If you want to find out what your insurance covers you against, you could read your salon insurance policy or read a summary of the cover. However, it can be useful to know how your insurance will operate in real-life situations.
Most people understand property insurance because they have household insurance, and salon insurance is no different when it comes to insurance for your business property. It covers accidental damage to your property, or loss of your property due to theft.
However, there are two main areas that many people don’t fully understand. First, any theft needs to involve forcible or violent entry or exit. And second, there is usually an average clause.
The “forcible or violent entry or exit” thing means that thefts are only covered if someone breaks into or out of your premises. If your salon is burgled, the loss is covered. If someone walks in off the street during your opening hours and steals some of your stock or equipment, that wouldn’t be covered.
The average clause deals with underinsurance. If your business property is worth £100,000 but you only insure for £50,000, any claim you make will be reduced accordingly. What this means is that if you’d insured for £50,000 and had to make a claim for £40,000, you wouldn’t get paid the £40,000 even though the amount you’d insured for was higher. You’d get paid £20,000, because the £40,000 would be adjusted by multiplying it by the amount you’d insured for (£50,000) and dividing it by the total value (£100,000).
Liability insurance is less well understood because it deals with legal liability which can involve complex legal issues.
Essentially, you become legally liable if you:
- Owe someone a duty of care
- Breach your duty of care
- Injure someone or damage their property due to breaching your duty of care
You owe a duty of care to anyone who comes into your salon. You could breach your duty of care by leaving a trailing electric cable across a walkway. If someone tripped over that cable and broke their wrist as a result, they could claim compensation from you. That compensation would include:
- The compensation awarded
- The claimant’s lost wages
- Associated costs and expenses
- Legal fees
You can also breach your duty of care by failing to do something. Failing to warn people that a floor that has just been mopped was slippery, for instance, would be breaching your duty of care and if someone slipped, you would be legally liable for their injury.
Compensation claims can be expensive to settle. A broken wrist would cost in the region of £20,000 to settle, and possibly even more if the claimant’s loss of wages was substantial. More serious injuries can cost in excess of £250,000.
Treatment risk cover
Standard public liability insurance doesn’t cover compensation claims which arise as a result of professional activities. For this reason, salon insurance should have a treatment risk cover extension to cover such claims.
This is important because, without such a cover extension, many compensation claims wouldn’t be covered. If someone suffered an allergic reaction to hair dye, for instance, that claim wouldn’t be covered by a standard public liability insurance policy, but would be covered by a salon insurance policy with a treatment risk cover extension.
Things you do or fail to do can result in compensation claims being made against you, but people can also claim compensation from you if they’ve been injured or their property has been damaged as a result of a defect in a product that you have sold or supplied.
Note that you don’t have to have manufactured the product in question. If you sell a beauty product that’s been manufactured by someone else and that product injures someone, you’re still legally liable for that injury.