If your salon has ever had to file an insurance claim when a client slips and falls, or when a pedicure causes an infection, then you know how important it is to have the right insurance coverage. But for small businesses like salons, it often seems as though the less you have to think about insurance, the better. That’s why many salons purchase their insurance coverage as a business owner’s package (BOP), at least when they are getting started. After all, it is supposed to provide all the coverage a small business needs in one convenient package.

But salons are different. The business of beauty carries risks that few other industries have to face. BOPs do not necessarily provide the coverage and level of service salons need, especially as they add new amenities and services. Instead, they may need a commercial package policy customized for salons.

What is a BOP?A BOP bundles property and liability coverage in one policy and was designed around the needs of so-called Main Street or mom & pop businesses—that is, small businesses with low risk. The package typically includes:

• Property insurance for the business’s physical property.

• General liability insurance, which protects against lawsuits that claim your business is responsible for property damage or bodily injury to others.

• Business interruption coverage, in case of a serious disruption in operations.

These packages are generally inexpensive, but the level of coverage may be less than your salon needs.

What is a custom package policy? This is not one stand-alone insurance policy like a BOP. Rather, your agent or broker will work with you to select the right mix of coverage that meets your needs. Every business needs the coverage included in the BOP, but some need additional coverage or higher limits for their coverage. That’s where this approach comes in.

Some insurers specialize in salons and spas, and they can offer salons insurance policies geared towards their needs. That includes customizing these policies to cater to the needs of an individual salon. You may even be able to get workers’ compensation insurance through the same insurer.

Custom vs. BOP: Key Differences Though they include some of the same coverages, custom policies and BOPs differ in three critical areas:

1. Professional liability coverage. This is not included in a BOP, but is critical for stylists, nail techs and any beauty professional. It provides coverage for all claims of alleged negligent acts, errors or omissions in the performance of your professional services. Though you may be able to get it as an endorsement (add-on) to a BOP, it will be at an additional cost and is not standard. For many insurers who cater to salons, this coverage is mandatory because it is considered critical for the industry.

2. Limits. Every insurance policy has built-in limits, the total amount the insurer will pay the insured (your salon) in the event of claims. Many BOPs include defense costs in the general limits of the policy, covering your lawyer's fees, court costs, witness fees, police report costs, fines, judgments and more. For example, if you get sued for $200,000 in medical costs associated with an injury at your salon, plus an additional $100,000 in legal fees, but your limit is only $250,000, then you will be responsible for paying the difference. Plus, you can easily max out your “aggregate” limit, which is the total paid out for all coverages during the policy year, leaving you exposed for claims later that year.With custom packages, you can get separate limits for separate policies. This also helps if you are shopping around for insurance and your loss record is not stellar. Though an insurer may not be able to offer you property liability, they may still be able to offer your general and professional liability.

3. Claims handling. All insurance companies have improved the speed and customer service of their claims handling. However, working with a company that specializes in the beauty industry ensures the claims department is knowledgeable enough to pay out your claim accurately and in a timely fashion. At a company that specializes in salons, you will likely find the claims adjusters speak your language.

It comes down to specialization. A BOP may serve the needs of a salon until they experience an incident that turns into a big insurance claim. And you want to have the right coverage before—not after—that happens. If you’re not sure what is included in your insurance policy, schedule some time to speak with your insurance agent or broker.

Kathy Lopez is Account Manager for SASSI, the Salon and Spa Specialty Agency. A division of W.H. Brownyard Corp., SASSI has served salons with specialized liability coverage for more than 85 years. You can reach Kathy at klopez@brownyard.com or 631-666-5050.