There are a number of different types of insurance that hair and beauty professionals need to protect their businesses against unexpected losses.
Most hair and beauty professionals know that they need property insurance, for instance. This protects your business property such as your buildings, contents, equipment and stock against losses due to accidental damage or theft.
Many will also be aware that they need public liability insurance, but although they know that they need it, public liability insurance is less widely understood.
What does public liability insurance cover?
All businesses need public liability insurance because all businesses come into contact with members of the public, whether those members of the public are customers, suppliers, or even just people who are walking past the business premises.
Public liability insurance covers compensation claims made against you by a member of the public who alleges that you have injured them or damaged their property either by doing something or failing to do something.
This type of insurance is vital because some compensation claims can be extremely expensive. Relatively standard injuries can result in compensation claims that cost in the region of £20,000. Compensation claims involving serious injuries can cost in excess of £250,000 to settle.
As well as the compensation payable, your public liability insurer will also handle the compensation claim on your behalf. This is important because compensation claims can involve complex legal arguments, so having an expert team fighting your corner increases the chance of a favourable outcome if a compensation claim is made against you. Your public liability insurance will cover any legal fees incurred.
However, public liability insurance for hair and beauty professionals contains some important differences because it contains a few important extensions:
- Products liability insurance
- Treatment risk cover
- Financial loss cover
Products liability insurance
Products liability insurance is similar to public liability insurance, but rather than covering compensation claims arising from things that you have done or failed to do, it covers compensation claims arising from any defects in products that you have sold or supplied.
It doesn’t matter whether you have manufactured the products yourself or bought them from a wholesaler. And it doesn’t matter whether you have charged for the products or given them away as gifts.
If the product is defective and someone is injured as a result, you could be found legally liable and have to pay compensation. Products liability insurance covers you against such compensation claims.
Treatment risk cover
A lot of hair and beauty professionals assume – incorrectly – that a standard public liability insurance policy will cover their activities and that they don’t need to buy a public insurance policy that was specifically designed for the hair and beauty profession.
The problem with a standard public liability insurance policy is that it will usually exclude compensation claims that arise from professional activities. This means that, although you would be covered if you spilled coffee on someone, any compensation claims arising from the provision of hair and beauty services would not be covered.
Clearly, this would mean that many potential claims would be uninsured. The treatment risk cover extension addresses this issue.
Financial loss cover
A public liability policy will cover compensation claims that involve injuries or property damage, but will not cover compensation claims that are for purely economic losses.
As an example, if you used the wrong hair dye on a model, that model wouldn’t be injured, but might not be able to work until the mistake was rectified and so they would lose income. A photographer or film studio that was planning to use the model might also lose income, or incur additional studio or equipment hire costs.
The financial loss cover extension extends the public liability insurance so that, as well as covering compensation claims involving injuries and property damage, it also covers compensation claims for purely economic losses.