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Insurance Wise

By: Katie Armitage
Posted: October 26, 2009, from the November 2009 issue of Skin Inc. magazine.

Unlike the many courtroom dramas on television, most legal proceedings are far from electrifying and don’t involve a lot of snappy dialogue. However, any legal action will seem dramatic if you happen to be in the middle of it. Although that may seem to be a remote possibility, today’s is a litigious society and having appropriate insurance coverage is a must.

Creative attorneys often name multiple parties in a lawsuit, leaving it to a jury to sort out who will actually pay a client’s damages. Even if you are technically in the right, you could still end up holding the bag. In addition to suing you, a client may go after your employer, landlord, the franchise owner, parent company and product manufacturer.

The basics

If you are a spa owner, you should have general liability or a business owner’s policy. (See Insurance Terminology for definitions of all the common policies for spas.) The complexity and size of your business determines how much coverage is needed. Smaller organizations can probably get by with just a business owner’s policy, but larger businesses need more comprehensive commercial general liability policies. Whichever is right for your spa, these plans will cover a washing machine that floods your work area, a table that collapses, a client who trips on icy steps, or an overturned candle that causes a fire or a waxy mess, which is a surprisingly common claim. Accidents can and do happen in any business, and having business property coverage is key because of your dependence on the facility and equipment to earn your living. Rhonda had more than $10,000 worth of equipment, accessories, products and a portfolio stolen out of her car. Three things worked in her favor: The car had been locked at the time of the theft, she filed a police report and she had property insurance.

Individual malpractice

Although fires, floods, and slips and falls are risks, your greatest liability comes from treatment mishaps. Many spa owners may have exclusions in their policies that place this responsibility squarely on the esthetician. Spa owners are wise to have practitioners carry their own coverage and skin care professionals should have it to protect themselves. It’s alarming that many estheticians assume that their spa policies cover their treatments because this is often not the case. It’s rare that team members would know the details of an employer’s insurance coverage. In fact, there have been instances where a spa’s insurance lapsed, and the staff didn’t know it until it was too late.

In one case of a treatment gone wrong, Beverly gave a brow and lip wax to a 13-year-old client, who suffered severe skin irritation. The client’s father, an attorney, quickly ushered the girl to the nearest emergency room, where she received pain medication and antibiotics. The spa’s insurance policy had an exclusion for work performed within the esthetician’s scope of practice, leaving Beverly responsible for the damages. Fortunately, she had her own liability coverage, and the claim was paid.

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