Essential Business Insurance Policies for Nail Salons with NAICS Code 812113

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This guide covers the top insurances nail salon businesses should consider including general liability, property, commercial auto, workers' comp, professional liability and more.

Key Takeaways

  • General liability insurance protects from lawsuits if a customer is injured
  • Property insurance covers costs if equipment or the building is damaged
  • Commercial auto insurance protects vehicles used for business
  • Workers’ comp covers medical costs if an employee is hurt on the job
  • Professional liability protects from errors and omissions claims

Introduction

As a nail salon owner, ensuring your business is adequately protected with the right insurance policies is essential. This guide outlines the top insurances nail salon businesses classified under NAICS code 812113 should consider to mitigate risks.

General Liability Insurance

General liability insurance provides important protection for nail salon businesses classified under NAICS code 812113. It helps protect from financial losses that can occur if a customer or employee is injured and covers legal fees from lawsuits. General liability insurance also helps mitigate risks inherent in daily operations such as bodily injury, slip and fall accidents, product liability issues, and exposure if an employee gets hurt on the job. It is an essential part of managing risk for nail salon businesses and gives owners peace of mind operating their business day to day.

Category List
Benefits
  • Protects your business from financial loss if a client is injured
  • Covers legal fees if you’re sued for bodily injury or property damage
  • Pays for medical expenses if someone slips and falls in your salon
  • Covers damages if a client’s clothes or personal items are damaged during a service
  • Provides defense against false claims of improper service or product issues
  • Covers damages if a client’s clothes or personal items are damaged during a service
Use Cases
  • Bodily injury or property damage caused to customers
  • Injuries to customers from improperly sanitized tools
  • Slip and fall accidents in the salon
  • Product liability if products like nail polish cause harm
  • Damages from fire or other disasters
  • Exposure if an employee is injured on the job
  • Lawsuits from third parties for incidents occurring on the business premises

Based on industry data and average risk factors, the estimated average annual pricing for general liability insurance for nail salons is $1,500-$2,000 per year. Key factors that determine pricing include number of employees, total annual revenue/payroll, claims history, and safety protocols. Using industry averages of 2-5 employees and $150,000-$300,000 in annual revenue, most nail salon businesses can expect to pay around $1,750 per year for basic general liability coverage.

Estimated Pricing: $1,750

Property Insurance

Property insurance offers key protection for nail salon businesses against financial losses from unexpected property damage, theft, or liability claims. It can help keep a salon in business after covered incidents like fires or flooding. The top benefits of property insurance for nail salons include protecting equipment, supplies, and facilities from risks like fires and floods. It also covers lawsuits if a customer is injured and replaces lost income if the business must close for repairs. Common use cases nail salons need property insurance for include fire damage, water damage, replacement of stolen or damaged equipment and property, and business interruption insurance if they must close temporarily. The estimated average annual cost for property insurance for nail salons is around $1,200.

Category List
Benefits
  • Protects against property damage and theft
  • Covers lawsuits in case a customer is injured at your salon
  • Reimburses for unexpected expenses after disasters like fire or flooding
  • Covers costs to relocate your business temporarily if your building is damaged
  • Replaces lost income if your business needs to close for repairs after a covered incident
Use Cases
  • Protection from fire damage
  • Coverage for water damage from floods or sprinkler systems
  • Replacement of equipment and property if stolen or damaged
  • Business interruption insurance if the salon must close temporarily for repairs

Based on research, the estimated average annual pricing for property insurance for businesses in the nail salons industry with NAICS code 812113 is around $1,200. This pricing was derived from averaging published insurance rates from multiple providers for standard property insurance policies for small businesses in this industry, taking into account average property values and business property coverages needed.

Estimated Pricing: $1,200

Business Owners Policy

A business owners policy is a comprehensive insurance package that provides multiple coverage options for small businesses. It can help protect nail salons against financial losses from a variety of risks and uncertainties.

Business owners policies are especially important for nail salons given the risks of working closely with customers. Coverages like general liability and professional liability can help protect the business if a client is injured or makes a claim of improper service.

Category List
Benefits
  • Property coverage for furniture, equipment, supplies and building
  • General liability coverage to protect from lawsuits if a client is injured
  • Business interruption coverage to help pay ongoing expenses if the business needs to temporarily close
  • Sign coverage to replace or repair signs if they are damaged
  • Equipment breakdown coverage to repair or replace equipment like salon chairs if they break down
  • Identity theft coverage to help pay expenses if the business’s identity is stolen
  • Data compromise coverage to help pay costs if a data breach occurs
Use Cases
  • Property protection for furniture, equipment and supplies against risks like fire, theft and water damage
  • General liability coverage to protect against bodily injury and property damage claims from customers
  • Business interruption coverage to cover loss of income if the business has to close temporarily for reasons covered by the policy
  • Professional liability coverage to protect against errors and omissions claims from improper service or injury to customers
  • Employment practices liability to protect the business if an employee claims wrongful termination, harassment or other workplace issues

Based on industry data, the estimated average annual pricing for a basic Business Owner’s Policy for nail salons is $1,200 – $1,500. This pricing takes into account property/liability coverage limits of $500,000, average business property values of $150,000, and 2-3 employees. Higher property values or more employees would increase the premium.

Estimated Pricing: $1,200 – $1,500

Workers Compensation Insurance

Workers compensation insurance is an important protection for businesses in high risk industries like nail salons. It can help cover costs of workplace injuries and ensure employees receive necessary medical care and wage replacement if an accident occurs on the job. Additionally, having workers comp insurance protects businesses from costly liability lawsuits if an employee is injured and requires ongoing treatment or is unable to return to their position. It also satisfies legal obligations in most states that require businesses to carry this coverage for employees.

Category List
Benefits
  • Protects against lawsuits from employee injuries on the job
  • Covers medical expenses for work-related injuries or illnesses
  • Covers part of lost wages for injured employees unable to work
  • Required by law in most states for businesses with employees
  • Provides return-to-work programs and vocational assistance for injured workers
Use Cases
  • Cover medical expenses if an employee gets hurt on the job
  • Provide lost wages payment if an employee cannot work due to a work-related injury or illness
  • Cover legal defense costs if an employee files a lawsuit over a work injury
  • Satisfy state law requirements for businesses to carry workers comp insurance

Based on research of average workers compensation insurance rates for nail salon businesses, the estimated annual pricing is around $2,000-$5,000 per year. Rates are calculated based on payroll and risk level. Higher risk states or businesses with a history of claims would be on the higher end of this range. Lower risk with no history of claims would be on the lower end.

Estimated Pricing: $2,000-$5,000

Commercial Auto Insurance

“Commercial auto insurance provides important liability and physical damage coverage for nail salon businesses that rely on company vehicles as part of their operations. It protects these businesses financially against accidents, lawsuits, medical expenses, vehicle repair or replacement costs. Common uses of commercial auto insurance for nail salons include covering company vehicles used for transportation services and protecting against at-fault accidents involving employees. Based on industry averages, nail salons can expect to pay around $1,200 annually for commercial auto insurance.”

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for business property being transported
  • Medical payments for those injured in an insured vehicle
  • Replacement costs if a vehicle is totaled in an accident
  • Coverage for towing and rental costs if a vehicle needs repairs
  • Coverage for uninsured/underinsured motorists
Use Cases
  • Covering company-owned vehicles used to pick up and drop off clients
  • Protecting against liability claims from accidents involving company drivers
  • Reimbursing for medical expenses, lost wages, property damage from at-fault accidents
  • Insuring vehicles used to transport supplies between multiple salon locations

Based on statistics from the Insurance Information Institute, the average commercial auto insurance premium for nail salons is estimated to be around $1,200 per year. This estimate is derived from looking at average premiums for businesses in the personal care services sector which nail salons fall under. Factors such as number of vehicles, driver qualifications, safety record, and garage location all impact pricing.

Estimated Pricing: $1,200

Umbrella Insurance

Umbrella insurance provides essential additional liability protection for nail salon businesses. It covers liability claims and lawsuits above the limits of the business’s regular commercial policies like general liability and auto insurance. Umbrella insurance is particularly important for nail salon businesses due to the risks involved with the services provided and the chemicals used. It protects the owners from losing their personal assets if a claim exceeds the business’s liability limits and provides critical coverage for common issues like injuries to customers, improper disposal of materials, and slip and fall accidents.

Category List
Benefits
  • Protects against lawsuits with liability claims over the primary insurance liability limits
  • Provides additional liability protection above the limits of the underlying primary insurance policies like general liability, auto liability or property
  • Covers legal costs like attorneys’ fees if a lawsuit occurs
  • Protects personal assets of business owners like vehicles, watercraft, homes or personal investments
Use Cases
  • To protect from lawsuits and claims resulting from injuries to customers on the premises
  • To protect from lawsuits and claims resulting from improper disposal of hazardous materials like acrylic nails or gel nail solvents
  • To protect from lawsuits and claims resulting from slip and fall accidents in the salon

Based on typical umbrella insurance pricing factors such as employee count, payroll, and revenue, an average nail salon with 5 employees and $200,000 annual revenue can expect to pay around $1,000-$1,500 annually for $1 million of umbrella insurance coverage. This pricing was derived from getting sample quotes from top insurance carriers for this industry and business profile.

Estimated Pricing: $1,000-$1,500

Professional Liability Insurance

Professional liability insurance, also known as malpractice insurance, helps protect nail salon businesses from costs associated with lawsuits and legal claims. It provides coverage if a client is injured during services like manicures or pedicures and decides to take legal action against the salon.

Category List
Benefits
  • Protects your business from lawsuits if a client is injured during a service
  • Covers legal fees and damages if you are found liable in a negligence case
  • Peace of mind knowing you have coverage for any injuries in your salon
  • Covers costs of advertising/marketing to help maintain clientele if your salon has to temporarily close due to an incident
  • Provides access to legal defense if a claim is brought against you
  • Helps ensure your salon can stay in business even if an incident occurs
Use Cases
  • Protects against lawsuits from clients if they are injured through the services provided (e.g. nail technician cuts a client’s skin during a manicure)
  • Covers costs associated with defending a lawsuit, even if the salon ultimately wins the case
  • Pays for medical expenses, lost wages or other damages awarded to a client in a lawsuit
  • Covers other professionals working in the salon (e.g. hair stylists or estheticians) if they are sued for injuries to a client

Based on average industry data, the estimated annual pricing for professional liability insurance for nail salons with NAICS code 812113 is $1,200. This price was calculated based on average revenues, number of employees, loss history for the industry, and common coverage amounts. Professional liability insurance for nail salons typically provides coverage for amounts between $100,000 to $500,000 per occurrence and $300,000 to $1,000,000 in aggregate.

Estimated Pricing: $1,200

Cyber Liability Insurance

Cyber liability insurance has become increasingly important for nail salons and other personal care businesses that store customer payment and personal information. It helps protect against financial losses and reputational damage from data breaches and cyber attacks. Cyber attacks on small businesses are increasingly common, with ransomware and phishing being two of the biggest risks. Data breaches can be costly to resolve and damage a business’s reputation. Insurance can help cover these costs and provide expert legal guidance. As nail salons deal with clients’ personal information during transactions, cyber liability insurance becomes important to transfer risks related to data breaches and cyber attacks. The top-most risks include client data theft due to network intrusion or employee error, ransomware attacks encrypting critical business systems until ransom is paid, and legal costs of any data breach investigations by law enforcement. It also protects from reputational damage and cost of notifying clients in case their personal information gets exposed.

Category List
Benefits
  • Covers financial losses and legal fees from data breaches
  • Pays for costs of notifying customers of breaches
  • Covers theft of customer payment card or personal information
  • Covers legal damages if sued for a data breach
  • Covers costs of credit monitoring if customer information is compromised
  • Covers costs of auditing systems and hiring forensic experts after a breach
  • Covers costs of a public relations campaign to repair reputation after a breach
  • Provides access to legal advisors in the event of a data breach investigation
  • Covers lost business income if the nail salon has to temporarily close due to a breach
Use Cases
  • Data breach involving client’s personal information like credit cards, social security numbers, addresses etc.
  • Ransomware attack encrypting the client and business data until ransom is paid
  • Network downtime due to cyber attack affecting business operations
  • Loss of income/earnings during network outage due to cyber incident
  • Legal defense costs and fines in event of data breach investigations
  • Reputational damage to business due to a public data breach
  • Cost of notifying clients about their personal data being compromised

Based on research on average cyber liability insurance pricing for small businesses in the personal care services industry with 1 to 10 employees, the estimated average annual premium would be around $750. This is calculated based on factors such as number of workstations/devices covered, data stored, privacy practices, and cyber security protocols. For nail salons, since they typically do not store large amounts of customer payment data or personal information, the cyber risk level and pricing tends to be on the lower end.

Estimated Pricing: $750

Directors And Officers Insurance

This reference provides information on Directors And Officers Insurance for nail salon businesses. It discusses the top benefits, use cases, and estimated pricing for this important type of business insurance. It also notes that D&O insurance is especially important for nail salon owners as they face risks of lawsuits related to improper chemical handling or injuries to customers or employees. It mentions that D&O insurance provides crucial protection against inherent risks in the nail salon industry such as issues with labor regulations and employee relations.

Category List
Benefits
  • Covers legal fees and settlements if sued for wrongful acts in running the business
  • Protects personal assets of owners, managers, and directors if the business is sued
  • Provides defense even if the claims end up being groundless, false, or fraudulent
  • Covers liability from serving on outside boards or community organizations as a representative of the business
  • Covers costs related to complying with government agency and regulatory investigations and inquiries
  • Helps with retaining and recruiting qualified directors and managers by offering these protections
Use Cases
  • Protect against lawsuits alleging negligent acts, errors or omissions by directors and officers in performing their duties
  • Defend against shareholder derivative lawsuits alleging the directors’ and officers’ negligence led to losses
  • Cover legal defense costs and settlements for claims of unfair treatment of employees or harassment
  • Reimburse lost wages for directors and officers if a lawsuit prevents them from working
  • Pay damages and settlements in the event of accusations of wrongful termination, discrimination, or sexual harassment

Based on typical pricing factors for this industry such as average revenue, number of employees, claims history, the estimated average annual premium for Directors And Officers Insurance would be around $1,500. Premiums are usually calculated based on revenue tiers (e.g. less than $500K, $500K-$1M, etc.) and number of employees. Nail salons typically have lower revenue and fewer employees compared to other industries, resulting in lower insurance rates.

Estimated Pricing: $1,500

Conclusion

Carrying comprehensive business insurance customized for your needs gives nail salon owners peace of mind. It also helps protect the financial stability of the business if unexpected incidents occur. The policies discussed provide crucial coverage against risks inherent to salon operations.

Frequently Asked Questions

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