Like all business insurance, hair and beauty insurance covers the wide range of risks that businesses in the hair and beauty profession face.
These risks include the risk of property owned by the – such as the business premises, as well as its contents such as fixtures and fittings, equipment and stock – being accidentally damaged or stolen. There is also a risk that the business owner could find themselves unable to work due to an injury or illness, losing income as a result.
In addition, there is a risk that a compensation claim could be made against the business, or the business could face legal fees in the event of it being involved in other forms of legal action.
However, hair and beauty insurance is slightly different in that, unlike standard business insurance, hair and beauty insurance has one important extension which adapts the liability insurance to fit the exact needs of the hair and beauty profession.
Liability insurance covers businesses against compensation claims made against them by people who feel that the business is responsible for them having suffered a loss.
Employer’s liability insurance – required by law if you employ anyone – covers compensation claims made by employees. Public liability is similar but covers compensation claims made by third parties. Public liability insurance usually includes products liability insurance, which covers you if a compensation claim arises due to a defect in a product that you have sold or supplied.
The problem is that the liability insurance cover in a standard business insurance policy usually excludes cover for compensation claims arising out of professional activities. What this means is that, although you would be covered if a compensation claim was made against you because you had accidentally tripped someone up or spilled hair dye on their clothes, you wouldn’t be covered if someone claimed compensation from you because they’d suffered facial scarring as a result of a beauty treatment or because they’d had an allergic reaction to hair dye that you had applied.
The liability insurance cover in a standard business insurance policy does not usually include cover for purely economic losses, either. Cover is generally restricted to compensation claims for injuries or property damage only.
Thankfully, the liability section in a hair and beauty insurance policy contains two cover extensions to protect you in the event of such claims. These are the treatment risk extension and the financial loss extension.
Treatment risk insurance
As mentioned, the public liability insurance cover in a standard business insurance policy could leave you uninsured in the event of a compensation claim being made against you in the event an injury arising from beauty or hairdressing services that you had provided.
A claim for facial scarring could cost over £50,000 and you might also be required to pay the private medical fees if cosmetic surgery was required so, clearly, this is a large gap in cover.
The treatment risk extension means that the liability insurance section of a hair and beauty insurance policy is extended to cover compensation claims arising from treatments.
Financial loss extension
Standard public liability insurance only covers compensation claims which result in an injury or property damage. Compensation claims for purely economic losses are not covered.
An example could be where a model’s haircut does not go according to plan. That model would not have been injured because the hair would simply grow back over time, but the model could lose income as a result of not being able to work and a photographer or film studio that was planning to use that model could also lose income as well as incurring additional equipment and studio hire costs.
The financial loss extension extends hair and beauty insurance so that the liability insurance section covers claims involving purely economic losses only.