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 DAY SPA
Example 1: A customer is complaining of abnormal irritation and splotching from sun exposure following a spa skin treatment. A general liability policy should cover any medical expenses or litigation.
Example 2: During a hair coloring appointment, the customer suffers chemical burns from one of the products. Your general liability insurance should provide coverage for medical bills and/or legal fees.
Example 3: A customer is threatening a lawsuit after complaining of intense pain and discomfort following a massage visit. General liability insurance will cover costs incurred because of the suit as well as the customer’s medical expenses.
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
On average, day spas in America spend 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:
Several factors will determine the price of your policy. These include your:
- 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 Day Spas 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 day spas should obtain:
Professional liability insurance
Day spas offer a variety of services, requiring skilled technicians to treat customers based on their individual needs. Professional liability insurance, also known as Errors & Omissions (E&O), is designed to protect professionals against liability claims. If a customer doesn’t receive the desired outcome or promised results, this may trigger a covered professional liability claim.
Workers’ Compensation Insurance
Your state will likely require the business to carry workers’ compensation for each employee. It covers work-related accidents and illnesses, along with resulting medical bills, lost wages, and any resulting settlements.
Workers’ compensation is purchased as a standalone policy.
Commercial Property Insurance
In addition to the extensive investment day spas make in equipment, furnishings, and tools, most facilities require extensive build-outs to get them up to code. A commercial property insurance policy covers this investment in the event of a covered loss.
Commercial property insurance is generally purchased as part of a business owner’s policy (BOP).
Types Of Coverage Some Day Spas May Need
In addition to the policies outlined above, there are a few other types of coverage your day spa 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
Business Interruption Insurance
Many BOPs offer business interruption insurance as part of the insurance package. If the business suffers a major loss in an event such as a fire, business interruption insurance will help cover lost revenue while you rebuild. In addition to making up a percentage of lost profits, it can cover fixed costs and additional expenses incurred when/if the business operates at a temporary location.
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.