High and tight isn’t just a hairstyle. Margins in the salon business are narrow and leave little room for error. The right insurance package can protect your salon against difficult-to-predict losses that can put your business at risk.
The size of your salon and the services you offer determine the types of coverage you’ll need. Benzinga’s guide to salon insurance gives you the tools you need to choose the best salon insurance to protect your business.
Best Salon Insurance
Compare rates for salon insurance and customize your quote to include the coverages you’ll need. Benzinga makes it easy to tailor your coverage for your salon, whether you have a chain of salons and a growing team or a solo startup with big dreams.
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Types of Salon Insurance
Today’s salons come in all shapes and sizes. Services offered can vary as well, ranging from cut and color to facials and skincare to full spa services. The coverage you’ll need for your salon follows a similar pattern for all these service types, but the difference is in the details.
For example, if you have employees, you’ll need workers’ compensation insurance in most states. But booth rentals are becoming more common, and these salon workers are contractors instead of employees. Workers’ comp isn't’ required for contractors.
In many cases, you can add coverage types or options to a base policy, allowing you to customize your coverage to your salon’s risks and invest in protection where you need it most. Here are some common insurance types for salons and businesses that offer similar services, such as spa treatments and nail care or even tanning.
Commercial General Liability (CGL) Insurance
Even in the most safety-conscious salons, accidents can happen. Slip and fall accidents are 1 example, but salons also face a unique set or liability risks based on the services the salon provides. A curling iron mishap or a client’s allergic reaction to a hair dye or skin treatment can lead to a lawsuit. Your general liability insurance policy serves as a first line of defense against bodily injury claims and property damage claims in which you or a worker damages the property of another person.
If stylists rent a chair in your salon, they are contractors rather than employees and need their own liability insurance coverage. Some providers refer to this contractor coverage as chair insurance or booth rental insurance, but at its core, the policy is either a liability policy or a business owners’ policy tailored for stylists.
Commercial Property Insurance
Some salon owners own the building that houses the salon, but a more common structure is for salons to lease space in a plaza, mall, or standalone building. Your commercial property insurance policy can protect the building itself if owned by the salon, but this policy type can also protect your supplies, inventory, equipment, and any improvements you’ve made to the space.
It isn’t uncommon for salon owners to invest 5 or even 6 figures in renovations and upgrades, making this coverage essential in protecting against risks such as fire, theft, water spills and burst pipes, vandalism and more.
Business Owners’ Policy (BOP)
A business owners’ policy (BOP) is a policy that bundles more than 1 type of coverage. A BOP includes general liability insurance and commercial property insurance while also allowing customization. A BOP is typically less expensive than buying separate policies, and you can adjust coverage limits for many risks and add extra coverages to the base policy.
Professional Liability Insurance
Also known as errors and omissions coverage, professional liability insurance protects against claims related to work performance, such as claims of damage to hair due to a styling treatment or lawsuits due to customer dissatisfaction. Where a general liability policy focuses coverage on bodily injury and and damage to the property of others, professional liability insurance focuses on other types of losses related to performance. Ideally, you and your stylists should be protected by both types of policies.
Workers’ Compensation Insurance
Other liability insurance policies exclude coverage for worker injuries. Exclusions are used in insurance policies to prevent or minimize duplicate coverage and to keep costs affordable by limiting the scope of coverage for each policy.
In most states, salons with employees are required to carry workers’ comp coverage. This no-fault insurance policy fills the gap left by other liability policies by providing a fixed schedule of benefits for workplace injuries. Your workers’ compensation policy also prevents many work injury lawsuits, saving your business time and money.
Business Income Coverage
Triggered by a covered commercial property insurance claim, business income coverage can pay for standard business expenses if your salon needs to close down due to claim-related damage and repairs. In an industry where every penny counts, this coverage can be a lifesaver if your business is without revenue for more than a few days.
Commercial Auto Insurance
If you have a mobile salon or use a company vehicle for business-related tasks like shuttling customers or transporting goods, be sure to compare quotes on commercial auto insurance as well. Standard personal auto insurance won’t cover most business-related auto risks.
Additional Insurance Types
Along with your core coverages, some additional insurance types may be wise choices to consider for some salons.
- Equipment breakdown insurance: For salons that use expensive equipment, such as tanning beds or electronics subject to surges, equipment breakdown insurance can cover repair costs and lost income.
- Cyber liability insurance: Theft of customer and payment data is a growing risk for small businesses. Cyber liability insurance can cover losses related to breaches or computer virus transmission.
- Umbrella insurance: An umbrella policy increases the liability coverage limits of underlying policies, such as general liability policies and commercial auto insurance policies.
- Employment practices liability insurance: Employees are often your biggest asset, but employment-related liability can put your business at risk. The right employment practices liability policy can protect your salon against harassment claims, hiring practices or wrongful termination claims, and more.
Cost of Salon Insurance
The types of coverage you choose affects the cost of coverage, but often you’ll pay less overall when you buy more than 1 type of insurance from the same insurer as opposed to using multiple providers. If you already have quotes for 1 type of coverage, be sure to ask that insurer about the other coverage types you’ll need.
Insurers consider hundreds or even thousands of factors when setting a premium, which refers to the cost of your policy. Below are some key factors that can affect the cost of coverage.
- Length of time in business. Experience counts when insuring your business. Expect to pay a bit less if your salon is well-established.
- Claims history. Insurers consider prior claims when predicting the likelihood of future claims. If you’ve ever had your rates increased after an auto accident, this is the reason why.
- Business credit history. In both consumer and business insurance policies, many insurers use credit history to understand risk. Credit-based insurance scores can highlight potential risk that may affect rates in some states.
- Sales volume. General liability insurance rates are driven in part by top-line sales figures. By extension, a business owners’ policy also uses sales to determine premiums.
- Industry. Businesses in industries with a higher risk of claims or a higher average claim amount tend to pay more for coverage.
- Number of employees. Your payroll totals play a large role in workers’ comp coverage costs.
- Coverage limits. Higher coverage limits lead to higher premiums, but the relationship isn’t always linear because each policy usually covers several types of risks and the largest risk for the insurer is for smaller claims. Doubling your coverage limit typically won’t double your premium.
- Location. Where your business is located affects both risk and the cost of servicing claims. For some insurance types, a denser population correlates with higher rates.
Here are some examples of premium costs for salons.
|General liability insurance
|$1 million (per occurrence)
|$1 million (per occurrence)
|Business owners’ policy
|$1 million liability
How Salon Insurance Works
Full coverage for your salon often requires more than 1 type of policy. A BOP is a great start because it covers many liability risks, as well as common risks to your business property. Even with a BOP, you may also need other coverage types.
This guide provides a basic understanding of which types of insurance you may need to consider as a salon owner, but each business is different. Review your coverage needs with an agent who represents your insurer before finalizing your coverage.
Choose the Best Salon Insurance
With margins often below 10%, you’re cutting it close if you don’t have the right business insurance coverage for your salon. Compare quotes from multiple providers, but also compare policy features and coverage limits.
A claim without coverage can cost your business more than you save. It makes sense to invest some time in choosing the best salon insurance for your business’s unique needs.