Covering Your Assets: Business and Liability Insurance

by Elle Tigan

What's your strongest feeling when you hear about a horrible salon accident?

Imagine a car plowing into a salon. It happened recently in San Diego -- a couple patrol cars, a fire truck, ambulance, twisted metal and pink capes strewn across the road.

You're likely to react first with a feeling of anguish at the evident suffering. Then, you're relieved that it wasn't you or your loved ones.

At what point would you think about the victims' insurance? Most folks only think about insurance when they're confronted with a situation where insurance becomes important.

We asked all the salon owners we met at Cosmoprof in Las Vegas about their insurance. Owners that had never had a claim rarely thought about it. Several salon owners who suffered significant losses gave highly emotional responses and universally agreed that they hadn't known enough.

Salon owner's risks to their income are great. If their clients can't come through the door and receive personal service, no income is generated.

Financial expert Suze Orman points out in Modern Salon that failing to get appropriate hair salon insurance is one mistake that could cost salon owners dearly in the long run.

The Insurance Information Institute (III) recommends salons consider Business Owners Policies (BOPs). While these types of plans may be advertised under different names, they usually include comprehensive coverage for both liability claims and property damage – two essentials.

Hair salon malpractice claims are on the rise and salon owners who under insure their businesses may not be able to cover liability costs on their own. Any business that provides personalized services is at risk of being sued by an unhappy patron, according to III.

BOPs allow for liability coverage that is specifically designed for hair industry professionals who use chemicals, sharp instruments and are in physical contact with patrons. The policies are written to cover most salon risks, but owners should read them to be sure what they contain. Is it necessary to perform a patch test on a client to be covered in case of a chemical burn? Your policy will tell you.

Stylists require a vast number of expensive tools to perform their duties. While most business insurance plans cover the cost of property damage, they may not cover the cost of replacing flat irons, hair dryers and other similar items. What's more, traditional business insurance may not cover things such as hair extension theft, a beauty salon crime that is gaining in popularity nationwide.

Before settling on a policy, owners should consider what factors contribute to their business risk, according to the Small Business Association (SBA). For example, salons that offer spa treatments or services like hair relaxing and straightening may find they are more at risk for liability claims. Salons that offer high-tech services should be sure they are following a strict protocol in order to limit their risk and lower their insurance costs, according to Modern Salon.

"Spas should be using medical intake forms and by law, the completed forms must be under physical lock and key," said attorney Joyce Hampers. "If they are on a computer for the world to see, you've compounded your liability issues."

A BOP policy may or may not cover loss of income. If a shop is flooded, insurance may cover the cost to repair the salon but not the six weeks loss of income for the salon owner. Policies vary by carrier so owners need to check to be sure.

Sewer back-up can be optional as well, and a frequent problem in salons. Coverage for damage from wind may be covered, but not "storm surge." This year's catastrophes offer a chance for everyone to be better-informed about insurance.

Professional liability is another option to consider. A salon policy doesn't always include this coverage. An insured salon may be protected from slip and fall lawsuits so that a landlord is reimbursed but the stylist-owner needs his or her own coverage to be fully protected.

While specialized hair salon insurance seems like an unnecessary expense to some, those who consider the cost of rebuilding a business may feel otherwise.

Furthermore, salon owners can use their insurance shopping experience as a catalyst toward improving their overall risk-management standards. Full coverage policies paired with good work habits and clean and safe shops can aid salon owners in their efforts to make their spaces safer and more cost-effective.

Salon owners may even want to ask their insurance representative for some tips on how to make their shops safer and more efficient. After all, most stylists know the benefits that consulting experts can render.

Elle Tigan is one of five women responsible for saloninsure.com, an agency that offers business insurance online to salon owners and stylists, based in Monterey, CA. For more information email elle@saloninsure.com or visit www.saloninsure.com.

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