June 2012

LeAnne Velona

The Beauty Professional| by Fred Jones


Protecting Your Booth Rental Business 

In a recent column, I discussed Booth Rental from a broad perspective. This month, let's delve a bit deeper into some important facets of a cost-effective Booth Rental business.

We'll begin with some tips on how booth renters can cover themselves from legal liabilities and meet some of their important contractual obligations.

 What follows is the second installment of my interview with Jeff Pulford. He is an experienced, trusted insurance expert who has become very knowledgeable about Booth Rental businesses.

Jeff: Every booth renter needs general liability. This covers the booth renter if they cause a slip and fall, electrocute a customer, accidentally burn or damage the salon or another tenant, etc. In addition, general liability is demanded by the lease with the salon owner and is usually demanded by the lease the establishment has with the building owner.

Fred: And what about injuries resulting directly from beauty services? 

Jeff: Every booth renter should also carry professional liability. A booth renter graduates from beauty school and attains a cosmetology license, authorizing them to charge money for their services. They are now a professional and should be in compliance with the laws and regulations governing the beauty industry, as well as the highest professional standards.

If they injure a customer while performing beauty services they are responsible, including any monetary damages, hospitalization, etc. The professional liability policy will defend and protect the booth renter by paying for a lawyer and the injured person's medical bills and general pain and suffering; the typical professional liability policy will cover up to $1,000,000 to cover all of the client's related damages.

 Fred: So, the general liability and professional liability are usually demanded by the salon and landlord, expected by clients, and protects the booth renter from errors on the job. But I know many booth renters avoid getting such coverage. Is it expensive? 

Jeff: No, it is the least expensive insurance policy in the country. Annual premiums for booth rental businesses from reputable companies start at $225.00. 

Fred: That covers both general and professional liability but does a booth renter need any other insurance?

Jeff: This is all a booth renter needs to fulfill their requirements as a responsible and independent business owner. Such a general liability / professional liability policy will also likely fulfill any contractual obligation for insurance coverage.

However, there are additional insurance options available, including:

Property coverage: theft, fire, vandalism, vehicle damage, etc. for cloths, shears, hair samples, various products, etc.

Major medical insurance: The salon can only cover employees, not independent contractors (booth renters) under the salon group medical policy. So truly independent booth renters must provide for their own medical insurance.

Disability: If a booth renter gets hurt and cannot earn a living they will be responsible for themselves. They will not be eligible for Workers Comp (unless a booth renter is in reality operating as an employee of the establishment/salon owner).

No group medical or group disability is available through the business for independent contractors. A booth renter who files income taxes is, however, eligible for SDI – State Disability Income – which in some states can cover up to $850/week for the period of injury/recovery. 

Salons want experienced, responsible, and talented people. There are substantial advantages of booth renters who have their own insurance and don't require the salon to cover them: this is a strong indication to the salon owner that the booth renter is responsible and professional; the salon owner's policy will not have to pay for a booth renter malpractice claim; and an independently insured booth renter is one of the most important criteria proving the booth renter is an independent contractor. A major benefit of this is that a salon owner does not have to carry workers compensation insurance on a valid independent contractor. 

In addition, the salon's insurance policy only covers the services of beauty professionals working in that salon. In contrast, an independently insured booth renter can work anywhere and be paid as a professional. This also offers a great degree of comfort to their out-of-salon clients who know they will be protected. 

Most other venues also demand insurance from those working on their premises. So an insured booth renter can be covered at weddings; social and family events; funerals; cruise ships and other entertainment venues; work at home; and services provided at multiple salons. And most policies will cover services provided in multiple states. 

Fred Jones serves as Legal Counsel to the Professional Beauty Federation of California, a trade association singularly dedicated to raising the professionalism of the beauty industry. To learn more about the PBFC and receive further details about the subjects contained in his column, go to www.beautyfederation.org.