Health Club Bond

What is a Health Club Bond

A health club bond is required for health clubs that collects fees from its members upfront. This bond is required for health club owners/operators before the health club can be legally licensed.

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Who Needs a Health Club Bond

In the following states, health clubs, gyms, spas, and other fitness facilities are required by state law to have a surety bond in place before they can obtain their licenses

Alabama
California
Colorado
Delaware
District of Columbia
Florida
Kentucky
Maryland
Massachusetts
Minnesota
Mississippi
Missouri
New Hampshire
New Jersey
New York
Oklahoma
Pennslvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Virginia
West Virginia
Wisconsin

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Generally, all the following types of prepaid membership health organizations may be required to post a bond

Bodybuilding clubs
General fitness clubs
Gyms
Personal athletic trainers who have their own facility
Racquetball/tennis clubs
Self-defense schools
Weight loss centers

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Why do I need a Health Club Bond

Because the bond provides a financial guarantee that a health club will return prorated customer membership fees to members if the club closes down. In other words, the bond protects members who make advance club membership payments. It also guarantees that the club runs in accordance with laws and regulations of the industry.

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How does a health club bond work?

Each health club bond is a legal contract binding three parties together.

The principal is the health club
The obligee is the state government that requires the bond
The surety is the insurance company who issues the bond

If a health club conducts fraudulent activities (i.e., not returning prorated amount back to its members if it closes down prematurely), a claim can be filed against the health club. If a claim is prove to be valid, the surety will pay for the claim up to the bond amount. Then, the surety will require reimbursement from the health club

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How much does a health club bond cost?

The cost of health club bond is a fraction of the total bond amount. Therefore, the cost of vehicle registration service bond varies, depending on the state and your credit score.

Generally, the health club bond premium is 1% of the total bond amount. Therefore, a $10,000 bond will cost $100.