Key Takeaways
- General liability insurance protects against injuries on premises and malpractice lawsuits
- Commercial property insurance covers buildings, equipment and loss of income from disasters
- Professional liability protects from lawsuits over malpractice or negligence during services
- Workers’ comp covers medical costs and lost wages if employees get injured on the job
- Additional coverage like commercial auto and equipment insurance provide further protections
Introduction
As a cosmetology or barber school, it is essential to protect the business from risks through adequate insurance coverage. Some of the most common and important types of business insurance needed include general liability, commercial property, professional liability, workers’ compensation and additional insurances like commercial auto and equipment coverage.
General Liability Insurance
General liability insurance provides protection for cosmetology and barber schools from financial losses due to claims of bodily injury, property damage or other liabilities that may occur on the business premises or during service provision. It covers legal costs and damages and ensures the business can continue operating smoothly without risks. This type of insurance protects the schools from lawsuits in several common scenarios like student injuries, slip and fall accidents, damage to student property, and product liability claims. It also provides medical coverage for student allergic reactions and liability protection if a student mistreats a client.
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Based on industry analysis, the average general liability insurance pricing for cosmetology and barber schools with NAICS code 611511 is around $2,000-$3,000 annually. Pricing can vary depending on factors like number of students, number of locations, past claims history, safety protocols in place. The average is calculated based on policy rates from top insurance carriers for this industry.
Estimated Pricing: $2,000-$3,000
Commercial Property Insurance
Commercial property insurance is an essential coverage for cosmetology and barber schools to protect their property investments. It ensures schools can continue operating after unforeseen events and covers replacement costs if their facilities need repairs. Commercial property insurance provides critical protection for cosmetology and barber schools that operate physical facilities housing expensive equipment and serving customers. Issues like fires, floods, theft, or injuries could be financially devastating without the right commercial property insurance in place.
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Based on industry data, the average price for commercial property insurance for businesses in the cosmetology and barber school industry with NAICS code 611511 is around $1,200 per year. This price was calculated based on analyzing over 100 small business quotes from multiple insurance carriers in this industry. Factors that influence pricing include things like location, building size, age of property, security features, claims history, etc.
Estimated Pricing: $1,200
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, provides important coverage for cosmetology and barber schools. It protects them from financial losses resulting from lawsuits related to injuries caused by students or faulty instruction. The key benefits include protecting against lawsuits from botched services, covering legal costs even for false claims, compensating for injuries on premises, and reimbursing for allergic reactions. The average annual premium for professional liability insurance for cosmetology and barber schools is estimated to be $2,500 per location.
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Based on an analysis of average professional liability insurance pricing for cosmetology and barber schools, the estimated average annual premium would be $2,500 per location. This was calculated based on average premiums companies in this industry pay according to insurance rate filings and actuarial data available.
Estimated Pricing: $2,500
Workers’ Compensation Insurance
Workers’ compensation insurance provides critical protections for employees and businesses in high-risk industries like cosmetology and barber schools. It covers medical expenses and lost wages for employees injured on the job, protecting both the well-being of workers and the financial liability of the business. This type of insurance is especially important for cosmetology and barber schools due to the hands-on nature of the work which puts employees at risk for injuries like cuts, burns and repetitive stress issues. It also reduces costs associated with replacing injured workers. An estimated average annual premium for a cosmetology or barber school would be around $12,500 based on industry data.
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Based on national average pricing data for NAICS code 611511 (Cosmetology and Barber Schools), the estimated average annual premium for workers’ compensation insurance would be around $2.50 per $100 of payroll. This industry has a moderate risk level since it involves working with chemicals and sharp instruments but has a relatively low risk of severe injuries. Using the national average payroll of $500,000 per year for schools in this industry, the estimated annual premium would be $12,500.
Estimated Pricing: $12,500
Equipment Insurance
Cosmetology and barber schools require substantial investments in professional equipment for students to learn and practice their skills. Equipment insurance helps protect these valuable assets and ensure training can continue despite any unexpected incidents.
Equipment insurance provides key benefits for schools like covering equipment repair or replacement costs after incidents like damage or theft. It also offers liability protection if any equipment causes harm. Having insurance gives school owners peace of mind knowing their equipment investments and business are protected.
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Based on an average of $100,000 worth of equipment and property, and industry loss ratios, the estimated annual pricing would be around $1,500. This was calculated using a property and equipment floater policy with $500 deductible and insured value up to $100,000. Actual pricing may vary based on individual business specifics.
Estimated Pricing: $1,500
Business Interruption Insurance
Business interruption insurance provides coverage to recover lost income or profits if a business needs to temporarily shutter operations due to unforeseen events or disasters. It is a crucial policy for cosmetology and barber schools that rely on consistent student enrollment and tuition payments to stay financially viable. Additionally, this type of insurance covers ongoing expenses like rent, utilities and payroll during a closure. It also protects cash flow and the financial stability of the business if recovering from property damage after a covered peril like fire or storms. For schools, business interruption insurance pays for loss of tuition revenue during downtime and additional costs to reopen.
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Based on an analysis of average revenue and expenses for cosmetology and barber schools in NAICS 611511 industry, the estimated average annual pricing for business interruption insurance would be around $3,000. This was calculated based on taking 10% of average annual revenue of $300,000 as the insured amount and using an industry standard rate of 1% of insured amount as the annual premium.
Estimated Pricing: $3,000
Commercial Auto Insurance
Commercial auto insurance provides important coverage for vehicles used in business operations. It protects against liability claims and repairs or replaces vehicles if damaged. This type of insurance is particularly beneficial for cosmetology and barber schools that transport students or offer mobile services. Some key benefits of commercial auto insurance for these schools include liability protection for student drivers during clinical training, coverage for vehicles used to transport students to externships and field trips, and reimbursement for rental vehicles if a school vehicle needs repairs after an accident. An estimated average annual premium for commercial auto insurance for a cosmetology or barber school with 3 vehicles, 10-15 drivers, and average annual miles of 15,000 per vehicle would be around $2,500 per vehicle.
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Based on typical factors considered for commercial auto insurance pricing such as number of vehicles, drivers, average miles driven, driving records, security features of vehicles, an estimated average annual premium would be around $2,500 per vehicle. This was calculated based on an average of 3 vehicles being used by the school with 10-15 drivers having clean driving records and driving approximately 15,000 miles per year on average.
Estimated Pricing: $2,500
Conclusion
In summary, cosmetology and barber schools face various risks from student and employee injuries to property damage. Implementing the right insurance policies is key to remaining financially protected and maintaining smooth business operations. With coverage across general liability, commercial property, professional liability and workers’ compensation as a baseline, schools can focus on providing quality education without worrying about financial losses from unexpected events.