Your Duties as a Martial Arts School Owner in regards to insurance
School Owners failing to comply with their duty of disclosure may entitle the insurer to reduce his liability under the contract in respect of a claim or may cancel the contract. If your non-disclosure is fraudulent, the insurer may also have the option of avoiding the contract from its beginning. N.B. The disclosure is especially important in matters relating to the physical risk, past claims, cancellations of insurance covers, the imposition of increased premiums etc. and any matters that might affect the acceptance of the risk (such as insolvency or criminal convictions).
Your duty of disclosure must be taken seriously as it may affect your right to claim. Disclosure is not limited to matters applying to the insured named in the policy but includes other past businesses or private insurances
Utmost Good Faith
Insurance contracts are subject to the doctrine of Utmost Good Faith and this is part of the Law. Both parties must strictly adhere to utmost Good Faith. If you fail to do so, you may prejudice any claim. For example if a school owner stated he had 100 students when in fact he had 200 then the person is really under insured by 50%. The insurer may choose to reduce the payout of a claim by 50% leaving the school owner to pay the balance to claimant.
Availability of Cover
Over the years there has been many concerns with Public Liability Insurance becoming unavailable to many businesses. This has happen on a few occasions in the martial arts industry due to some players pulling out after suffering high claims and not being able to manage the risk appropriately.
When several insurers withdrew from the market some years back leaving just one player there was a significant increase in premiums. There was also a major overhaul of the industry risk with Brazilian jiu jitsu, muay thai and kickboxing being casualties as they were perceived as a much higher risk of an incident compared to other styles.
As other insurance players crept back and included these perceived high risk styles school owners could then obtain insurance. This was only stop gap because the insurers were secured overseas and not registered in Australia. Martial Arts Australia played a big part in negotiating group deals with a number of insurers and helped assure underwriters that the industry risks could be minimised. As a result of Martial Arts Australia screening and educating school owners on the appropriate risk management measures better pricing and cover was extended to all styles by the Insurers.
Under the Tort system (compensation award) a payout is only available if someone is found liable, this means a person who is injured will want to blame the instructor or someone else who is deemed incompetent / negligent. The fault basis creates two class systems for people those disabled through injury and those who are not.
Many small claims are settled quickly but are a lot that settle after five years or more. This makes it very difficult to assess the cost level of current occurrences and, hence, the level of premiums required to cover this litigation process. Some injuries take a long time to manifest (be reported many months after the incident) and others take a long time to stabilise, particularly injuries to children. Some delays are a result of crowded courts and workloads of all parties involved.
Changing Public Expectations
Some claims arise by opportunist feeling justified in suing their instructor for an injury occurred outside the school where there is no insurance cover. Many people think it is quick and easy to make a fraudulent claim but it can take years to get a result and the result may even be a jail term rather than a pay out if found out.
There are many consumers that after the slightest bump want to sue someone. School Owners need to inform students before they enrol the possible dangers of their participation in training. They should also do a health screening, talk about goal setting, club rules and potential outcomes. Some schools include player accident (PA) as a way to sell their membership and don’t clearly outline the limitations of the cover. Like all polices player accident cover is usually covers around $1200 – $1500 per claim and doesn’t include all medical bills. Some students present bills for in excess of $15k for joint reconstructions / dental work and are very upset the amount is not as they thought. This is attributed to the instructor not giving the correct information to the student or the student just assuming everything is covered without first asking. Ultimately there is risk in everything we do and sometimes we just have cop it on the chin and wear it and take responsibility for our own actions and not blame others.