Is Your Club’s Insurance Keeping Up with Your Operations?

Your club may operate differently now from when you first arranged your insurance. Perhaps you have refurbished the bistro, upgraded the gaming area or started hosting more functions. You may have expanded your sporting activities, introduced a courtesy bus or taken on more volunteers.

These changes are a normal part of running a successful community club. However, when your operations change, your insurance may need to change too.

Your current cover may still be suitable. The important question is whether it reflects what your club does, owns and is responsible for today.

Renewal is a good time to review your insurance. However, you should discuss major changes with your insurance adviser when you are planning them, rather than waiting until renewal.

A Community Asset and a Commercial Venue.

Community clubs have an important role. They give members a place to meet, take part in sport and enjoy social activities. Many clubs also run several commercial services from the same premises.

On a busy weekend, your bistro may be serving lunch while the gaming room is operating, a private function is taking place, and volunteers are helping with a sporting event. Each activity can affect your insurance. Some may be covered by your business insurance. Others may need extra cover or a separate policy. The key is to understand what your insurance covers, instead of assuming every activity is included.

The mix of licensed activities, commercial services and community involvement is why it is important to consider your club’s insurance as a whole.

How Your Club’s Activities Affect Its Insurance

Liquor Licensing and Hospitality

If your club serves alcohol, you will know that holding a liquor licence comes with responsibilities.

Queensland’s Liquor Act 1992 sets requirements for licensed premises, including the responsible service of alcohol. Your public liability insurance may include cover for liquor-related risks. This depends on the policy’s terms, conditions and exclusions. The way you use your licenced areas can also matter. Longer trading hours, larger functions or changes to the premises may affect the activities described in your insurance.

Your bistro brings other considerations. Commercial kitchen equipment, refrigeration and food service arrangements all form part of how your club operates. If you have upgraded these facilities or changed how you use them, this may affect your property and liability cover.

Gaming Operations

Gaming machines are an important source of income for many clubs. The machines themselves can also be a significant investment. Changes to the gaming area, replacement machines, or a large increase or decrease in gaming revenue may affect your property values and the financial information used for business interruption insurance.

Queensland’s Gaming Machine Act 1991 regulates gaming machine operations. Liquor and gaming licences can also be connected. A licensing issue may affect your operations, but this does not mean any resulting interruption will automatically be covered by insurance.

Business interruption cover usually applies only when an insured event, such as fire or storm damage, causes the interruption. Cover for regulatory or licensing issues depends on the policy wording and any extensions included.

This means you need to consider not only the value or the gaming machines, but also the role gaming income plays in your club’s finances.

Functions, Events and Sporting Activities

Clubs often host activities outside their usual trading operations. You may hire out your function room for weddings or corporate events. You may also organise sporting competitions, fundraising activities or events away from the club’s premises.

These activities can raise questions about who is responsible, whether outside contractors have their own insurance and how your club’s policies apply. For example, an event held at your club is not necessarily covered in every situation just because you have public liability insurance. The type of event, who organises it and the policy wording can all affect the cover.

Hospitality Venue serving food and coffee

Volunteers and Community Involvement

Volunteers make a valuable contribution to community clubs. They may organise sporting competitions, help with fundraising, support events or serve on the committee. It is important to understand how your insurance applies to them, especially when their responsiblities change.

Worker’s compensation does not necessarily cover every volunteer. Some volunteers may be covered under Queensland laws. Voluntary workers personal accident insurance may also provide certain benefits for eligible injuries, depending on the policy terms.

You should also understand how your public liability insurance applies when volunteers carry out activities for your club. The type of work they do matters. Simply describing someone as a volunteer does not determine what cover applies.

Are Your Property Values Still Accurate?

Your club’s buildings and contents can change over time. You may have refurbished the dining area, replaced commercial kitchen equipment or bought new gaming machines. Even if you have not carried out major renovations, building costs and replacement values may have increased. The amount you insure your building for should reflect the cost of rebuilding it. It should not be based only on an old estimate or the amount you originally declared, perhaps years ago.

Some property policies include underinsurance or average provisions. These provisions can reduce a claim payment if the amount insured is too low. How they apply depends on the policy wording.

A professional valuation may be useful if your club has specialist equipment, unusual buildings or heritage features. Major renovations and new equipment can also affect your insurance before the work starts or the equipment arrives. Discuss these changes with your insurance adviser when you are planning them, rather than waiting until renewal.

Would Your Business Interruption Cover Reflect a Major Disruption?

Imagine your club had to close after a serious fire. Repairing the damage would be an immediate concern. However, you would also need to consider the financial impact of being unable to trade.

Many clubs receive income from several sources, including gaming, food and drinks, memberships and functions. Business interruption insurance may help cover some of the financial losses caused by an insured event. The cover is subject to the policy’s terms, limits and exclusions.

Your cover should reflect how your club earns money. If gaming revenue has increased, or your bistro and functions business has grown, you may need to update the financial information used to arrange your insurance.

It is also important to understand how the policy calculates a loss. Revenue and insurable gross profit are not always the same. The right figures depend on the policy wording. Your accountant and insurance adviser can help work out the relevant amounts.

You should consider how long it could take your club to return to normal trading. Rebuilding may involve approvals, construction work, specialist equipment and delays before you can reopen. Your business interruption policy includes an indemnity period. This is the period for which the policy may cover your loss of income after an insured event. A period that was suitable when you first arranged the policy may no longer be long enough.

What About Your Committee’s Insurance?

Your committee oversees the club, often on a voluntary basis. Incorporation can provide some protection, but it does not remove every possible personal risk for committee members. Claims about management decisions, employment matters or other wrongful acts may raise questions about management liability insurance.

This cover is different from public liability and property insurance that protects other parts of your club.

Many management liability policies operate on a claims made basis. This means the timing of a claim, and when you notify the insurer, can be important. The policy may also require you to notify the insurer about circumstances that could lead to a future claim.

Your committee does not need to understand every technical detail. However, members should know what protection is available and what the policy says about notifying claims or possible claims.

Changes to committee members, management arrangements or club operations are good reasons to review this cover. Your insurance adviser can explain what the policy covers. Speak to a suitably qualified legal adviser about committee members’ legal duties or governance responsibilities.

board members writing down

What Should Your Committee Consider Before Renewal

Insurance renewal can become a routine task, especially if your club has held similar policies for several years. Instead of simply renewing last year’s insurance, consider whether the information used to arrange it still reflects your club.

Have your activities changed or expanded? Are your building and equipment values up to date? Does your business interruption cover reflect your current income? Have volunteers, contractors or committee members taken on new responsibilities?

Ask your insurance adviser whether any policy limits, exclusions or conditions have changed, and what those mean for your club.

You do not need to work through every policy clause yourself. The aim is to give your adviser an accurate picture of your club and make sure your insurance options are explained clearly. Renewal is a useful time to review your insurance, but ideally, it should not be the first time you mention major changes. Discuss renovations, new equipment and services while you are planning them. This gives you time to consider any insurance issues before making decisions.

For more information about when to contact your insurance adviser, read our article 7 Reasons to Call an Insurance Adviser.

Understanding Your Club’s Insurance

Your club’s insurance should reflect how it operates today. This includes the mix of commercial activities and community responsibilities that makes each club different. This does not mean your current insurance is unsuitable. It may already meet your needs. However, as your club changes, it is sensible to review your insurance and understand whether anything needs to be updated.

At Clear Insurance, we work with licensed clubs, RSL clubs and hospitality venues to help them understand their insurance options. Learn more about our approach on our Clubs & Hospitality Insurance page.

If your club is approaching renewal, or you would like to discuss your current insurance, call us on 1300 721 132. We can have an initial conversation about your circumstances and how we may be able to help. If you need a detailed review of your current insurance, we can also explain our Risk & Insurance Review service.

 

Sources & Further Reading

 

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

Clear Insurance Pty Ltd. ABN. 41 601 916 689. AFSL No. 548953.