From makeup artists to laser technicians, the beauty industry covers many different occupations.
One thing they all have in common is that they give advice and interact with clients – both of which present different risks to businesses.
If people come to your professional beauty business for your advice and you deal with the risk of customers entering your salon, then you may want to consider a Combined Liability policy.
Not only will it combine two important policies in one, but it could reduce the risk of events you may not have considered.
English, please
What is Combined Liability insurance, you ask?
Well, this product includes two essential types of cover – Professional Indemnity (PI) insurance and Public Liability (PL) insurance.
These two policies are crucial for many professional beauty businesses.
Here’s a snapshot of what PI and PL insurance provide cover for.
Professional Indemnity (PI) insurance
Professional Indemnity cover is an essential policy for professional beauty workers. It’s designed to protect against financial loss for claims arising from acts of negligence, errors or omissions which involve a breach of your professional service.
Since many beauticians provide a service, there are a whole host of reasons why PI insurance is important.
Whether you are waxing someone’s face, giving manicures, or advising clients on beauty products, your salon is exposed to the risk of a claim every time you provide a service.
Public Liability (PL) insurance
Every day you work closely with your clients and members of the public, making Public Liability insurance a vital type of cover for beauty salons. It provides cover for legal costs and compensation for claims made against you by third parties for injury and property damage.
A claim could arise from forgetting to clean a spill on the floor, causing someone to slip and injure themselves or accidentally breaking your client’s property.
A real-life example of a PL claim occurred when a fire broke out in a day spa, which caused extensive damage to the property. The landlord claimed for costs relating to property damage.
Crucially, the fire was started not while performing a service but rather the towels had spontaneously combusted (you read that right).
The towels had been stacked into shelving shortly after being removed from a dryer, and residue oils in the fabric contributed to the spontaneous combustion. The beauty business claimed under their PL policy, and the insurer paid $65,000.
The relationship between PL and PI
Clearly, both PI insurance and PL insurance are each important to the protection of beauty businesses, but for different reasons.
But what makes it special for some occupations in the beauty industry is the way Professional Indemnity and Public Liability risks are closely linked.
To recap, PI deals with claims resulting from negligent service while PL deals with third-party injury or property damage.
But what happens if your negligent service causes third-party injury or property damage? Does that risk get covered by your Professional Indemnity or Public Liability policy?
Unlike traditional professions such as accountants, where a negligent act results in financial loss, for some beauty professionals, the professional service they provide comes with an inherent risk of injury.
Take the following examples
A small business owner runs a facial treatment beauty business. Their client suffered burns to various parts of her head and face when undergoing a facial treatment. The related injury, loss and damage was caused by the negligence of the salon’s service.
In a different case, a client had issues with her eyes because of the glue remover the salon used to remove her fake lashes.
Both examples feature an injury to a third party (PL) resulting from negligent service (PI).
In these situations, the root cause is hard to identify. If you had PI and PL cover through separate insurers there may be a dispute over which one will pay you out.
Luckily, insurers through BizCover have opted to combine the PL and PI policies for professionals like you. These tailored products prevent such gaps in cover and often have cost benefits when purchasing a combined policy.
In both cases above, the insurer paid out $135,000 and $50,000, respectively, under a Combined Liability policy.
The bottom line
For many beauty businesses, the risk covered by Professional Indemnity cover and Public Liability cover is not only present but intertwined. Having seperate policies or only one or the other invites unneeded risk – risk that is not there under a Combined Liability policy.
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizCover. © 2022 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769
