eyeglasses which were destroyed when the policy owner accidentally stepped on the students gear bag.
It is important to know that liability coverage only pays when the loss is caused by the insured's negligence. In other words, the insured must have done something, or failed to do something he/she should have done, which caused the loss. If a person who is standing on the insured premises faints and injures themselves when they fall, but the fainting was not due to anything the insured has done; no negligence exists, and the liability coverage would not pay for the loss. If however, the instructor performs a pepper spray demonstration in an enclosed area, and a non participant person observing the class is temporarily blinded, stumbles into a wall and is knocked unconscious; there is clearly negligence on the part of the instructor; the policy would pay for the loss under the liability coverage. The loss also must have occurred accidentally. There is no coverage, anywhere, that will pay a liability loss caused by an intentional act.
An instructor's liability can be lessened, or limited by having all class participants, or legal guardians in the case of minor students sign a hold harmless agreement; but these agreements are no guarantee that the instructor will never be found negligent. One should always remember that these cases are decided by jurors, not legal scholars.
Imagine a case where a six year old boy's neck is broken during a class; that the accident occurred because the child was engaged in horseplay that was forbidden by the instructor, and the child had been warned previously not to engage in such activities; and the child's parent signed a hold harmless agreement. In this case, the instructor has a valid argument that the injury was not caused by any negligence on his part, and that the parent, having signed the hold harmless agreement, knew the risks involved, and assumed responsibility for the child's safety.
Yet, imagine yourself sitting on the jury deciding the case. The child is rolled into the courtroom in a wheel chair, unable to use his arms or legs. His doctor testifies that he will be wheelchair bound for the rest of his life. His mother testifies that the child has suffered unbearable physical and psychological effects from the injury. She weeps, at times uncontrollably as she tells how the boys dream of growing up and becoming a pediatrician, and traveling to third world countries to save the lives of wretchedly poor starving children can never be realized by the boy, etc., etc. She weeps harder as she tells how he can never father children, or play baseball; and how the family has been forced to file bankruptcy because of the hundreds of thousands of dollars in medical expenses.
Could you look at the little boy and his sobbing mother and say, "Sorry, you knew the risk."?
In the case above, even if the jury decides the instructor is not responsible for the students injuries, consider the cost to the instructor in attorneys fees to defend himself. Ask any attorney what it would cost to defend yourself in a case like this; the answer will likely shock you. Your liability coverage would cover the attorney's fees in such a case.
There are limitations to the standard liability coverage found on policies covering martial arts schools. For example, most policies exclude coverage for tournaments; training with bladed weapons; training with live weapons, such as Dog Brothers style full contact stick fighting; training in conventional boxing, and full contact sparring. Coverage for tournaments can often be purchased at an additional charge. Coverage for some activities can not be purchased at any price, or at least not at a price that the average school owner can afford.
Medical coverage fills in the gaps left by liability insurance, in that, it will pay medical expenses of claimants, regardless of fault or neglect on the part of the insured. For example, a class observer trips over his untied shoe string, falls, and breaks his nose. The insured person did nothing to cause it; the guy is just clumsy. The problem is, he has no health insurance, and the emergency room bill is $600.00; or he's laid off from work and could use a few bucks to get him by until he's called back to work. Do you think that perhaps the fall he took might affect his memory, making him remember that the floor was wet, causing his fall? Count on it!!!!!!!! That's the oldest one in the book. Medical coverage would pay his emergency room bill. Often, by having his bill paid quickly by the insurance company, the guy will be satisfied, and less likely to go discuss the incident with his attorney.
Property coverage protects the insured against accidental loss to his/her business property. There are essentially two kinds of business property; real property, and business personal property. Real property consists of real estate (the building which houses the business), and any equipment essential to the operation of the building (furnace, air conditioning system, sump pump, toilets, showers, etc.)
Business personal property consists of furnishings and equipment used in the operation of the business (desks, fax machines, grappling mats, focus mitts, etc.)
It should be mentioned that, in order for a loss to be covered, the damage to an item must be both sudden, and accidental. If you want to give your insurance agent the hardest laugh he's had in a long time, have him come out to your school, show him a ten year old, worn out grappling mat, and tell him you would like his company to pay for a new one because yours is damaged. Normal wear and tear is neither sudden, or accidental.
The answer to this question depends on whether or not you are "An instructor". This question is not always easy to answer. Sometimes the definitive answer to this question comes from a jury, and cost you a lot of money to find out. To some, the answer is easy; if you advertise yourself in any way as an instructor, or take money for your instruction; you are an instructor, and need insurance protection.
What if, however, you don't operate a large commercial school, but you teach a few friends in the basement of your home? If you're charging for the service, you are an instructor, operating a business, and need insurance coverage. If you take no money, and do not advertise yourself as an instructor, an accidental injury to someone training at your home would likely be covered under your homeowners insurance, as long as the person was training there at your invitation, and assuming you have homeowners insurance. You should be aware though, that your homeowners insurance company will not be thrilled about paying an injury claim that occurred while you were conducting a martial arts training session in your home, and the premium they charge you the next year will likely reflect their dissatisfaction.
You may think that none of the guys you train with would make a claim against your homeowners insurance if they got hurt at your house. They know the risks, and they are your friends; they just wouldn't do that... right? In my experience as an insurance agent; in accidental injury claims against home owners, the claimant (injured party) in most cases, is a relative or close friend of the insured. If you think your friends won't do it... think again.
I have, in the past been asked questions such as: "What if I teach from my home, I take money for my service, but I take only cash, so there are no records to prove I take money. If someone is injured while I'm teaching at my house, can't we just say that no money was exchanged so I can get my homeowners insurance to pay the claim?" My advice to you would be; it's not worth the risk. In a case like this, if the claim is a large one, the insurance company is going to do a very thorough investigation before paying the claim. Their investigators do this sort of thing all day, every day, and are very good at it, so the chances you'll get away with it are not good; and you may find yourself charged with fraud.
I could continue writing examples of "What ifs" until I put most readers to sleep. I will spare you that, and end by saying that; this writing is by no means an exhaustive, or definitive work on the insurance concerns of a martial arts instructor. There are many factors in each person's situation that make their needs unique from those of all others. A fact that seems unimportant to the average person can be the deciding factor in whether a claim is paid or denied; or whether insurance coverage is needed or not. This paper is intended to give general information and is no substitute for consulting your insurance agent regarding your insurance needs.
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