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What Types of Insurance Does a Hair Salon Need?

What Types of Insurance Does a Hair Salon Need?

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What Types of Insurance Does a Hair Salon Need?

Hair Salon Business Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Coverwallet and Hiscox offer easy business insurance quotes at affordable prices.

What Types of Insurance Does a Hair Salon Need?

Hair salons offer a variety of services, from cuts and colors to hair extensions and blowouts. Some salons may also offer specialized services like waxing and eyelash extensions. As a result, many customers will be regular clients, bringing the business consistent and predictable income.

The risk of liabilities or lawsuits can be detrimental to a small business’s financial security, so protecting your business from hazards with insurance is an essential aspect of any business plan.

Related: How to start a hair salon

What Are Some Risks for a Hair Salon?

The risks for a hair salon include incidents such as:

  • Incorrect service
  • Customer injuries
  • Fire damage
  • Employee injury or illness
  • Income loss from closure or temporary relocation

Although the above list is brief, it illustrates the significance of having insurance. Certainly, risks can be mitigated through safety measures and training. Still, in an accident or claim, insurance provides the financial support needed to prevent the business from financial hardship.

Incorrect Service

Customers rely on the professional services offered by the hair salon to accomplish what the customer cannot do at home. Often, the services provided at a salon require extensive training hours and practice. A client may sue the salon if a hairstylist colors a client’s hair incorrectly, causing discoloration, hair breakage, or damage.

Allergic reactions, incorrect colors or weaves, and faulty hair straightening treatments are also liabilities for the hair salon. In more severe cases, misusing hair products and chemicals can result in hair loss, scalp burns, infections, and skin irritations.

Chemicals used in hair treatments can cause severe eye injury and are harsh on the respiratory system. In addition, hot equipment, such as blow dryers, straighteners, and curlers, can cause permanent scarring from burns.

Customer Injury

Clients are at risk of injuries onsite from slips, trips, and falls—particularly on wet floors. Areas prone to wet, slippery floors are hair-washing stations and bathrooms. Additionally, injuries can happen from falling shelves or inventory; therefore, salons selling merchandise should ensure that shelves and inventory are adequately secured. Other customer injuries result from sharp equipment, like clippers or shears, and hot tools.

Fire Damage

Fire is a major risk to the salon’s structure and belongings. Old wiring, malfunctioning equipment, and smoking are common causes of fire. Since the salon uses flammable products, such as alcohol-based hair sprays, the risk of a quickly spreading fire is an additional hazard. Other items in a salon that aid in a fast-spreading fire include accumulated hair clippings, magazines and papers, towels, furniture, and trash.

Heat-producing equipment—particularly hair straighteners and curlers—are a fire hazard if left on continuously. In addition, hot irons that have prolonged contact with flammable objects can easily be a source of fires.

Employee Injury or Illness

Similar to customers, hair salon employees are at risk of injuries from slips, trips, and falls. Other common injuries include carpal tunnel, cuts, and burns. Further, exposure to hair chemicals and products can lead to costly employee illness, including skin irritations and respiratory issues.

Muscle aches and joint issues are also a concern for hairstylists who regularly hold their arms and wrists in uncomfortable positions for an extended time. Additionally, many hairstylists are on their feet for most of their shift and could suffer pain in their back, hips, knees, ankles, and feet.

Temporary Closure or Relocation

Most salons service clients at their business location, although some salons may offer house or special event visits (i.e., hairstyling at a wedding venue). Since the salon provides most services at its location, an extended closure means the business loses a significant amount of income.

For instance, a fire requiring a closure while repairs are made means the salon needs to remain closed until repairs are complete or find a temporary location. Unfortunately, moving locations is not feasible for all the salon’s clients, implicating a loss of income during an extended closure.

What Types of Insurance Should a Hair Salon Consider?

Hair salons have various risk exposures that present a financial concern. However, with adequate insurance coverage, the salon is protected from financial harm if an incident should occur. Therefore, hair salons should consider the following insurance policies:

  • Professional liability insurance
  • General liability insurance  
  • Commercial property insurance
  • Workers’ compensation insurance 
  • Business Interruption insurance 

Professional Liability Insurance

Insurance for professional liability covers claims of negligence due to failed or mistaken services. When a hairstylist makes a mistake or harms the clients due to inexperience, carelessness, or accident, the client might sue the business. A professional liability policy insures the business for such claims and covers expenses, including:

  • Damages
  • Legal fees
  • Settlements

A professional liability policy differs from general liability coverage in that it covers liability resulting from providing professional services. For example, the professional liability policy will insure hair loss claims following a chemical treatment or claims of incorrect hair coloring. However, a professional liability policy does not cover client injury for incidents like slips and falls—a general liability policy covers those types of claims.

General Liability Insurance

General liability for premises and operations offers personal injury coverage for the hair salon if a customer is injured onsite or due to the actions of the business. A customer who slips and injures themselves on a wet floor is an example of a possible general liability claim. This policy covers expenses for bodily injury, property damage, medical expenses, and settlements for covered claims.

Since there is an overlap between a professional liability policy and a general liability policy, the same insurance company should cover the two policies with the same coverage limits. Doing so will minimize confusion and disagreements over which company is responsible for paying the claim.

Commercial Property Insurance

Property insurance covers business-owned structures and items (equipment, furniture, inventory, computers, and supplies). A property insurance policy covers perils including:

  • Fire
  • Wind
  • Hail
  • Vandalism
  • Theft
  • Water damage from leaking pipes

A property insurance policy will cover the cost of repairing or rebuilding a structure following a loss. Likewise, all salon equipment and business-owned items are covered. Commonly, a property insurance policy covers the items at their actual cash value (ACV) or their replacement cost value. Policies with ACV coverage reimburse the hair salon for lost items at the item’s value minus depreciation. Conversely, replacement cost policies reimburse lost items at the total replacement cost.

Workers’ Compensation Insurance 

Workers’ compensation insures the expenses that follow an employee injury claim. This policy helps alleviate costs like medical bills and lost income when an employee is hurt or becomes ill due to an incident while working. In addition to the employee receiving financial help following an injury, the workers’ compensation policy protects the hair salon owner from potential lawsuits.

In addition to medical bills and lost income, a workers’ compensation policy also covers rehabilitation care and disability income. In the unfortunate event that it is needed, a workers’ compensation policy also pays for funeral expenses. Overall, hair salons with employees benefit from a workers’ compensation policy because it helps protect the business from costly employee injuries.

Business Interruption Insurance 

Following a significant loss, like a fire, the business may be required to close for repairs. When a loss shuts down the hair salon, the salon is subject to a significant loss of income—primarily if an extended closure occurs during peak season.

However, the hair salon has coverage for expenses during an extended closure with business interruption coverage. For example, a business interruption policy covers the following:

  • Loss of business income
  • Employee wages
  • Temporary relocation costs
  • Payment on regular loans and bills

Typically, insurance companies do not write a business interruption policy as a solo policy, but rather it is added to a business owner’s policy.


Hiscox.com

How Much Does Business Insurance Cost for a Hair Salon?

The cost of insurance depends on the hair salon’s unique needs. Many policies can be bundled, saving time, hassle, and money. Customizing an insurance package means that the coverage is tailored to the business’s specific needs. For example, if the hair salon rents space, it likely does not need coverage for its structure. Therefore, the insurance company can write the property insurance policy to exclude structure coverage while still including coverage for business-owned equipment and supplies.

Several factors that influence the cost of insurance will include:

  • The size and condition of business-owned structures
  • The value and condition of the equipment
  • The number of employees on the payroll
  • The certifications and licenses of the hairstylists
  • Fire suppression systems or security measures
  • Any past or current liability claims or lawsuits

Insurance companies differ in what risks they are willing to insure, the coverage amounts, and insurance rates (i.e., pricing). Therefore, calling multiple insurance companies for a quote is helpful to compare coverage amounts and costs.

Do booth renters need to be insured?

As a salon owner, you may want to require anyone who rents a booth or chair from you to have salon booth renters coverage (also referred to as hair stylists insurance). That insurance will protect the booth renters against claims for their professional mistakes, bodily injuries, and property damage so that you do not have exposure for their missteps.

What Types of Insurance Does a Hair Salon Need?

What Types of Insurance Does a Hair Salon Need?

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