Although it’s fairly easy to work out how much your salon rent, equipment and stock is going to cost, it’s not so easy to work out how much your public liability insurance policy is going to cost because it depends on so many different factors. This is as true whether you’re just setting out in business, as it is if you’ve already been trading for a number of years.
There are a number of factors that affect how much public liability insurance costs and basically, they all boil down to the chance of your public liability insurer having to pay a claim, and the likely value of any such claim. The main factors that affect the cost of a public liability insurance policy are:
- Your experience/track record
- What you’re doing
- How much you’re doing
- What cover you require
Your experience/track record
In much the same way that if you want to insure your car, your insurance company will want to know whether you have a full driving licence or a are only a provisional driving licence holder and will want to know how long you have been driving, a freelance hair & beauty public liability insurer will want to know how much experience you have and how well qualified you are.
They ask this because although it’s no guarantee, someone with many years of experience is less likely to do something that will lead to a claim, even if that experience was gained working for someone else. Similarly, if you have taken formal training, you’re less likely to do something that will result in them having to pay a claim.
If you have been trading on your own for some time, your previous claims history will make a major difference to the cost of your public liability insurance. Although taking safety measures can seem expensive in the short term, in the long term the investment can more than pay for itself if it reduces the number of claims you need to make.
What you’re doing
Certain hair and beauty services are safer than others. If you are just cutting hair as a hairdresser, it is less likely that you’ll cause a problem than there is if you’re performing quasi-medical procedures. Similarly, if you’re dealing with the average man in the street rather than specialising in delivering hair and beauty services to rock stars and supermodels, even if a claim is made against you, it’s likely to be smaller.
That’s not to say that you shouldn’t do the top-end work. It’s just important to remember that when you’re thinking about your public liability insurance costs; if you’re doing the top-end work, the additional cost will need to be factored into your pricing.
How much you’re doing
No matter whether you’re doing high-risk procedures on celebrities or low-risk procedures on members of the public, the number of people you’re dealing with will affect the risk of a mistake occurring.
Public liability insurance is often based on your annual turnover. If you are dealing with 10% more clients, you will be paying 10% more to reflect the additional risk of a claim occurring.
What cover you require
Standard public liability insurance policies do not include treatment risk cover, so a hair and beauty public liability insurance policy which includes this cover will cost more. However, treatment risk cover is an essential extension because without it, many claims would not be covered. It is worth paying the extra to make sure that you don’t have any gaps in your cover.
It is also important to think about what indemnity limit you require. Most public liability policies have a £1,000,000 indemnity limit which sounds like a serious amount of money, but public liability claims can be expensive to settle. It costs a small amount more to increase the indemnity limit to £2,000,000 or even £5,000,000, but in the event of a serious incident that small amount of additional premium can prove to be a worthwhile investment.