It happens without warning. Everything seemed just fine the night before. Then you awake to a challenge that despite all your best efforts to resolve cannot be fixed. But relax; you will survive if it is just bad hair. If it is inadequate insurance coverage for your salon, the recovery period may by quite a bit longer!

You have insurance coverage for your salon…but is it the correct coverage and does it cover you for all the services you provide? About 50% of salons today do not have the proper insurance coverage in place to protect their assets. This could have a devastating effect in the event of a loss that is not covered or not covered properly. The loss could come from natural disasters such as a fire or wind storm or come in the form of a lawsuit filed by an employee or client. By not having the proper coverage in place it could cost you the entire value of your business and maybe even your personal assets!

Unfortunately, just buying an insurance policy doesn’t mean that you have total protection if something bad happens. Insurance policies are contracts and the insurance company is only going to pay what they are legally liable to pay. Having the proper insurance coverage is up to you and your agent. So what can go wrong? Let’s look at your property. Many salon owners insure their buildings or business personal property in the amount of what their building cost 20 years ago. In reality the true replacement cost today might be 20, 30 even 50% higher. In the event of a loss you could end up paying thousands of dollars to rebuild…..even though you have insurance. It is not the existence of a policy that matters; it is the content that makes the difference.

Most insurance policies provide basic coverages but they also have “exclusions” in the policy where they list the things they won’t cover. To protect you and your salon, you must pay particular attention to this part of the policy. For example, do you perform services like massage, eyebrow and eyelash tinting or even the latest craze, microblading? Most insurance policies exclude these types of services. In the event of a loss, a client may file suit against you for bodily injury. It is very possible that the courts could hold you financially responsible for that loss and the cost could be thousands of dollars and in possibly, bankrupt your salon.

Our world is changing. The level of sensitivity with interpersonal relationships with and between your employees continues to increase. The legal community has been quick to find victims and litigate or settle these issues at escalating dollar amounts. Many salon owners are not properly covered if an employee sues for things like age, sex or race discrimination, sexual harassment, wrongful discharge, failure to promote, etc. Your standard insurance policy either totally excludes these from coverage or gives you a minimal amount of coverage. From 2009 to 2016 the average award for these types of claims is $397,000! Plus plaintiffs have roughly a 50-50 chance of winning an employment practice liability case. Even if you win the case, you still have defense costs which average $150,000!

In a recent case, a pregnant stylist filed a wrongful termination suit claiming she was fired because she was pregnant. The salon owner claimed she was fired for three years of poor production. To date, the attorney fees are over $50,000 and the reserve on the policy is over $300,000! Are you prepared to absorb that level of financial loss?

What about cyber liability? You’d have to have been on a deserted island over the past few years not to notice the recent cyber-attacks on US businesses. Target, Yahoo, AT&T, EBay and Google, just to name a few, has all been the victims of a cyber-attack. Smaller businesses are just as vulnerable and the effects of an attack can be just as devastating.

Cyber insurance can greatly reduce or eliminate this potential crisis for your salon. These policies protect you in the event you get sued for Network and Information Security plus they will pay expenses you incur for things like the cost of hiring a public relations firm to restore confidence from negative publicity generated from the incident. It will also pay for the cost of hiring a breach response firm to find and fix the breach, assist with notice requirements and expenses, and provide credit monitoring as required by law in most states. The policy will also pay for direct loss of your money, securities or other property and maybe most importantly pay for your funds that were fraudulently transferred from your bank account.

In conclusion, your clients come to you to improve their appearance, to increase their confidence, to prevent the “bad hair” day. They trust that your professional skills will allow them to accomplish those goals. Your security and personal comfort level deserves the same approach. Protecting your business and personal assets requires consultation with an insurance professional who understands the unique exposures of your business. Take a few minutes to evaluate your current insurance policies. Then wake up tomorrow with confidence knowing you’re adequately protected. Make it a good business day!

Tom Stauffer, Vice President for The Campbell Group in Caledonia, Michigan is the director of their Salon Insurance Program. They insure salons, spas and cosmetology schools all across the USA. Since 1996 they’ve saved salon owners thousands of insurance dollars annually through their program. For questions/concerns you can reach him at tstauffer@thecampbellgrp.com. 800-748-0351, ext 1469