Key Takeaways
- General liability insurance protects from lawsuits if a client is injured on premises
- Property insurance covers repair costs if property is damaged by events like fire or theft
- Business interruption insurance provides income if operations must close temporarily
- Professional liability protects from lawsuits over injuries during services
- Workers compensation covers medical costs and lost wages if employees are hurt on job
Introduction
As a beauty salon owner, it is important to understand the key business insurance needs to protect both your business and clients. The beauty salon industry faces risks from client injuries, property damage, interruptions and more. This guide examines the top insurances beauty salons with NAICS code 812112 should consider.
General Liability Insurance
General liability insurance is an important coverage for beauty salons to protect their business from costly financial losses. It covers legal fees and damages if a client is injured on the premises or during a service. Additionally, it protects the business assets if the salon is sued, covers medical expenses for injured clients, and provides defense if sued for faulty products or equipment. Common risks in the beauty industry like product reactions, slips/falls and accidental property damage are all covered by general liability insurance.
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- Covers legal fees and damages if a client is injured on your premises
- Protects your business assets if you’re sued for bodily injury or property damage
- Covers claims from slip and fall accidents in your salon
- Covers medical expenses if a client needs treatment after an accident at your salon
- Covers legal defense if you’re sued for faulty products or defective equipment
- Provides coverage for incidents that occur off premise but are related to your business activities
- Covers claims of poor work quality or harm caused by services provided
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- Covers bodily injury or property damage if a client slips and falls in your salon
- Covers legal costs if a client sues your salon for an allergic reaction to a product
- Covers costs associated with a sexual harassment lawsuit or other legal claims from employees
- Covers damage to a client’s property like clothing if it is accidentally damaged or stained during a service
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Based on industry data, the average general liability insurance premium for beauty salons is around $1,200 per year. Premium pricing is affected by salon size (number of employees and stations), average annual revenue, location, claims history, and risk control measures. For a small salon of 2-3 employees with no previous claims and $100,000 annual revenue located in a low risk urban area, the annual premium would be approximately $1,000.
Estimated Pricing: $1,000
Property Insurance
Property insurance is essential for any business to protect its assets and operations from unexpected losses. It covers repair or replacement costs if property is damaged by events like fire, floods, storms or theft. This allows businesses to continue operating after insured incidents.
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- Covers costs to repair or rebuild your property after damages like fire, water damage, storm damage.
- Covers theft of business property including furniture, equipment and supplies.
- Provides liability coverage to protect your business against lawsuits filed by customers for injuries on your premises.
- Covers loss of business income if you have to temporarily close your salon due to a covered property loss.
- Insures property like tools, fixtures or supplies that may be damaged or stolen while working with clients on location.
- Protects the value of your business assets and investments.
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- Cover replacement costs for furniture, fixtures, and equipment if they are damaged or destroyed in an insured incident like fire, flood or theft.
- Cover loss of income if your business needs to close temporarily after an insured incident like fire or flood damage.
- Cover liability if a client is injured on your premises due to your negligence like slipping on a wet floor.
- Cover liability if a stylist damages a client’s hair or injures the client while providing a service.
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Based on industry data, the average annual property insurance cost for beauty salons is around $1,200. This covers building, contents, equipment and lost business income. The pricing is derived based on average property values and risks for beauty salons which typically have smaller building space but costly equipment and supplies.
Estimated Pricing: $1,200
Business Interruption Insurance
Introduction paragraph: Business interruption insurance provides critical financial protection for businesses by reimbursing lost income and extra expenses if their operations need to shut down temporarily due to unforeseen events outside of their control. It helps maintain cash flow so businesses can continue paying operating costs until they can reopen fully.
Additional paragraphs:
Business interruption insurance has become increasingly important for beauty salon businesses that rely on consistent customer visits and appointments to generate revenue. Closures from events like fires, floods or equipment failures would mean zero income until the salon can welcome clients again. The Covid-19 pandemic highlighted how non-physical issues can also force long shutdowns and cut off revenue streams. Having this coverage ensures funds are available to keep businesses solvent during interruptions and aids a quick return to typical operations.
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- Covers lost income if the business must shut down temporarily
- Covers additional expenses to keep the business running during closures
- Covers costs if key equipment or property is damaged and needs repair
- Protects cash flow so you can still pay operating expenses like rent and utilities
- Helps maintain your business’s reputation if you need to close for a period of time
- Reimburses lost income from cancelled appointments or walk-in customers during closure
- Provides funds to pay employee salaries if the business needs to shut down operations
- Helps the business get back up and running after an unexpected closure
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- Fire damages property and forces closure for repairs
- Flood damages property and forces closure
- Weather event like hurricane or tornado damages property
- Equipment failure like AC or appliances causes closure for repairs
- Supply chain issues prevent operation due to lack of materials
- Pandemic restrictions force closure by government mandate
- Staff shortage due to illness prevents operation
- Loss of a key stylist/hairdresser means reduced appointments & income until replacement is found
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Based on industry data, the average price for business interruption insurance for beauty salons with NAICS code 812112 is around 1-2% of their annual revenues. For a median revenue beauty salon of around $200,000 per year, the estimated annual premium would be $2,000-$4,000. This pricing is derived based on analyzing loss ratios and risks across the industry while factoring in location and other risk mitigation factors of the individual business.
Estimated Pricing: $2,000-$4,000
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, provides crucial coverage for beauty salon businesses. It protects against lawsuits from client injuries during services or other incidents, helps cover the costs of litigation, and demonstrates the business’s commitment to safety and responsibility. Additional intro paragraphs could highlight how professional liability insurance protects a business’s assets and livelihood from potentially ruinous lawsuits, explains some of the common risks the insurance covers such as negligence claims, privacy breaches, or discrimination lawsuits, or emphasizes how without this coverage, a single lawsuit could bankrupt the business and jeopardize personal finances.
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- Protects from lawsuits if a client is injured during a service
- Covers legal fees and damages if you are sued
- Provides peace of mind knowing you are covered for claims that arise from your work
- Shows clients you take their health and safety seriously
- Helps attract new clients by demonstrating professional responsibility
- Covers incidents of infection transmission between clients
- Protects your livelihood and personal assets in case of a lawsuit
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- Protects from lawsuits if a client claims they were injured due to the negligence of salon staff like hair dressers, estheticians, nail techs
- Covers legal costs and damages if a client sues for improper storage of client records that were accessed without permission
- Protects the business assets if they are sued for discrimination, sexual harassment, or other lawsuits by employees or clients
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Based on average data, the estimated annual pricing for professional liability insurance for beauty salons is around $1,200-$2,500 per year. Pricing is affected by factors like number of employees, annual revenue, claims history, types of services offered. For a small single owner salon with 1-3 employees and annual revenue under $500K, the estimated pricing would be around $1,200 per year.
Estimated Pricing: $1,200-$2,500
Workers Compensation Insurance
Workers compensation insurance provides critical protections for both beauty salon owners and their employees. It ensures employees will still receive wages and medical benefits if injured on the job, while also protecting businesses from costly lawsuits. This type of insurance is especially important for the beauty salon industry due to common workplace injuries from hair treatments, waxing, chemicals and other salon services. It also satisfies legal requirements and provides estimated average pricing of $1.50 per $100 of payroll.
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- Covers medical expenses if an employee is injured on the job
- Provides wage replacement if an employee cannot work due to a job-related injury or illness
- Protects the business from lawsuits if an employee is injured and tries to sue for damages
- Satisfies state law requirements for carrying workers compensation coverage
- Offers loss prevention services to help reduce the risk of injuries in the workplace
- Lowers overall costs compared to defending against employee lawsuits
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- Cuts, burns, and other injuries from haircutting, waxing, and chemical treatments
- Musculoskeletal injuries like back strains from prolonged standing or lifting
- Exposure to chemicals that cause skin and respiratory issues
- Slip and fall accidents in the workspace
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Based on industry analysis, the average estimated pricing for workers compensation insurance for beauty salons is $1.50 per $100 of payroll. This price was derived from analyzing insurance rates across several states for beauty salons and factoring in the higher risk level of this industry due to injuries from hair coloring chemicals, sharp hair tools, and repetitive stress injuries.
Estimated Pricing: $1.50/100 of payroll
Cyber Liability Insurance
As cyber attacks continue to grow in frequency and sophistication, cyber liability insurance has become an important protection for businesses handling sensitive customer data like beauty salons. Cyber insurance helps mitigate risks and costs associated with data breaches, system outages, and legal/compliance issues that could severely damage operations and finances without adequate coverage. Top benefits of cyber liability insurance for beauty salons include protection from lawsuits, data restoration costs, notifying clients, loss of income, fines/penalties, forensic investigation, legal counsel, and breach of privacy claims. Common cyber threats covered include theft of customer records, reputational damage, ransomware/malware attacks, regulatory fines, and business interruption. Estimated average annual premium for cyber insurance for a small beauty salon is around $750 based on typical industry pricing models and risk factors.
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- Protection from lawsuits in the event of a data breach or cyber attack
- Coverage for data restoration costs in the event files are damaged or destroyed
- Payment for costs associated with notifying clients of a breach and providing credit monitoring services
- Coverage for loss of income if a breach forces you to shut down while addressing the incident
- Reimbursement of fines and penalties imposed by government agencies in response to a breach
- Coverage for forensic investigation and associated costs if you need outside experts to determine the cause and scope of the breach
- Assistance from legal counsel and IT professionals included as part of the policy in the event of a breach
- Coverage for breach of privacy claims in the event clients sue over improper handling of their personal information
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- Cyber theft or damage to customer records – Customer personal and financial information like credit card or social security numbers could be stolen due to hack or accidental disclosure
- Reputational damage from data breach – A data breach involving customer information could damage brand reputation and lead to loss of business
- Ransomware or malware attack – Malware infections could disable systems and demand ransom to restore access, resulting in business interruption costs
- Regulatory fines and legal fees from data breach notification laws – States have laws requiring companies to notify customers impacted by a data breach, along with potential fines for non-compliance
- Business interruption from system outage – A cyber attack like ransomware could disable critical customer appointment scheduling systems, POS systems for processing payments, etc. resulting in lost revenue during the outage period until systems are restored.
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Based on typical pricing models and risk factors for the beauty salons industry (NAICS 812112), the estimated average annual premium for cyber liability insurance would be around $750. Premiums are usually calculated based on number of workstations/devices, annual revenue, and prior cyber incidents or claims. For a small beauty salon with 5 workstations and under $500K in annual revenue, $750 would be a reasonable average estimated annual premium.
Estimated Pricing: $750
Equipment Insurance
Equipment is vital for any beauty salon business to operate. However, it also represents a major financial investment that needs protection from potential losses. Equipment insurance provides that protection and peace of mind for beauty salon owners by covering the replacement costs of expensive tools and appliances if they’re damaged or stolen, which allows the business to continue serving clients without disruption.
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- Protect equipment from damage or theft
- Replace or repair equipment if it’s damaged or stolen
- Cover the costs of repairs or replacement
- Provides financial assistance to replace or repair costly equipment
- Protects your investment in salon equipment and tools
- Helps keep your business up and running after equipment losses
- Provides peace of mind for beauty salon owners by covering the replacement costs of expensive tools and appliances if they’re damaged or stolen.
- Allows your business to continue serving clients without disruption.
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- Covers the costs to repair or replace equipment like hair dryers, styling tools, facial machines, massage tables if they are damaged or destroyed
- Protects against losses from fire, theft, vandalism or other disasters that could damage valuable salon equipment
- Provides liability coverage if a client is injured by faulty or damaged equipment
- Covers business interruption costs if the salon has to close temporarily for repairs after equipment damage
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Based on industry data, the average annual premium for equipment insurance for beauty salons is around $1,200. This price takes into account average equipment values of $50,000 and a policy with $1,000 deductible. The premium is calculated using 1.5% of total insurable values.
Estimated Pricing: $1,200
Conclusion
In summary, general liability, property, business interruption, professional liability and workers compensation insurance provide crucial coverage for the risks beauty salons face. Having the right insurance ensures your business can stay operational through incidents and safeguards clients, staff and investments.
Frequently Asked Questions
General liability insurance protects beauty salons from lawsuits if a client is injured on the premises. It covers legal fees, medical expenses, and damages. Without this coverage, lawsuits over client injuries could bankrupt the business. General liability insurance is essential to manage risks of operating a salon.
Property insurance covers repair or replacement costs if the salon property like equipment, furniture or building are damaged by events like fires, floods, storms or theft. It also provides liability coverage if a client is injured on the premises due to negligence. Property insurance protects the business assets and ability to continue operating after a loss.
Business interruption insurance covers lost income if the salon must shut down operations temporarily due to events damaging property like fires, floods or equipment failures. It provides funds to pay expenses until the business can reopen fully, helping it stay solvent during closures. Without it, temporary closures could severely damage cash flow and finances.
Professional liability insurance, also known as errors and omissions insurance, protects beauty salons from lawsuits if a client is injured during a service due to negligence. It covers legal fees and damages. Without this coverage, a single lawsuit could bankrupt the business and owner personally. It demonstrates the business takes client safety seriously.
Workers compensation insurance covers medical expenses and lost wages if employees are injured on the job. It protects businesses by satisfying state laws requiring this coverage. It also protects against costly employee injury lawsuits. Workers compensation is especially important for salons due to common job risks.
