Getting the right insurance for a beauty business is a difficult yet necessary task. Salons carry many of the same risks as other businesses, such as the potential for bodily injury, property damage, advertising errors, and reputational harm. Without adequate coverage, even the most well-trained beauty technicians could face financial burdens that force them to permanently close the business.
Salon insurance helps protect beauty businesses from unexpected losses that they may otherwise struggle to afford. When acquiring salon insurance, here are some key aspects to consider.
1. Business Owner’s Policies (BOPs) Do Not Cover Everything.
Many salon owners make the mistake of only carrying one type of insurance, such as a comprehensive business owner’s policy. A BOP combines business liability and business property insurance into a single, convenient business insurance policy.
With BOP insurance, salons can stay protected from a wide range of claims, such as those that result from theft, fire, and other covered disasters. Business owners can also tailor their BOP to meet the unique needs of their company with coverage options like a data breach, business income for off-premises utility services, and other specialized policies.
Unfortunately, a BOP does not cover all risks faced by salons. Most BOPs do not cover professional liability, workers’ compensation, auto insurance, health insurance, and disability insurance, among others. A salon owner would need to acquire additional policies to cover these risks.
2. Insurance Is Required For A Wide Range Of Beauty Services.
It is highly advised that if a salon performs certain services for clients, they should have insurance. Some of these include:
- Eyelash extensions, tints, and lash lifts
- Manicure and pedicure services
- Sunbeds and spray tanning
- Skin treatments such as microdermabrasion, dermaplaning and microblading
- Facials and massages
- Brow lamination, brow tints, or brow threading
Most treatments in a salon should be covered by insurance. When shopping for salon insurance, check to see what specific treatments are covered.
3. The Cost Of Insurance Can Vary Based On Several Factors.
What insurance policies a salon needs and the amount of coverage required can have a major impact on salon insurance costs. However, there are also some lesser-known factors that insurance companies consider when providing an estimate for premiums. Services offered will play a role in determining a salon’s level of risk. For example, salons with tanning beds will typically pay higher premiums than those that do not.
Revenue is also a consideration when calculating insurance premiums. Salons with more revenue will typically have higher premiums for liability insurance as most courts consider income when awarding judgments. However, there are things that companies can do to lower their premiums, such as opting for a higher deductible. Choosing an optimal location for the business that has a low crime rate and is away from extreme weather can also lower insurance rates.
The number of employees that a salon has plays a part in determining insurance costs. Having more employees increases the odds of one filing a workers’ compensation claim, commercial property claim, or general liability claim. The amount of coverage that a salon chooses can also affect premiums. Salon owners can opt to increase the limits on their policies, but will likely see an overall increase in their salon insurance rates.
4. General Liability Insurance Is A Must-Have For All Beauty Businesses.
General liability is one of the most important types of insurance a salon can carry. Also referred to as business liability insurance, general liability policies protect companies from “general” claims involving property damage and bodily injury. General liability insurance can help cover attorney fees, court costs, and medical expenses resulting from bodily injury or property damage in which a salon may be held legally responsible.
For example, a customer could walk into the salon and slip in a puddle of water left by the shampoo bowl. If the customer suffers an injury, such as a broken ankle, he or she could sue the salon for legal costs and medical bills. Third-party property damage is also a concern in salons. For instance a nail technician could accidentally spill some nail polish onto a customer’s designer bag, resulting in thousands of dollars in damages.
5. Professional Liability Insurance Can Protect Against Mistakes.
Like any business professional, beauty salon owners and employees can make mistakes that put them at risk for a lawsuit. A hair colorist, for example, could accidentally leave bleach on a client’s hair too long, resulting in significant burns on the scalp. A customer could also sue if a file containing their personal information was lost or stolen. Even if a case filed by a customer has no grounds, salon owners could still be on the hook for legal fees.
Professional liability insurance, also referred to as errors and omissions (E&O) insurance, is a must-have for beauty salon owners. This type of policy protects against mistakes made while delivering professional services. A typical policy covers claims of negligence, omissions, errors in services given, inaccurate advice, misrepresentation, and violation of good faith and fair dealing.
6. Workers’ Compensation Is Mandatory In Most States.
Carrying workers’ compensation insurance is not just recommended for salon owners, but is often a necessity. Most states in the U.S. require beauty businesses that have one or more employees to acquire a workers’ compensation policy to protect the business from the cost of workplace injury claims. Slip and fall accidents, chemical burns, and other incidents at work could result in a serious illness or injury, causing an employee to miss work for weeks or even months.
Workers’ compensation insurance covers lost wages and medical costs for work-related injuries and illnesses. Business owners can rely on workers’ comp if an employee requires medical care or time off from work or if an ill or injured employee sues the salon for failing to prevent an accident. Without workers’ compensation, a business may be responsible for any legal or medical bills that result from a lawsuit. Many states also enforce costly penalties for noncompliance.
7. Property Insurance Is Necessary Whether A Salon Owner Rents Or Owns.
There is a common misconception that property insurance is not required when a company owner does not actually own the building in which they do business. In reality, property insurance can be useful whether a person rents or owns. In fact, some property owners may require that a salon owner acquire property insurance before they can rent a building.
Property insurance can help cover the building itself, as well as its contents. From reclining chairs and hood dryers to massage beds and styling tools, a property insurance policy can prevent salon owners from having to repair or replace these items out-of-pocket, which can be costly. Property insurance policies protect against a wide range of incidents, such as fire, theft, storm damage, and other events that could cause significant widespread damage.
8. Business Interruption Insurance Protects Against The Unexpected.
Owning a salon comes with certain risks that could cause financial hardships without adequate coverage to protect the business. Business interruption insurance protects salon owners if an unexpected accident should occur, such as a tree that falls on the salon roof or a temporary road closure that prevents customers from reaching the salon. With business interruption insurance, salon owners can replace lost income if it cannot reopen.
Business interruption insurance can cover a wide range of expenses, such as mortgage or rent payments, loan payments, taxes, payroll for employees, and relocation costs if the business is forced to move due to physical damages. It may also cover other expenses, such as the cost to temporarily rent a space to run the company.
There are some exceptions that business interruption insurance does not cover, such as flood or earthquake damage, utilities, communicable diseases that cause a shutdown of the business, undocumented income, and broken items resulting from a covered loss.
9. Cyber Insurance For Salons That Advertise Online.
It is common for modern salons to use the Internet to advertise their services. Social media, business websites, and other online pages and platforms can help draw in new customers and encourage existing clients to return. The Internet can also be used for other purposes, such as to accept payments, store customer data, and even schedule customers for services.
Unfortunately, even the most secure website can become a victim of a cybercrime. Salons are a common target for cybercriminals as many salon owners do not have the budget necessary to allocate towards cybersecurity. Cyber insurance can help protect these businesses by covering the costs to investigate incidents, restore websites, pay regulatory fines, and avoid reputational harm. Cyber insurance can also be useful if a client chooses to sue for loss of personal data.
10. Equipment Breakdown Insurance Can Cover Repairs Or Replacements.
The cost to replace a salon chair that falls apart or fix a dryer that stops working can be significant. Salon equipment is expensive and most small businesses do not have the budget needed to cover unexpected equipment breakdowns. Equipment breakdown insurance can help cover repairs to salon equipment or replace the equipment if it cannot be fixed.
Equipment breakdown insurance offers comprehensive coverage typically categorized into five main categories: mechanical, electrical, computers, boilers/pressure equipment, and air conditioners/refrigeration systems. If equipment in any of these categories stops working, equipment breakdown insurance may cover lost income, and expenses incurred during the restoration period.
Reach Out To Southern States Insurance
There are many different types of beauty salons, each with its own risks and exposures, that require protecting. To learn more about what to consider when acquiring salon insurance or to request an insurance estimate, contact Southern States Insurance.