Liability Insurance

Business Liability

Business liability (also known as general liability) protects you against bodily injury lawsuits, such as those claiming that a customer or visitor was injured while on your premises. Trips and falls would fall under this category. Business liability also provides protection against property damage claims, personal injury lawsuits involving libel or slander, claims arising from false advertising and claims arising from the physical eviction of a person while on your premises and/or claims of false arrest.

Millions of civil cases are filed every year, which result in juries awarding hundreds of millions of dollars due to product liability and personal injury lawsuits. As a result, liability limits of $1 million to $5 million have become the standard. Often, landlords and leasing companies will require a minimum of $1 million, but you should weigh and evaluate the cost to increase beyond that because the limits you choose can spell the difference between solvency and bankruptcy later on.

Also remember the importance of the lease agreement. It is a legal document and needs to be read in its entirety. Before signing a lease, review what party is responsible for what certain items and conditions. For example, some salon owners are responsible for glass and all improvements while others are not—this is an important factor to consider when deciding on limits. Your insurance agent may be able to help with appropriate limits, but they are not an attorney and therefore cannot give you legal advice. As a salon owner, it is up to you (and a lawyer if necessary) to review your lease and adequately insure your salon. Keep in mind that landlords and leasing companies often ask to be added to insurance policies as an additional insured. It protects their interest and gives them a position on your policy.

If you are a tenant in a building, make sure to include a coverage called Fire Damage Legal Liability. This coverage relates to a liability exposure in which the salon owner is responsible for damages to the building due to his negligence. This does not cover damages to the salon’s equipment.

Property Coverage

This is a broad term and can include the building, business personal property (contents) and many forms of business income coverage. Many salons are tenants—not building owners—however, if you do own the building, make sure to adequately insure it. Buildings should be insured for replacement cost to avoid a potential coinsurance penalty. Buildings should be well-maintained and kept clean of debris. All buildings, particularly the older ones, should have a scheduled maintenance plan that includes an annual visit from a roofing contractor and regular troubleshooting for electric and plumbing issues.

Business personal property (contents) can include beds, lotions, products, improvements and betterments, etc. As mentioned in the liability section, you need to be aware of what your lease makes you responsible for. Oftentimes, a tenant is responsible for glass, roof and even air conditioning units.