Purchasing cosmetology 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.
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. Did you know you might even he held responsible for accidents that happen on the walkway leading up to your salon? Then, of course, there’s product liability that kicks in when a client has an allergic or otherwise adverse reaction. 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.
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 $2 million 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. 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. If you don’t want to worry about someone filing a claim after you take a leave of absence or even after you retire, you want to make sure your liability insurance is occurrence-form.
If you don’t have professional cosmetologist 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. We joined this industry to help people. If a client were to sustain injury from a service you provided, even if it was an allergic reaction due to no fault of your own, you are responsible to make that right.
You need to verify three things about your cosmetologist insurance policy: 1) that it covers professional, general, and products liability; 2) that it has an individual aggregate; and 3) that it is occurrence form coverage. (If you’re wondering, yes, the coverage included with AHP membership meets all those requirements.)