The old saying “What you don’t know can’t hurt you” does not apply when selecting the insurance that will protect your business assets. Learning about types of insurance and protection limits available for your skin care facility will be time well spent in the event of a claim.
Most businesses—even sole proprietorships—are best protected by having professional liability, or malpractice coverage; general liability, or trip-and-fall coverage; and business property coverage. This column will focus on professional liability, also known as malpractice, since this is the one coverage every service provider should obtain, either as an employee or independent contractor.
What is malpractice?
Malpractice is bodily injury and/or property damage arising out of a professional spa service. Bodily injury could include such things as a client contracting a scar, a burn or a disease. A lawsuit is brought forth when the injured party alleges that an injury is a result of negligence on the part of the skin care professional. Damage to the property of a client during a service could also be covered as part of a professional liability policy—for example, product spilled on a client’s clothing.
Because professional liability policies cover services provided by the named insured on the policy, the services you are providing should match the services covered. This is why what you don’t know can hurt you. For instance, not all policies provide coverage for all services considered to be esthetic services. Procedures, such as waxing—especially Brazilian—lash tinting/perming, microdermabrasion and chemical peels are often excluded from coverage. This may be either as a result of the language in the policy or the service not being covered within the scope of practice allowed by a certain state’s license. Read the exclusions page of your policy to be sure that none of the treatments you are offering are listed as an exclusion, especially if the insurance carrier is not knowledgeable of the skin care and spa industry.
Most policies exclude any procedure that is against a law or not allowed for your professional discipline. These guidelines can vary from state to state; therefore, know what services are allowed in your state, and if any special licensing or certifications are required before you offer them.
With the growing number of medical spas, knowing these guidelines is imperative, because different coverage is needed for services such as lasers, medical-grade peels and injectables.
Following are questions you should be asking when selecting a policy:
- Will the costs for defending your claim be deducted from your liability limit or be incurred in addition to your limit?
- Is your policy written on a claims-made or an occurrence basis? An occurrence basis pays even if the policy is no longer active; a claims-made basis pays only if the claim is made, or reported, while the policy is effect or for a limited time after it expires.
- Is the policy written for an individual or is your entity—i.e., your LLC—also insured?
- Is there a deductible; if so, what is the amount? Will a larger deductible reduce the premium?
Make an informed decision
Working with an insurance professional who understands the professional skin care industry and the services provided allows you to make knowledgeable decisions when purchasing the coverage that will protect your business. Ask questions about the coverage provided, the rating of the insurance carrier or the qualifications of the agent and agency.
Speaking with other professionals in your field, seeking information from trade associations, and reading trade publications will help when selecting your policy and insurance professional.
Informed decisions will allow you to make the best possible choices to protect the assets you have worked to build, as well as guard against the possibility of losing future income.