In a perfect world, the biggest risk in a salon would be dyeing a client’s hair green accidentally. But as a salon owner, you know there’s much more at stake. Clients can fall, employees can get sick, and your equipment can be lost, damaged, or stolen. That’s where salon insurance comes in.
Keep reading. We tell you everything you need to know about salon insurance.
What Is Salon Insurance?
When accidents happen on the job, salon insurance helps you cover the costs. It can pay for legal fees, medical bills, repairs, and income reimbursements. Without salon insurance, you have to pay out of pocket if your property is damaged or a client or employee makes a claim. Yikes!
Insurance providers sell salon insurance as a bundle of popular business insurances. Here are the most common types of coverage included in a salon insurance policy.
General liability is standard in any business insurance policy. It comes in handy if a client slips on spilled shampoo, gets sick from chemicals in the salon, or if their personal belongings are lost or damaged. If the client sues, general liability insurance will cover the cost of their medical bills and legal fees.
General liability is third-party insurance. It won’t cover accidents that happen to you or your employees.
Errors and Omissions
You and your team are hair care experts. But everyone makes mistakes. And sometimes, your business will be blamed for a mistake, even if it wasn’t your fault. Errors and Omissions (E&O) insurance protects you if a client claims you were negligent, misrepresented your services, or gave them inaccurate advice.
Let’s say a client sues you, claiming you recommended a product that damaged their hair. E&O will pay for your legal defense and any loss of earnings. It’s also called professional liability insurance.
Many salon owners make and sell their own shampoos, conditioners, or hair dyes. For this group, product liability insurance is a must. A client can claim your product has design defects, manufacturing defects, improper warnings, or strict liability (i.e., a customer was hurt even if it wasn’t directly your fault). For example, product liability can pay for medical costs, legal fees, and settlements if a client has an allergic reaction to your product.
A general liability policy can cover some product-related claims, but every policy is different. Read yours carefully!
Picture this: A few too many hair dryers get plugged in, an electric circuit overloads, and fire starts. Your salon could be out of commission for weeks as you work to repair the damage (and your reputation might take a hit).
Business income insurance can reimburse you for the income you lost during that time. Also, you can extend the policy to cover you for those slow days as you get back up and running. It’s sometimes called business interruption insurance, and it’s a real lifesaver.
Business income usually covers loss of income due to fire, theft, or extreme weather.
Commercial property insurance protects the building and assets that keep your business running. In the event of a fire, burglary, theft or extreme weather, the commercial property pays for repairs or replacements. Along with your salon building, it protects your:
- Salon equipment, like trolleys, sinks, and standing hair dryers
- Tools, including blow dryers and curling irons
- Inventory, like hair products, use or sell to clients
- Furniture, including salon chairs and tables
It’s good to have commercial property insurance, even if you run a home-based salon. And some policies will cover your rented business property. Also, find out how your insurance provider will determine the value of your property, i.e., how much they will reimburse you for repairs or replacements.
Equipment Breakdown Insurance
Equipment breakdown insurance fills in some gaps left by commercial property coverage. Commercial property protects you in the event of external damages. Equipment breakdown protects you if a machine itself fails, like from a power surge or shortage.
Salon owners spend a lot of money on hair dryers, air conditioners, water, and fire alarm systems to keep their businesses running smoothly. Make sure your salon insurance policy protects these investments.
Workers’ compensation insurance is a must if you hairstylists (or other beauty techs) to work in your salon. Employees can fall, get sick or react negatively to a product. If your stylists get sick or hurt on the job, workers’ comp helps you pay for their immediate medical expenses, lost wages, and ongoing care or rehabilitation costs.
Also, your workers’ comp policy might include employer’s liability coverage. This protects you if your stylist decides to sue over the injury. Most states require all businesses with employees to have workers’ compensation insurance.
Business Owner’s Policy
Salon owners can also choose to buy a business owner’s policy (BOP) as salon insurance. A BOP combines general liability, business property insurance, business income insurance, and equipment breakdown insurance. BOPs usually cost much less than buying each type of coverage individually.
What Insurance Do I Need as a Salon Owner?
Salon insurance requirements can vary from state to state. In general, salon insurance is a must if you hire a team or rent out booths to independent stylists. You might not perform the hair services, but you still have responsibility for incidents that happen in your salon. And be sure to recommend a good solo-professional insurance policy to your staff or booth renters.
If you join a salon franchise, you’ll likely need liability coverage to fulfill the terms of your contract. After all, franchisors want to keep their reputation clean. If you run a salon franchise, make sure to outline what insurance coverage franchisees need in the franchise agreement.
Some salon insurance providers offer a Franchise Certificate of Compliance. They’ll track franchisor requirements and make sure franchisees meet their coverage limits.
How Much Does Salon Insurance Cost?
Salon insurance costs will vary. A bundle of general, professional, and product liability might cost anywhere from $150 to $350 per year. And a more comprehensive BOP usually costs about $684 per year.
The cost depends on the coverage included in your policy and the size of your salon. You’ll need more coverage for ten employees than for two. If you don’t have employees, stick to the standard salon technician policy, which will be much cheaper.
Is Your Salon Protected?
Are you ready to run your salon with peace of mind? Well, it’s time to get your hands on a salon insurance policy. Salon insurance protects you when accidents happen that involve your business.
At PocketSuite, we also want to give peace of mind. Running a salon can be stressful. But it doesn’t have to be. PocketSuite has a range of customized features to keep your salon running smoothly.