Get a quote on Business Insurance
When you operate a spa, it’s important to be aware of the various hazards that could affect your business, from unexpected disasters such as fires to accidental injuries or lawsuits brought by dissatisfied customers. When you secure the right range of business insurance, you can feel confident that your business will be financially protected in the event of a costly lawsuit or accident.
What insurance coverage do I need for my spa?
There are many types of insurance coverage to consider, but these policies are particularly relevant to spas:
General Liability Insurance
General liability insurance covers incidents of third-party property damage, bodily injury, personal injury, and advertising injury. This is a crucial coverage for spas since they are constantly visited by members of the public. Customers may be at higher risk for injury since spas often feature showers, whirlpools, and saunas, making it likelier for customers to slip on wet flooring. Customers are also often walking the premises barefoot or in slippers, making slip-and-fall accidents all the more common.
If a customer suffers an accident while on your premises, your business 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: A water fountain in your spa’s lobby malfunctions and sprays water onto the floor. Before you can clean it up, a client slips in the resulting puddle and falls, breaking her arm. General liability insurance would cover medical costs as well as legal fees if the client sues.
- Property damage: One of your employees knocks over a wax warmer and the wax spills onto a client’s expensive handbag. General liability insurance would cover the damages.
Product Liability Insurance
Many spas may offer retail products for sale, from skin care and haircare items to candles, apparel, and accessories. If the products you sell end up injuring customers or damaging their property, you could be sued. Product liability insurance can step in to protect your company against claims of bodily injury or property damage caused by products or goods you sell, providing funds to cover lawsuits 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:
- A client buys a bottle of your spa’s proprietary skin care cream and suffers a severe allergic reaction after using it. If the client sues, your product liability insurance would cover your legal fees and pay any settlement that results.
Commercial Property Insurance
Commercial property insurance is a key coverage that will protect the value of your spa’s building, supplies, and equipment. Spas may use high-value equipment and tools, and any losses or damage to your business property can have a negative impact on your finances. In addition, some spas offer food and operate kitchens, which leads to an increased risk of fires. 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 storm, a power line falls onto your spa and sets the roof on fire. Commercial property insurance would cover the costs of repair.
Business Interruption Insurance
Since spas cannot easily operate away from commercial spaces, any disaster that damages the property could also severely impact your business income. If you are forced to temporarily close due to property damage from a covered peril, business interruption insurance (also called business income insurance) can provide funds for lost income and ongoing operating expenses. Commonly covered perils include fire, lightning, windstorm, hail, explosion, and vandalism.
Example:
- After faulting wiring in the HVAC system causes a fire to break out on your property, you must close your spa for seven weeks while repairs are made. Business interruption insurance will cover rent payments, employee salaries, and lost profits while you are unable to operate your business.
Commercial Crime Insurance
Commercial crime insurance provides protection from financial losses related to crimes such as theft, burglary, robbery, forgery, and fraud. This coverage applies both to outside parties and your own employees. Because spas may maintain costly inventory, handle large financial transactions, and accept cash payments and tips, they may be more vulnerable to theft and fraud. For spas that offer accommodations or locker rooms, there is also a risk that guest property may be stolen.
It’s important to understand that 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.
Example:
- One of your employees steals $5,000 in cash from your spa’s safe. Commercial crime insurance would cover the loss.
Professional Liability Insurance
Spas offer a variety of services, many of which have the potential to harm clients. Although you and your employees are likely highly trained and meticulous in your work, it’s still possible to make a mistake or give clients a service that doesn’t meet their expectations. If clients are dissatisfied with the results of your service, or if they receive an injury as a result of your work, you could be sued. 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:
- A client tries a custom skin treatment that your spa offers, but she notices that her skin is extremely sensitive and has discoloration after the treatment. She sues, alleging that you made a mistake while applying the treatment. Your professional liability insurance would cover the lawsuit and any resulting settlement.
Workers’ Compensation Insurance
Workers’ compensation insurance provides financial and medical benefits for employees who suffer occupational injuries or diseases. When working at a spa, there is a risk that employees will sustain common injuries from slips and falls, lifting heavy objects, exposure to chemicals, or repetitive strain. If an employee is injured or falls ill on the job, workers’ comp will pay for medical expenses, lost income, and rehabilitation. It will also 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 massage therapists injures his back when lifting a massage table. Your workers’ compensation insurance would pay for his medical expenses and a portion of his lost income if he is unable to work for a time.
Additional Coverages
- A business owner’s policy (BOP) could be a good choice for many spas. 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 less expensive for small businesses than buying each insurance policy separately.
- 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.
- Bailee’s customer insurance covers the property of clients while it is in your care, custody, or control. Your spa may need this coverage if you hold clients’ personal items while they are receiving services.
Pricing and Quotes
Pricing for spa 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 day spa 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 spas:
| Provider | General Liability | Professional Liability | Business Owner's Policy |
|---|---|---|---|
| Embroker | ?? | ?? | ?? |
| CoverageSmith | ?? | ?? | ?? |
| CoverWallet | ?? | ?? | ?? |
| Hiscox | ?? | ?? | ?? |
| Thimble | ?? | ?? | ?? |
Business Insurance and Coronavirus
COVID-19 has had a major impact on businesses offering personal care services, including spas. Many of those working in this industry may be unsure 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 operate a spa, unpredictable incidents could arise, whether it’s a fire or storm that damages your property, an accidental customer injury, or a lawsuit brought by someone disappointed with your professional services. It can be difficult and financially taxing to keep your business running in the face of an unexpected disaster. Ensuring that you have a wide range of business insurance can give you peace of mind, knowing that if a catastrophe occurs, your company will be financially protected.
