Opening a Salon? You need insurance..

If you are opening or own a salon, you will need insurance. Following is a list of questions I asked an insurance expert. Insurance is one of those things you buy hoping you will never need it.

The answers are from:
Michael F. McGroarty
McGroarty & Bradburn Insurance, Inc.
Pittsburgh PA
1-800-737-8494

Liability Insurance--What the insurance covers?
The insurance covers Bodily Injury and Property Damage to the public as well as operators' professional coverage for errors and omissions made by the salon or its operators.

Falls, etc. in the salon?
Any Bodily Injury or Property Damage and Professional Liability if purchased for negligent acts for which the salon would be responsible.

Services by owner and employees?
The entity (salon) and the employees are generally covered by the policies.

Services by Booth Renters (Independent Contractors who actually rent space in the salon)?
Again the salon (Corporation, Partnership, Sole Proprietorship) would be covered as well as employees. Independent contractors would not be covered. The independent contractor needs their own coverage and should name the entity as an additional insured.

Does the salon owner need liability insurance to supplement the booth renter?
The owner should not under any circumstances do anything without having their own coverage first. They should not rely on the renter to cover them. 99% of the time this will not work.

Property Insurance?
Property insurance if the salon owner owns the building?
Basic coverage should be building, contents, business income, hired and non-owned auto coverage, crime, business interruption, umbrella, professional.....be careful about things like tanning, etc. that the policy covers things that are outside the norm of the particular business.

Property insurance if the salon owner rents space?
Everything above except the building. However, betterments and improvements made to the building by the tenant that would not be taken out if the tenant vacated the premises can be covered by the tenant.

What is the amount based on?
Furniture and Equipment?
All limits should be replacement cost currently and an inflation % increase should be included at each renewal.
Small equipment such as irons, blowers, shear, etc.?
(Quite often such equipment belows to the individual operator)
The owner can include property of thers in their policy. The individual operator usually has no coverage under their homeowners for business property.
Supplies?
These would normally be covered as contents.
Records and compiter?
Should be insured separately as computer coverage with a separate limit.
Loss of business and Interruption of business?
Usually included in package policy for 12 consecutive months.

Workman's Compensation?
Is it correct that every state requires workman's comp but that it varies from state to state?
Yes, all states require coverage but the benefits differ from state to state.
Does the owner have to pay workman's comp for independent contractors?
No. But they need certificates of insurance from the independent contractor so that they do not get charged.
How can the salon owner legally reduce the cost of workman's comp?
Have no losses or have no employees.

Optional Insurances: Medical Insurance, Disability Insurance, Group Life Insurance
Is it feasible for a salon owner to offer these insurances even if the employee pays all or a large portion?
Yes!
What are the advantages of offering these insurances?
To attract better employees particularly single moms.
To allow owner to have his personal insurance as part of a group.
What are the disadvanages of offering this insurance?
Employees sometimes do not want to participate especially if they are covered by a spouse.
The age of the groiup drives the premiums.
Can independent contractors participate?
Not usually. Most plans require UC2 or W2 forms to prove the individuals are employees.