Starting your own business can be an exciting but stressful time. There are so many decisions to make to set yourself up for success, including how to insure your business assets. Here is a quick guide to understanding what salon insurance costs and what coverage you should be looking for!
Cost of Insurance for Salons
Insurance plans are as unique as your salon—there will be coverage that is pretty standard, but some coverage will require customization to fit your exact business needs. We will speak generally about insurance costs, but realize that each policy is tailored for your business.
To start, here are a few factors that will determine the price you pay for salon insurance:
- Location of your business
- If your space is leased or owned
- Building type (ie. free standing)
- Number of employees
- Claims history
Generally, you should plan to spend between $300–$800 per month to insure your salon. Different types of salons will have different pricing. For example, hair salon insurance costs can vary based on the number of full or part-time employees.
Independent contractors for a hair salon, who rent a chair or booth, can be a more affordable option for the salon because it reduces the risk for the business and thus the price paid for insurance. As the owner, you can also require those independent contractors to carry their own insurance policy and list your business/salon as an additional insured on the employee’s policy.
Spas and beauty salon insurance costs can vary widely not just on the number of employees but also on the services offered. Spas and salons generally provide services to their clients that carry more risk for insurance claims—for example, consider an esthetician. General services for an esthetician can include laser hair removal, microcurrent therapy, lash and eyebrow treatments, waxing, and teeth whitening. Many of these coverages for a practitioner require an additional endorsement, so you can imagine that this will affect pricing for these types of salons.
Insurance For Salons: What to Look For
Are Your Business Practices Covered?
When shopping for a policy, the first thing to look for are the types of services covered by the policy. With BBI Salon & Spa Insurance, there is coverage for many types of salons and spas including the following:
- Beauty and Hair Salons
- Day Spas
- Mobile Salons & Mobile Spas
- Massage Spas
- Health Spas
- Barber Salons
Next, review the limits of coverage. These big dollar values might not be exactly what you think—when they are listed as the aggregate limit, that is the most the policy will pay out during that policy term, usually one year. When the policy lists occurrence limits, that is the payout maximum for each time you submit a claim against your policy.
Let’s say you have a policy with a $3,000,000 aggregate and $2,000,000 occurrence limit. If you submit a claim that ends up paying out $2,000,000 for just one occurrence, the maximum it can then pay you for the next claim is $1,000,000 because you reached the annual limit.
However, if you are submitting several small claims for each occurrence, then you will be able to continue to draw against the $3,000,000 annual limit for more claims during that 12-month policy term. This would be the common structure. But, it illustrates there is a maximum the policy can reimburse or payout based on each time a claim happens, and each year you have an active policy.
Insurance Essentials You Need
There are a couple of necessary coverages you should find listed on your policy, so be sure to look for each of these to be listed before you sign the contract! When you are running a business, your need for coverage is greater than if you were an independent contractor. A business needs additional coverage, so make sure to check that your salon liability insurance includes each of these types of coverage:
- General Liability
- Commercial Property
- Professional Liability
- Workers Compensation Insurance (if applicable)
If you want to learn more about what each of these coverages can do for you, there is a great article breaking down examples and inclusions pertaining to insurance for salons.
Additional Coverage Options
While you are shopping for insurance, you may notice companies touting additional options you can add to your policy. You may wonder if you need to purchase these, but understanding what they are is the first step to answering that question. Below we describe the reasons and use for these additional insurance coverage options:
- Inland Marine: This poorly named coverage is designed to extend insurance to your equipment and business assets that are not included in the building structure. This can include things like your salon chairs, hairdryers, massage tables, and your supplies. Supplies would include inventory you sell as well as inventory you use in business services.
- Product Liability: Another coverage you can add to your base policy, in the event that your salon has a retail extension. This would include selling products related to beauty services or a boutique-style set up with items that are not related to the industry. Selling products you make or resale is critical coverage that you will need to add to your policy if this applies to your business.
- Commercial Auto: If you provide mobile salon and spa services and want to seek additional coverage for a dedicated van or trailer. Your personal auto policy may not provide you with the right liability coverage for a business vehicle.
Salon Insurance You Can Trust
Now that you understand the basic costs for salon insurance and what elements you need in your policy, you are ready to find a liability policy you can customize for your business. Your friends at Beauty and Bodywork Insurance are always here to help you understand your options before you finalize your purchase.
Contact our licensed agents today with any questions, we will be happy to assist you in building and purchasing the right insurance policy for your spa and salon!