The old saying ” what you don’t know can’t hurt you’ certainly does not apply when selecting the insurance that will ultimately protect your business assets and possibly your personal assets.
Learning about types of insurance and protection limits available for your business will be time well spent in the event of a claim. Knowing that you have done your research will give you peace of mind in the event of a claim. While no one can foresee every possible situation, professionals that understand your industry will have the experience to help you make informed choices.
Most businesses even sole proprietors are best protected by having professional liability (malpractice), general liability (trip and fall) and business property coverage.
This article 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.
Malpractice is bodily injury and/or property damage arising out of a professional service. Bodily injury could include such things as scarring, a burn or disease. A lawsuit is brought forth when the injured party alleges that an injury is a result of negligence on the part of the spa professional. Damage to the property of a client during a service would also be covered as part of a professional
liability policy, for example, product spilled on a client’s clothing.
Since professional liability policies cover services provided by the named insured on the policy, it is important that the services you are providing 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 aesthetic services. Procedures such as waxing (especially Brazilian), lash tinting/perming, microdermabrasion and chemical peels are often excluded from coverage. This may be either a result of the language in the policy or not covered within the scope of practice allowed by a state license. It is important to read the “exclusions” page of your policy to be sure that none of the services you are offering are listed in the list of exclusions especially if the insurance carrier is not knowledgeable of your 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 and therefore it is important to know what services are allowed in your state and if any special licensing or certifications are required.
With the growing number of medi-spas, knowing these guidelines is imperative since different coverage is needed for services such as laser, medical grade peels and injectibles.
Other things to be aware of when selecting a policy:
- Will the costs for defending your claim be deducted from your liability limit or in addition to your limit?
- Is your policy written on a claims made or occurrence basis? Briefly, occurrence basis pays
even if the policy is no longer active, claims made pays only if the claim is made (or reported) while the policy is effect or for a limited time afterward.
- Is the policy written for an individual or is your entity, i.e., your LLC also insured?
- Is there a deductible and what is the amount? Will a larger deductible reduce the premium.
Working with an insurance professional that understands your industry and the services you provide will allow you to make knowledgeable decisions when purchasing the coverage that will protect your business. Do not be afraid to ask questions about the coverage provided, the rating of the insurance carrier or the qualifications of the agent/ 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 and protect against the possibility of losing future income.