Navigating Salon & Spa Insurance Needs

Navigating Salon & Spa Insurance Needs

Not only are most businesses required by law to have some form of coverage, but the idea of preparing for the worst case scenario also makes good business sense. Fire, theft, and employee and client accidents or lawsuits can destroy a business and even tap personal assets, like your home or savings. Here’s what you need to know when it comes to insurance for your business.

Cost Versus Risk

The cost of insurance should be considered from the initial concept of opening a salon or spa and factored into the overhead expenses for the business. Nobody desires to pay high premiums but having to pay out-of-pocket for any claims, which can and do happen and can cost much more in the long run. One small disaster, let alone a significant catastrophe, can be the demise of a small business that is not insured or appropriately insured.

Insurance Types

There is no one single standard answer for the types of insurance businesses should carry, but as a business owner, you should be aware that you are liable for what happens in and around your business. Therefore, at the very least basic property and casualty risks (liability) insurance should be a top priority to protect your assets. Depending on your area, you may wish to look into riders or add-ons for flood, fire, and earthquake insurance to provide coverage in such cases.

Also, many landlords require a certain amount of hazard and liability insurance and in many cases want to be listed on the policy. If you purchased the building for your business and carry a mortgage, your lender may also have specific insurance requirements. In each case, you can ask your insurance broker or carrier to supply a certificate of insurance for each entity as needed.

For workers’ compensation insurance, the requirements vary from state to state. So, it’s advised to do some research in your area. Regardless, some workers’ compensation coverage should be in place to cover employee medical and disability expenses. It should also cushion the complications of employee claims. According to the insurance industry, employees make up the majority of the claims. Make sure that you are ready for the proverbial rainy day with the right insurance.

The Basics

Once you’ve identified the type of insurance needed, decide what sort of deductible is right for your situation. Typically the higher the insurance deductible, the lower your premiums; however, it’s advised to have reasonable expectations should something go wrong. The best suggestion is to have a business savings account that is at least the amount of your deductible. For this scenario to work, use the account as a safety net that is never used, except in the case of a claim.

Managing Risk

With insurance, risk management is the process of understanding, evaluating, and addressing possible risks in your business that may trigger an insurance claim. Recognize and act upon all areas of concern including potential risks to both employees and clients. Install safety precautions as needed, provide regular monitoring and claim evaluations to help prevent future claims. Also, carefully examine all recurring claims. If something in your salon causes injury, property damage, or any other claim that costs you money, immediately identify and correct the problem. After all, managing risk is also the key to successfully keeping insurance costs under control.

A common misconception with business owners is that small business insurance is expensive. In the grand scheme of things, however, not having insurance could be much more costly.

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