July 2009

Your Private Label Could Make You Liable

by Adam Bray

Branding! Every salon does it.

Salons are constantly thinking of ways to separate from the competition.

What better way to brand your salon then to launch your very own line of products. Whether it’s a manufacturer’s formula or one that you created yourself, you now have your own product. This is great!

You need to remember a couple of things that could cause the dreams of success with your new products to come crashing down around you. There’s a good chance the salon lacks liability coverage for private label products. That means if your name is on the label, you may not be covered.

Salon policies assume the coverage is for providing services and the premiums are based on you running a service business. By adding your own products, you become a manufacturer and your risk changes. Manufacturing hair or skin care products is a larger risk than that of a salon.

Here are a few common questions salon owners have about selling their own products.

I’m not making the product, how can I be the manufacturer? From a liability standpoint, you’re considered the manufacturer because your name is on the label. If product were to cause harm to somebody due to negligence in the manufacturing or application you could be named in the lawsuit.

Why doesn’t my general or professional liability insurance policy cover it? Remember, insurance for your salon is based on it being a service business. If there is a liability claim that was caused by your salon’s product, your insurance company may deny the claim “Failure to disclose any and all business operations.”

Can I get insurance coverage for this? Absolutely! But not all companies will be able to cover the manufacturing part. The manufacturing, importing, blending, mixing, repackaging, re-labeling or wholesale distribution of cosmetics and hair or skin products may be excluded. Check with your agent and tell them your plans on doing before you start the process.

The special products may only be a small part of your business mix. If you plan on selling private label products, contact your insurance professional to find out what changes may be needed in your policy. If the company insures relabeled or manufactured products, great. If not, you may wish to contact an agent that has special knowledge in this area. Don’t assume you’re covered, know that you are!

Adam Bray, a licensed agent with Hedges Gallery of Insurance, specializes in the insurance needs for salons in Ohio. Contact Adam at 513-932-6914 or adam@hedgesgalleryins.com with any questions.


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