Insurance: take cover
Whether you're looking to renew your present policy, or take out cover for the first time, it pays to study what's available when it comes to insurance. But where do you start in this minefield? Marc Loud, director, Park Insurance, finds out more
The internet is a well-developed platform for specialist brokers in this field, who promote deals they have negotiated with insurers. But you must be satisfied with the policy offered and any quotation before you commit - you need the policy to perform if the worst happens, so the more time spent on research will enhance your knowledge and ability to make the right decision.
Buying insurance is not just about claims, but it is also a tool for determining how risk can be minimised. Some brokers highlight risk management, so any measures taken will help to maintain competitive premiums and minimise consequences.
One of the main points to consider is the insurer, and I advise using a specialist broker, especially for salons.
Many brokers offer cover with insurers with little security and policies with low liability limits. I have also seen some insurers cover risks they don't understand.
For example, thread vein removal is covered under many policies, but by laser removal only, and not sclerotherapy.
A broker will advise the insurer that the salon offers this treatment - acceptable on their list - but don't understand this can also be done by injection. Most policies have a clause stating that treatments that pierce the skin are not covered. So in this instance, the salon owner assumes they have cover, when in reality they don't.
HOW MUCH COVER?
Insurance is one of the basic costs of doing business - responsible businesses budget for the appropriate coverage as a precautionary measure in the event of a loss-- especially a catastrophic one.
However, there are risk takers who think of business insurance as optional and operate their salons with little or no coverage in place other than their legal requirements of employer's liability insurance. This is a very dangerous practice, as those who gamble and lose usually pay a much higher price and often go out of business.
While there are a wide variety of insurance policies available for protecting yourself and your business, one of the most essential is liability. This is especially important for those in the beauty industry, whose business is providing services that may pose a risk of injury.
Liability risks come in many more forms than might be expected. In addition to liability arising specifically from a treatment, salon owners may also be held accountable for a variety of business liabilities, such as a client slipping and falling.
In a simple risk assessment, you will think about the protection of the assets of the business, the consequence of disruption to trade, and your duty of care for the safety of any employees and the public.
Most, if not all, salon insurance needs can be catered for in a package, typically covering loss or damage to material property - buildings, and contents, tenants, improvements, goods in transit, glass, sanitaryware and shop front; plus business interruption, rent, money, employer's liability, public and products liability, including the important treatment risk and also legal expenses insurance (included or as an additional offering).
These packages have evolved and the best now offer wider 'all risk' cover on buildings and contents plus cover for trade fixtures and fittings on a new-for-old basis.
There is a wide range of useful add-ons, for example, cover for reproducing computer system records, property temporarily removed and at exhibitions, seasonal increases, replacement of stolen keys, and the provision of helplines.
Some salons outgrow the package concept and need a bespoke approach, but a good broker will be aware of the needs of his client.
PREVENTION Since slips and falls account for the vast majority of liability claims, it pays to be extra careful about preventing them.Begin reducing your liability by keeping floors dry - you can cut your liability substantially when you take reasonable and prudent care to prevent accidents.
WHAT DO I NEED?
Look for, or request, a summary of the cover, or better still, a specimen of the policy wording. Most policies are more plainly written than they used to be and you may be surprised how easy it is to understand. But don't be afraid to have the cover explained or pose queries either - a good broker should be keen to ensure a satisfied customer and that he/she is able to make an informed decision.
Decide if the quotation, including premium payment options, is attractive? Is everything clear? Do any requirements present a problem? Does the broker instil confidence? Are all of your treatments included?
HOW MUCH?
Employer's liability cover will be for the minimum statutory requirement of £10m, while public liability should be for at least £2m (consider a higher figure) any one claim and the treatment risk £2m; the latter may be variable according to the precise activities carried out.
Your buildings will also need to be insured for the rebuilding costs and the contents, stock fixtures and fittings will need to be insured as if they were to be replaced as new.
MAKING A CLAIM
Ensure that you report all incidents that could give rise to a claim as soon as you become aware of them, either by contacting your insurer or broker. You will be advised if you need to complete a claim form or produce documentation to support your claim. There may be further time limits to support the initial notification and legal protocols. In certain circumstances, late notification could result in your claim being rejected. The police will need to be told if thieves, vandals etc, are involved.
If the claim involves damage to your property, do not dispose of damaged items or authorise repair work, except in an emergency or to prevent further damage, until your insurers or broker advise you can.
If your claim involves damage to third-party property or injury to persons, pass copies of all correspondence, including solicitors' letters, to your insurer or broker immediately and unanswered. Any attempt to negotiate or respond to the incident without prior reference to your insurers or broker might prejudice your cover.
TIMESCALE
This very much depends on the type of claim, its size and complexity. Insurers will be happy to dispose of small straightforward claims where all information is to hand, the circumstances are clear and no good purpose would be served in investigating or calling for alternative estimates.
For bigger cases, the process of examination may take place - a loss adjuster or other claims expert may be called in for an inspection, estimates requested, reports produced, medicals, negotiations with solicitors, witness statements, authorising remedial work, etc.
Most claims are settled amicably to the satisfaction of policyholders.
Any dispute or grievance can go to a complaints procedure. Businesses with a turnover of under £1m have ultimate recourse to the Insurance Ombudsman who has powers to overturn decisions - or uphold them.
Underpinning the industry is strict regulation by The Financial Services Authority (FSA); brokers have 'conduct of business' rules to obey, and they are required to 'treat their customers fairly'.
Insurance is founded on utmost good faith and failure to provide full and accurate information (material facts) could compromise your cover, so make sure you are truthful at all times
MARC'S TOP TIPS
* Select an insurance specialist
Brokers that specialise in salon insurance can offer a unique and realistic perspective on the exposures you are most likely to face, and advise on the best policies available.
* Read and understand your policy
To fully protect yourself and your assets in the event of a lawsuit, you must thoroughly understand the coverage you have, applicable limits, and policy exclusions.
* Reduce potential liabilities
An example would be advising third parties, in writing, of specific risks, such as using a 'Caution! Slippery When Wet' sign after mopping the floor. Should an accident occur, take immediate action by calling an ambulance for the injured person and document all known facts surrounding the accident including date, time, name of injured party, and type of injury, so you can accurately reconstruct the events should the injured file a lawsuit.
