When it comes to starting, expanding – or even selling – your business, figuring out the insurance may be one of many things on your “to do” list. However, in order to be fully covered in the event of a loss, salon owners should prioritize insurance among their first business decisions. They should also be prepared in the event that a business associate – such as a landlord or lending company – requests inclusion on the policy.
Here’s how we advise clients regarding these matters:
When do you need to start your salon insurance?
Signing your lease and getting your business insurance should go hand in hand. Once you execute the contract, you incur liability. If construction and build-out are going to take time, get liability coverage immediately. Then, as the equipment is being delivered, add property coverage and other necessary coverage. Once you open the doors, you should have a complete commercial policy in place. If you are taking over a salon that is already up and running, you should purchase your insurance as soon as ownership occurs. It is very important to use a company that specializes in the tanning industry. Also, remember to get the other policies your business might need – Worker’s Compensation, Employment Practices Liability Insurance, Flood, Umbrella, etc.
When do I cancel my salon insurance?
If you are selling your salon, you don’t want to cancel your insurance until the deal is closed. Give your insurance agent notice that you are looking to sell, and then when the deal is done, they should have you sign a certain standardized form. Don’t keep coverage in force if the business and lease are no longer in your name (or the name of your entity).
If you are closing down a location and your name is still on the signed lease agreement, then you should continue liability coverage until the lease expires. You can reduce your coverage by decreasing or eliminating property-type coverages, but you should still have liability coverage as long as your entity is on the lease.
Why does my landlord need to be added onto my policy?
Landlords and property management companies typically want to be added onto their tenants’ insurance as an Additional Insured. This is because when you add the landlord and property management as an Additional Insured to your policy, and they are pulled into a lawsuit as a result of your potential negligence, the insurance company will provide a defense for both you and them.
And the lending company?
Lending companies typically want to be added onto their lessees’ policies as a Loss Payee and sometimes even an Additional Insured. In the event of a covered cause of loss, the lending company wants to make sure they will be financially compensated. By adding these types of institutes to your commercial policy as a Loss Payee, then the company is entitled to payment from the insurance company for balanced amount (other policy terms might apply). When a lending company wants to be added as an Additional Insured, it is for similar reasons to the landlord’s request – they want the insurance company to provide defense for them if pulled into a lawsuit due to your potential negligence.
Jenny Bortman is an account executive for Universal Insurance, which has been serving professionals in the indoor tanning industry since 1993. For a competitive, personalized quote or additional information about Universal’s exclusive Tanning Salon program, call 800.844.2101 or visit www.uitanning.com.
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