It’s no secret that insurance can be one of a business owner’s biggest headaches. General liability, professional liability, workers’ compensation, deductibles, premiums, and occupational risks — it can all be overwhelming.

Don’t sell the shop — or nod off — just yet. With a little planning and a lot of advice, you can make informed decisions and rest easy, knowing you’ve taken the necessary steps to protect yourself and your business assets. At the same time, don’t make the mistake of thinking that just because you have the recommended coverages, you’re protected from every possible situation.

“The only thing you can do is make informed decisions and hope for the best,” recommends Alison Hightower, a partner at Nossaman, Guthner, Knox & Elliott LLP in San Francisco, Calif. Hightower represents policyholders in coverage disputes and helps companies avoid insurance coverage problems.

Whether you’re a salon owner or a booth renter, there are basic coverages that you should consider — if you haven’t already.

Before you start comparison shopping, have a general idea of what you might need. While the insurance agents you’ll encounter will likely be helpful, you’ll feel more comfortable knowing the lingo.

Mabel Cartwright, an account executive with Palomar Insurance Corporation in Montgomery, Ala., recommends that salon owners carry a package policy that includes commercial general liability, property coverages, and professional liability insurance.

Commercial general liability insurance, known as CGL, covers a business’s liability exposures that are not specifically excluded from the policy. Professional liability insurance covers errors or omissions that injure a client. Property insurance covers damage or property loss, or damages caused to other people or their property on the policyholder’s property.

Straightforward enough, right? Unfortunately, it’s not so cut and dry. Cartwright says many factors can affect policy types and their availability to salon owners.

“If a salon includes tanning booths or massage facilities, for instance, it is very important for the salon owner to discuss these additional exposures with an insurance agent so that proper coverages can be provided,” says Cartwright.

Regardless of the policy or carrier you choose, Hightower and Cartwright agree that property insurance is a must-have for salon owners and booth renters.

“Your coverage will depend on whether you rent or own the salon,” says Hightower, who recommends a minimum property coverage of one million dollars for salon owners. “Though, that doesn’t go very far.”

The property insurance limit should be equal to the replacement cost of the property on the salon’s premises. When estimating replacement costs, salon owners should consider equipment, retail inventory, and supplies and tools used to service clients.

Cartwright says that booth renters may or may not be included under the salon owner’s property policy, and circumstances vary greatly. She explains that it is the responsibility of the property owner to carry the appropriate insurance.

“If the salon owner provides equipment and supplies, she needs the coverage for this exposure,” says Cartwright. “The salon policy can be purchased to cover the personal property of the individual operators even if they are independent contractors. Salon owners and their operators should discuss the situation to determine how it should be handled.”

When discussing property insurance needs with agents, be prepared to explain your shop’s location and its proximity to neighboring properties. According to Hightower, if there’s a risk of damage to neighboring properties, general liability insurance could be triggered.

Professional Liability

In addition to property coverage, salon owners and booth renters are wise to have professional liability coverage. It is designed to cover the errors and omissions of operators servicing clients. While a salon owner’s package policy may cover booth renters’ professional liability for their work, booth renters should inquire — not just assume that they’re covered.

So, what might qualify as an error or omission?

“This may include claims for damage due to nail products used on a client. We would recommend minimum limits of $500,000 and would strongly recommend limits of $1,000,000,” says Cartwright.

While these limits serve as a starting point, salon owners and booth renters should consider a number of factors before jumping into a particular professional liability policy, or including it in a package policy. What is the volume of your business? What can you afford? Do you do artificial nails? What are your risks? What do the insurance agents you’ve consulted suggest?

Hightower explains that there’s a growing trend where insurers are successfully arguing that certain professional services gone awry do not qualify as accidents — and therefore, cannot be covered under general liability policies. For example, in a nail procedure requiring chemicals, a nail technician intends to apply those chemicals, which may not qualify the service as an accident should something go wrong in the process.

“This is where professional liability insurance helps,” says Hightower. “It helps to eliminate the coverage gap. If you have general and professional liability coverage, there is less risk for exposure.”

While insurance can be complicated, it doesn’t have to be. Cartwright assures that there are numerous package policies available at equitable prices. Shop around, ask informed questions, get multiple bids, and compare.

Tara Maras is a Las Vegas-based freelance writer and a partner at Monarch Creative, a marketing and design firm that helps small businesses apply creative solutions to achieve their marketing and business goals (

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