3 Things to Know When Purchasing Liability Insurance (For Hairdressers!)
This morning I woke up so excited! As I sat up in bed I stretched my arms high over my head, took a deep, cleansing breath and thought to myself, “Self, today is the day. Today is the perfect day for us to finally get in a car accident!”
What, you don’t plan your fender benders? (I hope not; planning things like that is highly illegal in all 50 states.) No, let’s not be crazy; no one plans to get into a car accident. But guess what: Car accidents still happen every day.
The worst part about a car accident is that people get hurt. They get injured and medical bills need to be paid. Cha-ching! And cars need to be fixed or replaced. Cha-ching again! And someone needs to be held responsible for these costs, so lawyers will most likely be involved. Cha-cha-cha-ching!
Who among us has that kind of extra money lying around in case a car accident happens? The thought of driving without car insurance is ludicrous.
And with that in mind, why in the world would a hair professional not carry professional liability insurance to protect their beloved family, their clients whom they adore, and the career that provides the livelihood that they have worked so hard to achieve?
If you don’t have professional liability insurance, you’re taking a risk that could cost you everything—even future earnings, tax returns, and your credit rating. It’s not just responsible business sense to have insurance; it’s part of being an ethical professional in a service industry.
Purchasing liability insurance can be intimidating, especially if you don’t know what to look for. This is not an investment that should be made based on cost alone. Not all insurance policies are created equal, so it’s important to understand what you’re getting. When you begin looking for liability insurance, there are three key things to keep in mind.
1. Your insurance policy should cover professional, general, and product liability. The number of things that can go wrong in the salon is daunting. Save yourself the stress and get peace of mind knowing that you have insurance to cover your professional, general, and product liability for any potential mishap. If anything should go wrong during a service that you are able to provide because you are a licensed hair professional (i.e., a client is cut or over-processed), professional liability insurance is for those claims. General liability insurance is for the slips, trips, and falls that can easily happen in a salon. Then, of course, there’s product liability that kicks in when a client has an allergic or otherwise adverse reaction.
2. Be wary of the cheapest liability policies. Chances are, they look like a great deal financially because they have a shared aggregate. A shared aggregate means that, although the policy says that you have a $2 million safety net for the year, it’s actually the same $2 million that has been promised to others on the same policy. If another professional on the shared aggregate policy has a $2million payout to an injured client, that leaves zero money left to protect you and the policy is rendered useless for the rest of the year. Make sure your liability insurance has an individual aggregate—you and you alone! Should a claim be brought against you, you will be certain the limits of your insurance policy are all available to protect you.
3. There are two kinds of liability insurance: claims-made insurance and occurrence-form insurance. Claims-made insurance means the insurance company will only have your back if you have a current insurance policy on the date that the claim is filed. Claims are rarely filed on the date the incident occurs, as it can take a prosecutor’s lawyer years to finally file an official lawsuit. However, if you had occurrence-form insurance but let the policy lapse because you stop working behind the chair and one of your former clients files a claim against you, the insurance company will look at the claim and go back to the date that the incident occurred. If you were insured on the date the incident occurred, your occurrence-form insurance policy, even though now it’s expired, will still go to bat for you.
We don’t have insurance because we wake up in the morning planning accidents. We have insurance because we don’t know what anyone else is or isn’t planning. It’s called an accident for a reason. Don’t accidently lose your career because you aren’t insured.