by Ed Sneineh, CLU, ChFC
Illinois Insurance Agent, Chicago
A club is an association of a number of people who group themselves and regularly meet for a mutual purpose of the members. A club has to meet certain legal organizational requirements for it to be legitimate. The club's purpose should be anything except the sole purpose of getting insurance. This means that a group of people cannot organize themselves in a club just for the purpose of purchasing health insurance, for instance. Types of clubs:
A club can be social, political, charitable, financial, etc. Examples of club includes: Women clubs, books clubs, country clubs, bible clubs, rifle club, country club, golf club, etc.
Insuring a club is one of the confusing issues for commercial insurance personnel and customers because of the significant differences between one club to another and their level of exposure. The challenge comes as a result of the difficulty in determining the liability exposure of the club. All clubs share certain common coverages.
The common coverages that are shared with other businesses include property coverage for the building (if owned) and business property (office furnishing and computers), workers comp for work related injuries of the staff, business auto, umbrella, and commercial general liability. Commercial general liability and directors and officers coverage are, perhaps, the most important coverage needed by clubs. Eligibility And Determinations of Insurance Rates For Clubs
- Purpose of the club. A 'book club' is different in its liability exposure than a 'rifle club' or other clubs that participate in 'amusement activities' . The chances that the club will cause damages to other people (non members) bodies or property are not the same.
- Size of the club as determined by its enrollments (number of members) and payroll of the staff.
- Activities of the club. Clubs that sponsor social and sport events are more likely to be sued than clubs that do not sponsor such activities.
- Experience of the board. Some insurers will not want to insure newly formed club. It is a good idea for newly formed clubs to have their directors prepare their resume to be submitted with the application for insurance.
- Clubs that participate in or sponsor any activities where liquor is served must make sure that a liquor liability is purchased to cover this exposure. No coverage is provided under commercial general liability for any damages resulting from activities arising from the consumption of liquor sold by/ under the supervision of the club.
- Use of general contractors. Using contractors to perform activities at the club's location or any location while in control by the club may affect both insurability and rates. The club must demonstrate that the contractors do indeed have their own insurance policies (by providing certificate of liability insurance), else they will be considered as employees for the determination of different insurance policies, particularly workers compensation and commercial general liability.
- Exposure to children activities. Insurance companies look at supervising children as potentially riskier that supervising adults. Children need extra care, and are more prone to abuse.
- Limits of coverages. Naturally limits of coverage will affect the rates. More coverages means higher premiums.
- The business auto liability rates are normally determined by the nature of drivers, garaging ZIP, and nature of business use.
- Property coverage rates are determined by the amount of coverage and description of building where the property is located.
Not all insurance companies have strong appetite for club insurance. Therefore shopping for a good policy is important. Contacting a couple of experienced independent insurance broker is the starting point.