It seems that beauty treatments are one of those rare "recession proof" commodities that Americans love. But what happens when that love goes away? Like in 2009, when a 14 year old Florida girl went in to a beauty salon to have her hair dyed blue, and came out with third-degree burns and bald patches. Her parents spent $85,000 in medical expenses and surgical procedures, and turned around and sued the salon for negligence and pain and suffering. It turned out a stylist had not followed the product directions.
While you may have faithful customers and always follow directions, accidents happen all the time. While you focus on your customers and your business, it's important to have the right beauty salon insurance to protect you from financial losses.
Hair Salon Insurance Is Important
- There are more than 86,000 hair salons in the U.S., including 4,000 barber shops.
- Combined hair salon revenue for 2012 was $20 billion.
- The hair salon industry is mostly comprised of small businesses, with the top 50 chains accounting for only 15% of total revenue.
- 80% of hair salons have fewer than five employees.
Most U.S. hair salons are one-shop businesses, or small, local chains. Their small size makes them more vulnerable to financial loss due to fire, storm, break-in or lawsuit.
Salon Insurance for Salon Owners
If you are like the majority of salon owners, your small business is your livelihood. Whether you are just getting started or beginning to expand to new locations, you need the right beauty salon business insurance to keep your investment secure.
Whether you own a hair salon, nail salon, spa, or provide a variety of esthetician services, you will need these three types of beauty salon insurance:
- Salon liability insurance: This provides financial protection if a customer incurs bodily injury or property damage in your place of business and sues. For example, if one of your clients slips and falls at the wash basin, your general liability would pay her medical expenses, plus any judgment or settlement amount you owe, as well as for your legal defense. It's a good idea to set your liability coverage limits as high as you can afford.
- Property and casualty insurance: This covers damage to the building that houses your salon, whether you lease or own it. Casualty insurance covers property you keep inside the walls of your salon, such as computers, counters, chairs, tanning beds, styling equipment, and product. Usually this coverage does not include plate glass walls. If your salon storefront includes a large amount of glass, you may wish to purchase plate glass coverage for a small increase in your premium.
- Workers compensation insurance: If you have employees, you need workers compensation coverage to protect against financial loss from on-the-job injuries and illnesses. This coverage helps the employee by paying medical bills, a portion of lost income, and rehabilitation expenses. It also protects you from lawsuits. Most policies stipulate that by accepting workers compensation payments, the employee agrees not to sue the salon.
Common Salon Insurance Issues
There are several additional considerations for salon owners, depending upon the nature of the salon and the services offered.
- If you hire beauty contractors:
- The hair stylists, manicurists and massage therapists who rent space in your salon may not be covered by your general liability policy if they cause bodily injury or property damage to one of your clients. Stylists can face lawsuits over something as small as a bad haircut, and these suits can be just as financially destructive as a case in which a client suffers physical harm, such as a chemical burn or an allergic reaction.
- Consider requiring all of your beauty contractors to carry professional liability insurance. This will provide financial protection for both the contractor and, consequently, the salon, which is helpful if you face litigation over accidents that occur during service.
- If you sell beauty products:
- If there is a problem with a product you sell, such as a manufacturing flaw or a chemical imbalance in a hair care product, you could be partially liable for any illness or injury your customer suffers. A faulty product suit can affect all parts of the distribution network, from the manufacturer all the way down to the seller.
- If you carry personal care products on your shelves, such as shampoos, oils, nail lacquers, soaps, massagers, and so on, you can likely benefit from product liability insurance. Product liability provides financial protection for your salon, if one of your products causes injury to your customers. That way you don't have to pay for a manufacturer's mistake.
Nail Salon Insurance
Because of the sharp tools, chemicals, and extended contact necessary for most manicures and pedicures, it is essential to have the right nail salon insurance to protect your business. Some special considerations for nail salon owners include:
- Professional liability insurance: This is especially important for nail salons, because if a worker fails to sanitize tools or accidentally cuts or otherwise injures a customer, your business could be sued. Make sure each employee or contractor carries professional liability coverage so that you are protected from lawsuits due to service mistakes.
- Workers compensation: The effects of breathing nail care chemicals day in and day out can be highly detrimental to your workers' health. Workers compensation is essential to any employer, but even more so to nail salon owners because of the tools of the trade. You can reduce your employees' medical risks by ensuring that they wear protective masks and gear when handling chemicals.
Special Salon Insurance
Depending on the types of services you provide, you may need some or all of the following types of insurance for beauty salons:
- Drain and sewer backups: If you own a hair salon or barber shop, special coverage options may be a good choice, such as drain and sewer backup coverage to pay for the costs of water damage to your walls and floors if your drains become clogged with hair.
- Fire liability: If you own a spa or esthetician services salonan use candles and flammable oils, you probably need fire liability coverage. If you are sued over a fire that starts within the walls of your business, your legal fees and settlement are covered, up to the limits of your policy.
- Equipment breakdown coverage: If your salon is dependent on equipment such as tanning beds, computers and other machines for revenue, equipment breakdown coverage could be a good investment. This coverage ensures that you can get the gadgets you need back online quickly without emptying your bank account.
- Inland marine: Provides financial protection for equipment that is in transit or in storage. If your employees perform esthetician services, hair care, or spa services in outside locations, such as weddings and private homes, inland marine coverage protects you from equipment loss on the go.