We can all breathe a sigh of relief that 2020 is almost over with. This was a tough year for many in the spa business. Insurance has become a focus for all businesses since our changing world has given us more perils than ever before. It is crucial to understand what insurance can and cannot do for you.
Liability is third party coverage
A business will buy liability as protection against lawsuits. For those doing salon services of any type, professional liability is necessary. This provides protection from allegations of negligence or a lawsuit stating the service did not turn out as expected. All businesses and independent contractors also need general liability.
Communicable Disease Endorsement
This endorsement is critical in these uncertain times. If someone sues you for giving them an infection, this type of coverage could respond. Not many policies have this coverage. Virtually all policies have pandemic exclusions now, but it is valuable to have coverage for communicable disease for overall salon activities.
Sexual Abuse Coverage
This has become a hot topic since the #MeToo movement took center stage. This coverage is most needed in the beauty business, especially for massage or tattoo services. If a person has any allegation of sexual abuse, there is likely going to be a lawsuit against both the salon and the professional doing the work. Lawsuits alleging sexual abuse or misconduct are on the rise, as are the size of the verdicts being awarded by courts.
Cyber Insurance
If the business has any online services, telehealth clients or keeps records in the computer, there is an exposure to hacking and cybercrime. The need for cyber insurance has grown tremendously as businesses of all sizes are being hacked and client information stolen. If the business has a ransomware attack or other cybercrime, there is someone to call immediately who will help handle the situation if you have the endorsement on your policy.
All the above issues are third party claims where the business could get sued. With the events of 2020, there is a focus on business income loss and what is available from insurance as first party coverage.
Business personal property insurance protects against physical damage loss to your property from perils outlined or not excluded on the policy. Covered causes of loss generally include fire, smoke, theft, vandalism, wind in most states, and some water damage not related to flooding. Insurance policies do not provide coverage for flood, earthquake, and virus or mold to name a few key exclusions. If any exceptions are made to these exclusions, they often have small sub-limits.
Business income loss has been the hot topic in 2020. Business income coverage goes along with covered perils as noted above. If the business sustains loss from say a fire and must shut down, business income coverage will then apply if endorsed on the policy. Since insurance policies now all exclude viruses on business personal property coverage, there would be no coverage on business income loss either.
If we have learned one lesson in 2020, it is to pay attention to what insurance coverage is able to do for the salon and spa professional and where the business needs to be prepared to shelter the burden themselves. The world is only going to get more complicated as years go by.
–Susan Preston, President, Professional Program Insurance Brokerage
