Acquiring the right insurance for a beauty business is essential to prevent devastating reputational and financial losses. Salon insurance is designed to safeguard business owners from unexpected compensation claims or property damage that could force the business to close.
While most Georgia salon owners understand the importance of carrying insurance, cost remains a common concern. The cost of salon insurance can range considerably depending on the size of the company, the number of employees, and similar factors. It is important for salon owners to identify their level of risk and what types of policies are required to keep them safe.
Learn more about the different types of salon insurance and the average cost of these policies in Georgia.
What Types Of Insurance Do Salons Need?
Business insurance is designed to protect the financial assets of a business owner. It is considered an essential investment for beauty salons and should typically be acquired before opening the doors. The cost of insurance may seem high for start-up companies, but it is important to be proactive when it comes to protecting critical assets. It is also wise to remember that insurance will not protect the business from everything. Most policies contain certain exceptions or lists of perils that are uninsurable.
While not every beauty salon will need all of the following insurance types, the average salon can benefit from carrying some of the policies described below:
General Liability Insurance
Commonly referred to as business liability insurance, general liability insurance is a broad type of insurance that protects business owners from “general” claims involving bodily injury and property damage. A general liability insurance policy will typically cover attorney fees and medical expenses that result from bodily injuries or property damage in which the salon may be held legally responsible.
Nearly every company has a need for general liability insurance. Liability claims are fairly common and can get quite expensive. In fact, an analysis by The Hartford found that 40 percent of small businesses are likely to incur a property or liability loss in the next 10 years.
Business Owner’s Policy
A Business Owner’s Policy (BOP) is a combination of business property insurance and business liability insurance. This type of policy helps cover companies from claims resulting from theft, fire, and other covered disasters. BOPs can also help cover claims that arise from normal business operations, such as property damage or bodily injury.
Optional coverages are also available under a BOP, such as business income for off-premises utility services, data breaches, and other specialized policies. BOPs can even be customized to fit the unique business and industry. Any business owner that has a physical location and faces the possibility of getting sued should carry a BOP.
Drain/Sewer Backup Insurance
Beauty salons commonly use water for day-to-day services, such as hair washing and rinsing. Along with various chemicals and hair products, loose hair strands are sent down the drain. Over time, products and hair can become lodged in drains and sewer systems, potentially causing blockages and other problems.
With drain and sewer backup insurance, beauty salons can stay protected against water damage and other problems resulting from a drain or sewer backup. This type of property damage can be costly to repair without insurance coverage, making it a smart investment for salon owners.
Plate Glass Insurance
Beauty salons are known to be sleek and stylish. It is not uncommon for salons to have expensive glass storefronts, consisting of oversized windows and glass doors that allow in ample sunlight. While the look of glass can make a salon appear more upscale, it also poses certain risks to business owners.
When a piece of glass cracks or breaks, it can be costly to repair or replace. Having plate glass insurance can help cover these types of incidents. Plate glass insurance may be sold as a stand-alone or add-on policy that covers a percentage of the cost to fix or replace the glass.
Fire Insurance
Salons often use chemicals and various materials that are highly flammable. If an incident occurs in which a fire breaks out, the business may be on the hook for thousands of dollars in damages. Most salons would be forced to shut down either temporarily or permanently without fire insurance.
Fire insurance generally provides businesses with additional coverage for losses or damages that occur to a structure or its contents in a fire. This type of coverage may be capped at a rate that is less than the cost of the accrued losses. Most policies pay back the policyholder on an actual cash value basis or replacement-cost basis.
Equipment Breakdown Coverage
Equipment breakdown coverage can be used to help pay for damaged or broken-down equipment following a covered incident. It is typically used to help cover equipment that is necessary for a company to continue running, such as computers, security systems, air conditioning systems, and boilers.
Equipment breakdown insurance can help pay for a variety of expenses, such as the cost of repairs after an incident, property damage liability costs, and the extra expense of temporary or rush repairs. It may also cover lost business income due to broken-down equipment, as well as mandatory inspections of equipment.
Salon Booth Renters’ Coverage
Salon booth renters’ insurance, also referred to as beauty salon chair insurance, is a common type of business insurance that covers anyone who rents a space inside a beauty salon. Insurance helps protect booth renters against claims of professional mistakes, property damage, and bodily injury.
Many different types of small businesses in the beauty industry can benefit from carrying booth renters’ insurance, including hairstylists, cosmetologists, aestheticians, barbers, nail salon owners, and tanning salon owners. Insurance for booth renters can cover a variety of potential exposures and prevent booth renters from losing their livelihood.
Commercial Property Insurance
Commercial property insurance protects business owners against damage to owned, rented, or leased business property. This includes assets like buildings, furniture, equipment, inventory, and fixtures. This insurance can also cover the costs to repair or replace damaged, destroyed, or stolen property, including equipment or property that does not belong to the company but is in the custody or care of the company.
With commercial property insurance, salon owners can protect against a wide range of incidents, such as explosions, fires, burst pipes, vandalism, theft, and storms. Commercial property insurance is so valuable because it covers the building and everything inside and outside of it, such as computers, exterior signs, and fencing.
Professional Liability Insurance
Professional liability insurance (PLI) is a type of insurance that protects professionals against claims of negligence or mistakes initiated by clients. An accidental burn or cut to a customer could result in a lawsuit for a salon. Beauty salons that offer other types of services, such as tanning services, facials or manicures, may face higher risk exposures.
Carrying professional liability insurance protects salon owners from costly lawsuits arising from claims of misrepresentation or negligence. It is important to remember that PLI is a specialty coverage that is not typically included under most BOPs.
Workers’ Compensation Insurance
Under Georgia law, salons are required to carry workers’ compensation insurance if they have a certain number of employees. Workers’ compensation protects employees who become ill or injured on the job. Coverage can help pay for the salon owner’s legal defense fees if needed, as well as an employee’s medical bills and lost income.
There is always a potential for an illness or injury while on the job. In a salon setting, employees can suffer burns to the skin, puncture wounds from scissors, irritation to the lungs from chemical exposure, repetitive motion injuries, and other unexpected illnesses and injuries.
Are There Exclusions To Salon Insurance?
While every beauty salon business should carry insurance, it is essential to understand what each policy covers and its limitations. Most insurance policies include a section that lists exclusions. In the salon business, some of the most common insurance exclusions include the following:
- Airbrush services
- Eyelash coloring or dying services
- Electrolysis
- Red light therapy services
- Massage therapist services
- Hair implanting and transplanting
These services are often considered too risky for insurance companies to cover and may require salon owners to seek add-on coverage or specialized policies.
How Much Does Salon Insurance Cost?
Based on an analysis of applications from Insureon, the average beauty salon in Georgia can expect premiums that are similar to the national median. Cost is based on the type of insurance policy purchased.
For example, the median annual cost of a workers’ compensation policy for a beauty salon in Georgia is $1,814, just over the national median of $1,641. In Georgia, the median annual premium for a general liability insurance policy is $425, just less than the national median of $500.
There are several factors taken into consideration when providing a premium estimate, such as the age of the business, amount of revenue, number of employees, and location. Insurance companies will also take into account deductibles. Salon owners that opt for higher deductibles will typically pay lower premiums as they are taking on a greater financial risk in the event of a claim.
Request An Insurance Quote Today
No two beauty salon businesses are the same, meaning each business faces a different level of risk. It is the responsibility of the salon owner to determine the amount of risk that they are comfortable taking and to seek the proper coverage to protect against potential threats. For more information about the average cost of salon insurance in Georgia or to request a quote for salon insurance, reach out to the insurance professionals at Southern States Insurance.