Are you looking to start your salon and want to know about insuring your business? No business comes without its risks. Your salon business is not an exception either. Salon insurance is specially tailored to suit your salon business and gives you coverage in case you incur any liabilities such as lawsuits from customers as a result of injuries or other occurrences.
Here are the important things you need to know about salon business insurance that we’ll be discussing here:
Why do you need salon business insurance?
What types of insurance policies are available for salon businesses?
How much does it cost to insure your salon business?
How do you choose an insurance provider for your salon business?
Why Do You Need Salon Business Insurance?
As a salon owner, your customers do not only come to you to look good, they also choose your business because they want some assurance of quality service and safety. If anything happens to make your business fall short of these expectations, it could result in legal action. Experts make mistakes and customers make claims of scalp reactions even though they assured you that they weren’t allergic to the product. The unfortunate thing is, these occurrences are quite common in the salon business. So, you want to be adequately prepared in case they happen.
If you have employees, you’re automatically responsible for their work conditions. The nature of the salon business requires employees to handle chemicals, flammable material, and hot objects. In the event of an accident, your employee is entitled to a settlement by your business and could sue you for it. If you have insurance in place to cover this, you’ll have nothing to worry about.
Salon equipment is a very important tool of the trade. A hood dryer that breaks down without notice or a styling chair that comes apart could set you back by a significant amount of dollars. The same thing could happen if you have a leaking roof or broken wall to fix. In some cases, you may even have to close up shop for a couple of days before repairs are completed. Your income is dependent on the customers you attend to. No business activities mean no income for those days or hours. Insurance takes care of this by bearing the brunt of the income you lose as a result of this.
Salon insurance policies are specifically designed for salon businesses and the peculiar liabilities common to the industry. This is why it is very important to have them in place from the onset of your salon business.
What Types of Insurance Policies Are Available for Salon Businesses?
There are five types of insurance policies available to salon owners. They are:
General Liability Insurance.
Commercial Property Insurance.
Business Owner Policy.
Professional Liability Insurance.
Workers’ Compensation Insurance.
General Liability Insurance
This type of insurance covers third-party claims. These claims can arise as a result of injuries to customers or property damage during a home service session. Unfortunately, these events are not far fetched in a salon environment and can be of potential high risk. Having general liability insurance is a sure way to cover these risks before they happen.
Commercial Property Insurance
You may lose valuable work time as a result of repairs or damage to your building or equipment. Sometimes your salon equipment can break down with little or no notice. When this happens, you don’t only lose time, you also lose income and incur repair costs. Getting commercial property insurance gives you coverage against this loss and costs of repairs that you probably didn’t see coming.
Business Owner Insurance
This type of business insurance is a combination of General Liability Insurance and Commercial Property Insurance in addition to other specific types of insurance policies you may need based on the services you offer in your salon. This means that it can take care of third party claims, property damage, and repair costs. The advantage of this policy is the fact that it’s tailored to your needs and won’t cost as much as buying the combined insurances separately. However, it doesn’t cover liabilities that are a direct result of your services. This is why you’ll need to get Professional Liability Insurance.
It’s only advisable to buy a General Liability Insurance separately instead of a Business Owner Insurance if you don’t own the salon location and are only renting a booth or workstation. This also applies if yours is a mobile salon business.
Professional Liability Insurance
This covers liabilities that arise as a direct result of your professional services or advice. Your customers are in a position to make claims if something goes wrong during a hair styling session or you recommend a product that causes an allergic reaction or scalp burns or other harm to them. If your staff was the one who provided the service, the same could still happen. No matter how much of an expert you or your staff are, mistakes can still occur when you least expect them to. Getting professional liability insurance is a smart way to ensure that the costs of such mistakes are taken care of if or when they do happen. It is also known as errors and omissions insurance or indemnity insurance. Some states make it mandatory for you to have this insurance before offering selected salon services.
Workers’ Compensation Insurance
This type of insurance is mandatory for every salon business with employees. It covers lost wages due to sick days and medical bills in case of any injuries or illnesses that happen while working. It also protects your salon business from legal claims that may come up as a result of working conditions.
Find out about grants for your business HERE!
How Much Does it Cost to Insure Your Salon Business?
It costs an average of $2,900 per year to fully insure a salon with two employees. However, this value can vary between $600 and $12,000 depending on some factors. These factors include the nature of services you provide, the number of employees, the size of your business, and the location of your salon.
Buying policies that combine two or more insurance types is an effective way for you to reduce insurance costs for your salon business. However, you mustn’t try to do a lot of cost savings when buying insurance for your salon business. The rewards will eventually be much more than what you spend on it annually or monthly. In most cases, insurance costs about 1 percent of the salon’s total revenue.
How Do You Choose An Insurance Provider for Your Salon Business?
Choosing the right insurance provider for your salon business can be a daunting task but a rewarding one eventually. First, go for an insurance provider that caters specifically to salon businesses to be sure that you get coverages for liabilities peculiar to your business.
When choosing an insurance provider, look out for the cost and coverages they offer. These two things are the most important determinants. When it comes to insurance costs, less isn’t always more. Your aim shouldn’t be to choose the cheapest policy. You want to take a critical look at the coverages they offer too. Not all insurance providers offer the same coverages at the same price. Weigh the cost and coverages against your business needs before you decide if it’s good for you. Your end goal should be to choose a policy that fully protects your salon business.
I hope you enjoyed learning all about salon business insurance. Owning a salon business puts you in a position to help people look their best. You need your peace of mind to do your job well. With the right coverages in place, you are assured of cushioning in case of any legal or financial trouble beyond your control. Your customers and employees are also assured of quality services and an environment where their safety and welfare are a priority.
Is it compulsory to get salon insurance?
Salon businesses are mandated by the law to get workers’ compensation insurance if they have employees. For other types of salon insurance, it depends on where your salon is located. However, failure to get the other types of salon insurance is likely to land your salon business in frequent legal trouble. This may cost you a lot financially and may eventually lead to the closure of your salon. This is why it is important to get full protection for yourself and your business.
Do I need salon insurance if I’m only renting a booth?
If you’re renting a booth or hairstyling station, you are also exposed to the same types of risks as a salon owner. Therefore, you need to be insured. You also work with equipment and products that are potentially harmful to your customers. Your equipment is also prone to damage and can also result in loss of income for your business.
It’s not uncommon for renters to make it a requirement for you to get insurance before they allow you to rent a booth or work station at their salon.
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Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Shawn Chun is an entrepreneur who has owned several types of businesses from a coffee shop to an import and export business to an online review business plus a few more and now creates online resources for those interested in starting a salon business. It is demanding work he loves to do it. Shawn says “I do it for those passionate about their business and their goals. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive.”
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