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Business Insurance


If good grooming is your trade and you are planning to open a barber shop, spa or hair salon, you typically won’t have a problem finding a company to write your business insurance policy, because the risk of claims against these businesses is well understood by the industry - it’s a classification most insurance companies love.

It is a retail, brick-and-mortar operation, the claims that come out of these places are pretty standard. The trip-and-falls and the cuts are predictable. Getting insurance for these entities is not difficult and not expensive.”

Underwriters will consider your business experience and your insurance claims history when they set your premiums. Prices vary by your claim risk and business size. A salon owner will spend between $2,500 and $3,000 annually – less than 1 percent of their gross annual income – on insurance for his business.

Things that raise your premiums

Having adequate liability insurance will be important to protect you against claims, says John O’Connor, Travelers’ vice president for product and platform in the small commercial sector. If your business includes a nail salon, that could raise your costs, since your employees may be considered at greater risk of developing health problems from chemical exposure.

In addition to the dangers from chemicals,

There are some services that can raise your rates. When you get into procedures like electrolysis or Botox injections or permanent eyeliner and tanning, that is when you see an increase in prices and the availability of carriers begins to shrink, you open up to a whole new set of liabilities.”

The larger your operation, the greater your liability insurance needs will be. A $1 million policy typically is adequate, For most barber shops, salons and spas, such policies cost between $500 and $700 a year.

Sometimes salon owners function as landlords, renting out business space to stylists. To provide themselves with an extra layer of protection, they may require the stylists to take out liability policies that name the salon as an insured party.



Most barber shop, salon and spa policies are written as packages called business owner policies (BOPs), says Levenson, the New Jersey insurance agent. Here are seven types of coverage that typically are included:

  • Property insurance – This is necessary to protect your investment from mishaps such as fire, flood and theft.
  • Liability insurance – This guards against claims or lawsuits. If you add an umbrella policy for unusually high losses, it will kick in when your standard policy reaches its coverage limit.
  • Employment practices liability insurance – Often called EPLI, this covers you if an employee takes you to court over allegations of harassment or wrongful termination.
  • Key employee insurance – If you depend on certain employees to keep your business running, key employee insurance provides compensation if they are unable to work.
  • Loss of income insurance – In most cases, this protects you if you’re forced to temporarily close your business. Salon owner O’Brien says a power outage once cost him $4,000 in a single evening.
  • Workers compensation insurance – This pays for medical care for employees who are injured at work, regardless of fault. Because requirements vary around the country, contact your state insurance department for details.
  • Employee dishonesty insurance – This protects you from criminals who may be on your payroll.


When it comes to obtaining competitive business insurance quotes, business owners need to take time to understand the different types of coverage available so they will have more insight into which commercial insurance is appropriate for their situation. Certain insurance coverages like workers compensation and commercial auto (if vehicles are used for business) are required in most states while other policies like general property or liability are optional.

Even when policies are not required by law, it still makes sense to review the coverage to better determine if it is necessary to protecting the business. One of the first steps in shopping for commercial insurance is to decide what risks or exposure the business faces. For example, if vehicles are not used for business operations, then commercial auto coverage is not necessary.

The next step in the process is to find a professional insurance broker to aid in evaluating coverage and obtaining quotes from insurance companies for the different insurance lines that would be appropriate for protecting the business assets, employees and customers. Many brokers are specialized in various types of coverage for different industries so they can assist with the unique needs of each individual business owner.

During the process of insurance planning, it is also important to have business paperwork in order. By providing complete information to the broker and insurance company, both will understand the operations more easily, and this, in turn, can result in more favorable rates. The most important rule is to be completely honest with the insurance professional so that the insurer has all the information needed to accurately quote premiums for the policies.

Also part of the process is to ensure that the business has safety procedures and employee training in place. This will first keep claims low and can also aid in securing the best premium rates. Safety equipment such as fire sprinklers, extinguishers and security alarms are also beneficial so tell the broker or insurer when this equipment is installed at all business locations.

Be sure to obtain a minimum of three quotes from different commercial insurance carriers and read over the coverage terms carefully. Making a decision based solely on price can result in inappropriate insurance amounts or even a financially unstable company. Brokers work primarily on behalf of business owners so they can provide the best advice on the pros and cons of each insurance policy being reviewed.



Even when cash may be scarce, or revenues down, small businesses should not neglect their insurance needs. Businesses that are underinsured or without broad, proper and adequate coverage are taking needless risks, which could eventuate in serious financial problems, including bankruptcy. In a crisis, a business without insurance or which is underinsured can be totally destroyed.

Business owners must be thoroughly informed on what their insurance policies cover and what is excluded. A periodic review of insurance, therefore, is an absolute necessity, along with updates and adjustments in coverage as circumstances change. This article will discuss the various types of insurance available to small businesses and what you should do to best protect yourself against harmful claims against your business.




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