The beauty salon and spa industries are booming businesses — and their employment figures are following suit. A spa trade organization reports that employment in the spa industry rose by about 3% from 2014 to 2015; another report showed that the salon industry has grown steadily over the past decade, even throughout the recession.
As the beauty industry changes, it is important to make sure that a salon or spa’s policy is not outdated. Sometimes what doesn’t seem like a big change — like adding a relatively minor new amenity or service — can be an excluded exposure on the current policy and may be an issue if a claim occurs.
Below and on the following pages, five things agents and brokers must know about insuring the health and beauty industry.
Related: Risks in focus: Insuring hair salons
What are typical risks and exposures for the beauty industry?
There are many risks and exposures to consider in the beauty industry.
Claims are common for allergic reactions from product ingredients; accidental nicks and cuts stemming from haircuts; nail infections; massage injuries; and burns from skincare treatment. That isn’t an exhaustive list — sources of claims are as diverse as the services salons and spas provide.
Claims will happen because you cannot avoid human error, but safety refresher courses can help in reducing the number of claims and should be offered to employees and contractors. It is essential that salon and spa owners also make sure that everyone who works in their business has the proper training and licensing for each service being performed. Agents and brokers may be surprised how many beauty businesses don’t look for certification when hiring.
How do independent contractors create liability issues?
Much of the growth in the beauty industry has been among independent contractors who might rent booths at salons or perform services at someone else’s day spa.
If a claim occurs with an independent contractor who carries his or her own coverage, the owner of a salon can be dragged into a lawsuit because of vicarious liability. It’s good to always require an independent contractor who has his or her own policy to add the salon owner or landlord as an additional insured to ensure proper protection. That will cover them up to the policy limits if they are brought into a claim.
However, any number of things can create a lapse in coverage, information which the salon owner won’t always be privy to. To avoid that scenario, adding an independent contractor to the salon owner’s policy can create peace of mind knowing the proper coverage is always in place.
When a salon provides multiple services at once, how does this lead to claims problems?
When a stylist or esthetician provides multiple services to a client during one visit, it can lead to adverse reactions, injury or difficulty settling a claim.
If the client is injured during these services, it may create confusion about the cause of the injury. An additional service can exacerbate an adverse reaction.
For example, Bay Shore, New York-based Salon & Spa Specialty Insurance sees problems when a technician applies two chemical services on the same day, such as a color and perm. It is usually recommended to wait a minimum of three to seven days between services. Performing these two services together can damage the hair or burn the scalp.
What coverages are being more widely used right now for salons?
Most of the businesses we used to think of as beauty shops are now full-service salons.
Over the past few years, coverage for skin treatment has been the most requested service. Applications are pouring in for coverages for services such as chemical peels, waxing, microdermabrasion, massage and facials.
How can agents and brokers act as risk managers for their salon clients?
Agents and brokers should seek feedback from salons on the risks involved, based on information provided on the application.
For example, if the business is a hair salon, go over licensing and the risks of claims for unlicensed operators, what would be covered under the policy, what the insurer can’t cover and why.
Once the policy is in force, it’s a good idea to review the insured’s policy at each renewal to ensure that they are covered for any exposures from new services added during the year. Some insureds are cognizant of the insurance requirements of new services and will bring up questions when they are in the early planning stages of something new, but the majority won’t say anything until they have a look at their renewal and realize the new service isn’t on their policy. Most discrepancies are caught at renewal, usually when the insured realizes that they omitted information throughout the year and provides updates to their broker.