John Graden: Recently we spoke about the seminar I was at, where one of the Instructors said that over fifteen years after an incident he was sued by a student and it cost him fifteen thousand dollars to make the lawsuit go away.
In 2015, Bill Cosby was criminally accused and charged with a sexual assault from 2012, so I want to reiterate to our listeners out there, the distinction between a martial arts school Coverage Policy that is specific to a time frame and this policy that is specific to incidents. Please expand on that Jennifer.
Jenifer Urmston: The types of coverage that are out there are Claims Made Coverage versus Occurrence Based Coverage. Occurrence Based Coverage, covers you for the time period of the policy that an incident occurred during that time and it will continue to cover you for the legal Statute on that claim and would cover you years later if the incident occurred during the occurrence period of the Policy.
A Claims Made Policy only covers you for claims that are made during that Policies coverage period, which could be this year only, if you didn’t buy the tail coverage at the end of the Policy to keep the coverage in effect, for a number of years, going forward.
John Graden: So, in the situation where I described with the Instructor, because I think Cosby’s in a whole different league, but it’s just reminiscent of the situation if he had purchased and I don’t know if he did or not, a Claims Policy.
Jenifer Urmston: A Claims Made Policy and then did not buy extended tail coverage on it, he would have no coverage for that claim being submitted years later.
An Occurrence based Policy would have covered him for the claim that occurred while it was an active policy, even if it was years later. And then important, you know, two important things there, you know, that are Statutes of Limitations vary in different States for how many years later a claim can be filed, the Statute of Limitations for claims, for a claim filed by a Child, doesn’t even start until they become an Adult, so that’s why minors can have claims be filed many years later.
So, it is important to carry Occurrence Based Coverage, for the period of time that your operating your facility or if you already have a Claims Made Policy, it is important to purchase tail coverage on that Policy that is sufficient for the Statute of Limitations in your State, which could be, you know, twenty years later. So, it is very important to consult someone that knows about the laws in your State as well as to consult an experienced Insurance person in the Fitness Industry who knows about the coverage on these Studio Policies.
John Graden: That is sage advice and very clear, no doubt about it guys you have to get Occurrence Based Policies and talk to Jennifer Urmston at Sports Fitness Insurance Corporation.