While thinking about this article, I started to realize that it often is not what we know, but what we do not know or assume to be correct that can cause us the most trouble. There are many articles written regarding the types of insurance an aesthetician should carry, primarily:
The problem arises when coverage is purchased and the policy does not provide the proper protection needed. This can happen in a variety of ways and I will call your attention to just a few incidences that agents discover.
Professional Liability and Exclusions
While it is difficult at times to understand the language of your policy, I highly recommend that you always read the “exclusion” page of your policy to learn specifically what will NOT be covered. The exclusions can often be more informative than trying to read what is covered.
Many companies are excluding bikini or Brazilian wax treatments as covered services even if these treatments are within the scope of practice for an aesthetician in your particular state. It is important to not assume that all the services you provide will be covered. Be wary of new machines and products when adding a service and be sure to check with your insurance professional before purchasing the machine or product.
Most policies contain the exclusion that coverage will not apply if you are in violation of a law. What does that mean exactly? In the case of an aesthetician, it could mean that you are practicing in a state that requires licensing and you do not have a license or you are performing a service that is not within the scope of practice for an aesthetician in your particular state or district.
To illustrate the point, there are some states that limit where (or even if) an aesthetician can perform microdermabrasion services. Providing a service not within scope of practice in your state could nullify your insurance coverage. To prevent this type of situation, know what the requirements are for licensing in your state, learn what is within scope of practice for your discipline and then be sure your insurance provider is aware of and providing proper protection for these services.
Be sure that the policy you are purchasing covers aesthetic and other spa services; many policies designed to cover beauty salons and cosmetology do not necessarily cover such things as aesthetics and massage.
Before you sign that lease, buy a business,or just begin working,consider the following: When setting up your business, your accountant, attorney, and your insurance professional will be your most important advisors.
General Liability and Renting Space
When an aesthetician or any day spa service provider is working as an employee, the owner of the facility will usually have general liability coverage in place to protect themselves and their employees against slip, trip and fall incidences. For example, in New Jersey booth renting in not allowed; all service providers must be employees and then are protected by the insurance protecting the spa or salon. However, if you are renting space, you are no longer protected by the spa/salon’s coverage. Being a renter (or independent contractor in some cases) sets you up as a separate business entity and the spa’s policy cannot provide coverage for you. You must have your own general liability coverage to protect yourself in the event one of your client’s claims an injury from something other than a service.
The question then is asked, “Will my landlord not be responsible if someone falls in the building or in the parking lot”? The question does not have a simple answer and you must look to your lease first to find how your “area” is defined, what insurance requirements it may have, and what proof of coverage you will be required to provide.
Often, if someone is injured (especially in a common area), the lawsuit will name everyone that is remotely connected to the area including you. You would then have to provide an attorney to respond to the suit and defend yourself if necessary. The lawsuit may eventually dismiss you, but not before you spend thousands of dollars in your defense.
Having the correct insurance in place will not only satisfy your lease but will offer you the defense you will need until the lawsuit is dismissed or you pay any damages that may lawfully be required. It is recommend that you have your insurance professional review the insurance section of your lease to be sure you are in compliance and have the proper protection for your business.
Even if there is no lease in place, if you are paying rent or are truly an independent contractor, the same scenario would apply in most cases.
Business Personal Property
Whose property is it? That is the main question to think about! If you are renting a space and all the equipment, product and retail belongs to you, it is important for you to determine the value and have adequate insurance to make you whole in the event of a claim from perils such as fire and theft. The owner of the facility cannot insure personal property that does not belong to them so do not make the assumption that since the owner has the building insured, you will have coverage for your equipment.
The other part of this type of coverage that should be considered is business interruption (or business loss of income protection). Determined by your income, the coverage would protect you in the event that a covered peril prevents you from working at your facility and you either have to move or close until renovations are made. Remember, even though you might not be able to use your space, your expenses will continue and you will need some income to pay these expenses. If you have to relocate and advise your clients of the change, part of this coverage will pay the expense to help you with the relocation.
While being careful in selecting your advisors, the time and effort to select the proper insurance professional may be of utmost importance. This person will be the one who helps you to choose the proper protection for the business and assets that your attorney and accountant have arranged for you. With this in mind, please consider these issues when selecting an agent to help you with your insurance portfolio:
As always, keeping good records, having consistency in your services, and documenting your work will be your best defense.
originally published in the July 2012 article of Dermascope magazine.
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