Claims Made vs. Occurrence Part III
Limiting Your Exposure Liability Claims
Every salon owner needs professional liability insurance that protects them against claims made by customers who have suffered burns from overexposure or who have had a photosensitive reaction. Since personal injury claims easily can run into the hundreds of thousands of dollars, it should come as no surprise that a liability limit of $1 million no longer can be considered excessive, even for the smallest salon. Fortunately, the cost of this coverage is actually quite reasonable.However, of more pressing concern for salon owners is the availability of occurrence form professional liability policies. Until just a few years ago, most insurance companies only would underwrite professional liability for tanning salons on a claims-made basis. Broadly speaking, "claims made" means that the policy had to be in effect when the claim is made in order for a claim to be covered. However, some insurance companies today offer professional liability on an occurrence basis which, as you may have guessed, provides coverage for claims that fall outside the "occurrence" definition.
For example, if a claim is made against a salon one year--or even three years--after its policy has expired, an occurrence-based policy would give the salon owner liability protection up to the limits of insurance in effect at the time of the negligent event, even if they currently have no insurance protection at all.
Tip: Many insurance agents recommend that salon owners purchase professional liability on an "occurrence" basis instead of a "claims-made" basis whenever possible. Therefore, it may benefit salon owners to seek out the services of a specialized agency, such as Universal Insurance, that offers both types of coverage to find out which form is best for their needs.
If a salon owner is hit with a lawsuit, and the claim is covered, your insurance company will come to your defense. But as the old saying goes, "An ounce of prevention is worth a pound of cure." The best course of action for you, as a salon owner, is to limit your exposure in advance by minimizing potential risks. The five steps outlined below can help a salon owner get started. Even if you are already familiar with these procedures, you may wish to discuss them with your employees and explain why these practices are necessary.
Five-Step Plan for Limiting Your Liability Exposure
1. Review warnings and safety procedures with every new customer and make sure they are included in the literature that you provide. Make the customer aware that risks do exist and that there also may be risks as yet undiscovered. Explain the procedures that are in place to reduce those risks (such as protective eyewear and timers) and be sure customers understand their own roles in this process.
2. Secure written proof that you have fully warned your customers about known risks. You want to document that you have advised your customer that various risks might exist and that your customer consents to proceed with the service only after considering those risks and securing the advice of a physician, if he or she wishes to do so. Make sure the customer discloses a fairly complete medical history and be sure you and your staff know what might be problem signals in that history. If in doubt, request a release or consent form from the client's physician. Whenever possible, have customers sign clearly worded releases of liability.
3. Watch out for customers who demand extra long and overly frequent sessions. Observe and document their behavior, as well as any discussions you may have with them about it. Make sure you and your staff keep good records about and relating to each customer. Check with customers to be sure they are happy with the service provided and listen to their complaints.
4. Conduct regular follow-up quality control of your equipment, your methods of operation and your staff. Have regular training sessions and keep records. If you do not work in the salon, find competent managers and check up on them periodically without warning. Make sure the salon looks professional--it's good for business and enhances the impression that you know what you are doing. Never oversell. Each staff member should have some sales know-how; however, customers will complain if they feel pressured.
5. In the event of a claim, be sure to notify your insurance carrier promptly. If the claim is covered, many insurance policies require that the insurer provide defense counsel. In such a case, the insurance company's counsel owes a primary duty of loyalty to the insured or his or her client. A full, frank and honest discussion with an attorney may reduce the cost and expense of a lawsuit and promote settlement where appropriate.
Closing Thoughts
Universal Insurance Facilities, Ltd. offers a variety of flexible and affordable coverage designed to fit every size salon and is the only agency that currently offers claims-made coverage and occurrence form professional liability policies. To get more information on these or any of Universal's other specialized tanning salon insurance coverage, please contact Universal Insurance Facilities, Ltd., P.O. Box 5400, Scottsdale, AZ 85261, (800) 844-2101, fax (602) 970-6240.
