Business Insurance for a Barber Shop

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Business insurance is designed to protect a business owner’s financial assets and is an essential investment for a barber shop.

 

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About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A BARBER SHOP

Example 1:  A customer stumbles while getting out of their chair and strikes their chin on the counter. General liability insurance would likely cover medical care associated with the incident.

Example 2:  A contracted hairdresser trips over supplies that are left on a stairway, sustaining multiple injuries as they fall down the steps. General liability insurance would probably cover the injuries as long as the hairdresser was an independent contractor. (The injuries would fall under workers’ compensation if the hairdresser was an employee.)

Example 3:  When talking with a new customer, an employed hairdresser makes disparaging remarks about the haircut they received elsewhere. The remarks get back to the other hairdresser, who believes that the comments are unwarranted and negatively impact their competing business’s reputation. They file a slander lawsuit seeking compensation. General liability insurance would probably cover the lawsuit.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

COST OF GENERAL LIABILITY INSURANCE

The average barber shop in America spends between $350 - $750 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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OTHER TYPES OF COVERAGE BARBER SHOPS NEED

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all barber shops should obtain:

 

Professional Liability Insurance

As a business that employs skilled workers, your barber shop may need professional liability insurance. This coverage protects against errors in work, and it’s available for a variety of different professionals.

When purchasing this coverage, make sure you understand and communicate to all hairdressers who is covered by your chosen policy. Coverage might extend to employees only, or it may also cover people working as independent contractors. Whichever option you ultimately get, you’ll want to let everyone know so that they can make their own informed decisions about whether they need additional protection.

 

TYPES OF COVERAGE SOME BARBER SHOPS MAY NEED

In addition to the policies outlined above, there are a few other types of coverage your barber shop may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

 

Commercial Property Insurance

If your barber shop owns its building, you probably want to insure the building with commercial property insurance. Coverage often also covers items located inside an insured building, such as chairs, mirrors, and other fixtures.

Communicate to hairdressers what your property insurance does and doesn't cover. It may not cover equipment and supplies that hairdressers themselves own, and they’ll want to know if they need to purchase insurance for their personal equipment.

Commercial property insurance can be bought as part of a business owner’s policy (BOP).

 

Home-Based Business Insurance

If you run a one-person barber shop from your home, home-based business insurance is more appropriate than commercial property insurance. Home-based business insurance normally covers business-related risks that are excluded from traditional homeowner’s insurance policies.

Home-based business insurance may be bought through a BOP, or it’s sometimes possible to acquire as a rider that’s added to your homeowner’s insurance.

 

ADDITIONAL STEPS TO PROTECT YOUR BUSINESS

Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.

 

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

FREQUENTLY ASKED QUESTIONS

What is included in a business owner’s policy?

A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.

What is the difference between business insurance and general liability insurance?

“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.