Salons are a popular and fulfilling business to run, but it’s important to be prepared for the unexpected hazards that could have an impact on your business, from lawsuits brought by dissatisfied clients to accidental bodily injury or property damage. Securing comprehensive business insurance coverage can help protect you from these common risks.

What insurance coverage do I need for my salon?

There are many types of insurance coverage to consider, but these policies are particularly relevant to salons:

General Liability Insurance

General liability insurance is a common coverage that most businesses purchase. This insurance type covers incidents of accidental third-party property damage, bodily injury, personal injury, and advertising injury.

Accidents happen all the time, and salons are at higher risk for general liability, as your doors are open to the public and customers are constantly visiting your establishment. If you inadvertently damage a client’s property or they suffer an accidental injury on your premises, you could be held liable for damages. General liability insurance can cover you for any medical costs, legal fees, or damages in the event of a third-party injury or lawsuit.

Examples:

• Bodily injury: Your client is walking over to your hair washing station when she slips on some wet flooring. She fractures her wrist and requires medical treatment. General liability insurance would cover medical costs as well as legal fees if the client sues.
• Property damage: While performing a manicure, one of your nail technicians accidentally spills nail polish on a client’s expensive purse, staining it. Your insurer would cover the damages.

Product Liability Insurance

Product liability insurance protects your company against claims of bodily injury or property damage caused by products you sell. Many salons recommend and sell hair care products, lotions, creams, face masks, and other items for clients to use at home; product liability insurance can be an important coverage in these situations. If your products end up causing injury to a customer, you may be sued. Product liability insurance will provide funds to cover your legal fees and any resulting settlements.

Product liability insurance is typically covered under the products and completed operations section of a standard commercial general liability policy. Standalone product liability insurance policies are also available for more high-risk businesses.

Example:

• Your salon sells its own line of hair care products. You suggest that a client purchase a temporary hair color spray to use for an event she’s planning to attend. When she uses the product, she suffers a severe allergic reaction. If the client sues, your product liability insurance would cover your legal fees and pay any settlement that results.

Commercial Property Insurance

If you own or lease commercial property for your salon, it’s essential that you have coverage for the value of your building, tools, equipment, and other business property. Salon equipment can be expensive, and any losses or damage to your business property can strain your financial resources. Commercial property insurance can provide funds to replace or repair your business property if it is destroyed or damaged by a covered peril such as fire, explosion, storm, vandalism, and more. 

Example:

• During a severe storm, a tree falls against the wall of your salon, shattering windows and damaging the wall. Your commercial property insurance would pay for repairs. 

Professional Liability Insurance

When you provide salon services, there’s a risk that clients could sue you if they’re unhappy with the results. Although you’re likely highly trained and careful in your work, it’s still possible that you could accidentally hurt a client or give them a service that doesn’t meet their expectations. Professional liability insurance can provide financial protection if you are sued as a result of alleged failures, negligence, or errors in your professional services.

Example:

• After you apply a client’s acrylic nails, she develops a severe allergic reaction. You are sued for negligence. Your professional liability insurance would cover the lawsuit and any resulting settlement.

Business Interruption Insurance

Since salons rely heavily on their commercial spaces, business interruption insurance is a key consideration. Also called business income insurance, this coverage will reimburse your business for lost income and operating expenses if you are forced to temporarily close due to property damage from a covered peril. Commonly covered perils include fire, lightning, windstorm, hail, explosion, and vandalism. Business interruption insurance can be added to your commercial property or business owner’s policy.

Example:

• After a fire breaks out in your salon, you must close your business for two months while repairs are made. Business interruption insurance will cover rent payments, employee salaries, and lost profits while you are unable to operate your business. 

Workers’ Compensation Insurance

Workers’ compensation insurance provides financial and medical benefits for employees who suffer occupational injuries or diseases. Common salon workplace injuries included slips and falls, injuries from scissors or other sharp objects, and exposure to chemicals. Repetitive strain injuries are also common. 

Workers’ comp will pay for medical expenses, lost income, and rehabilitation for injured workers, and will provide death benefits and funds to cover funeral costs in the case of a work-related death. Workers’ comp coverage is legally required for companies with employees in most states, and penalties can be severe if you do not have adequate coverage, so it’s important to make sure that you are complying with state laws. 

Example:

• One of your hair stylists severely burns her hand on a hot curling iron. Your workers’ compensation insurance would pay for her medical expenses and a portion of her lost income if she is unable to work for a time.

Commercial Crime Insurance

Commercial crime insurance provides protection from financial losses related to crimes such as theft, burglary, robbery, forgery, and fraud. While most commercial property insurance policies do not cover losses from crimes committed by employees and offer limited coverage for losses from crimes committed by other third parties, commercial crime insurance can provide the protection your business needs from crime-related losses. Many salons accept payment in cash, are frequented by many clients, and may have high employee turnover, which means they may have higher exposure to crime.

Example:

• One of your stylists quits abruptly. You discover that he had stolen $1,000 from your cash register before leaving. Your commercial crime insurance would cover the loss. 

Additional Coverages

• Bailee’s customer insurance covers the property of clients while it is in your care, custody, or control. Your salon may need this coverage if you take clients’ coats, purses, or other personal items while they are receiving services. 
• A business owner’s policy (BOP) could be a good choice for many salons. Designed for small and midsize businesses, a BOP combines general liability, property, business income, and extra expense coverage into a single package. BOPs are typically more cost-effective for small businesses than buying each insurance policy separately and can help you ensure that you have a wide range of coverage. 
• Employment practices liability insurance (EPLI) protects your business against lawsuits by prospective, current, or former employees accusing your business of wrongful treatment such as discrimination, harassment, or other employment-related issues.

Pricing and Quotes

Pricing for salon insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a salon with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for salons:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Business Insurance and Coronavirus

COVID-19 has had a significant effect on salons and the personal care industry. Offering beauty services requires working closely with clients, and many salons have been forced to close due to state orders or a lack of customers during the pandemic. Salon owners may be uncertain about how their business insurance will handle this situation.

In the majority of cases, business interruption insurance policies you have in effect will not cover losses caused by coronavirus. These policies typically only cover losses caused by a direct physical loss or damage, like a fire or theft. Some business interruption policies will include coverage for losses caused by “communicable or infectious diseases,” but this is rare.

How workers’ compensation insurance handles coronavirus cases varies widely depending on the state. If you have employees who catch coronavirus as a result of their work, they may be eligible for workers’ compensation payments in some states.

If your business continues operating and a client or other third party sues you claiming that they contracted coronavirus after visiting your business, some commercial general liability policies will provide coverage, depending on your individual policy and the laws of your state.

You cannot purchase a new policy to cover coronavirus-related losses because insurance policies will not cover losses that have already been discovered.  

Consult our FAQ on coronavirus and business insurance for more information.

Final Word

When you own a salon, it’s crucial to consider the liabilities you will be exposed to.  Business insurance can help your company cope with unexpected disasters, whether it’s a lawsuit brought by an unhappy client, an unexpected disaster that damages your salon, or a client injury that happens on your property. The financial support business insurance provides will enable your business to continue operating even after a costly disaster or lawsuit.