Will your hair or beauty salon insurance pay what you need? – The risk of underinsurance

Dean Laming ACIIBy Dean Laming on October 26th, 2021

If you’re a hair or beauty salon owner, you understand the importance of insurance. So you make sure you take out an insurance policy. Then, if the worst happens and you lose everything in your salon, your insurance will pay out enough for you to replace everything, right? Well that is indeed how it should work, but if you set your sums insured (the amounts that your stock, contents and buildings are insured for) incorrectly, you might get paid less than you were expecting and you might even not be able to recover from a disaster.

Contents insurance

Imagine if a fire at broke out at your salon and everything was destroyed – your stock, equipment, machinery, accessories and also any improvements you made to the premises as a tenant, such as flooring, lighting and other fixtures and fittings. If you have a total of say £20K of contents, you might think that you would be able to replace them with second hand items or not replace some things straight away, so you might decide on £10K as a sum insured. However, if you do need to make a claim, the insurer would say that you have only insured 50% of the true value of the items you had in the premises. You would therefore have paid only 50% of the premium you should have paid.  Consequently, the insurer would then only pay 50% of your claim. So you would be expecting to be paid £10K but you would actually only get £5K to replace the £20K of items that you lost. So the small amount that you saved on the premium has now resulted in a shortfall of £15K. Unless you could pay this out of your own pocket, it could mean the end of your business.

In other words:

However, this is one of the many times when Salon Gold stands out from the rest. If you insure your salon with Salon Gold, you enjoy the very rare advantage of not being penalised in this way.

So for Salon Gold customers, the example above would look like this:

 

If you have underinsured your contents, we work with you to get you back on your feet as soon as possible.

Buildings insurance

If you own your building, the sum insured for this should be the amount it would cost to rebuild it, not the amount it would sell for. You should also include the cost of clearing the site if the building were to be destroyed and the cost of professional fees for architects and surveyors. The cost of demolition and removal of debris alone could be substantial and if you underinsure, you could find that the amount you get paid out by your policy leaves you with a half-built building.

Keep your cover up to date

Now that you know how to assess your sums insured to protect yourself properly, make sure that you review any changes throughout the year – have you added any new equipment or have you refurbished? Also, don’t forget to let your insurer know about any additional staff or treatments in your salon.

At Salon Gold, we remind you each year at renewal to check that your sums insured are still right for you and we send you a guide to help you to review them. However, it’s important to let us know straight away if anything changes. Our team of advisors is here to help you and with our specialist insurance for salon owners, hairdressers, beauty therapists, holistic therapists, nail technicians, barbers and students, Salon Gold has your back!

Dean Laming ACII

Dean Laming

Dean Laming is a Chartered Insurance Broker with more than 25 years insurance experience. Through various underwriting, operational and management roles, Dean has built up extensive insurance knowledge together with expertise on running a business. Dean is Managing Director of Salon Gold, part of the wider Henry Seymour Group.

All articles by Dean Laming

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