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.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A MAKEUP ARTIST BUSINESS
Example 1: While discussing cosmetics with a client, you unknowingly recommend a mixture to which the client is allergic, triggering a reaction that requires some medical attention. If this incident went to court, general liability insurance would likely cover any medical expenses incurred by the client’s allergy treatments, as well as any settlements.
Example 2: Your business films an advertisement that is aired on TV. In the ad, a pair of actors play happy customers who refer to another local makeup artist’s business, at which point the ad shows an image of a clown. The other business learns of your ad and takes legal action against you, claiming that your ad’s clown image is a slanderous misrepresentation of their services. General liability insurance would probably cover your business in a resulting settlement or court-mandated payment.
Example 3: A busy employee drops an open bottle of conditioner, spilling it on the floor. As he runs to find a mop, an elderly customer walks over the spill and slips, sustaining a minor hip fracture. If your business were sued as a result, any hip injury compensation or settlement would likely be covered by general liability insurance.
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 makeup artist business 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:
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.
OTHER TYPES OF COVERAGE MAKEUP ARTISTS 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 makeup artists should obtain:
Professional Liability Insurance
All varieties of makeup artists work with clients who look to them for recommendations and advice in the world of cosmetics. Clients may rely on their makeup artists to help them cultivate the right appearance for professional events or personal endeavors. Your business should be confident in its provided services, but if a client believes they have lost an important professional opportunity due to either your cosmetic advice or a professional error, you do not want to be held liable without a professional liability policy. This is a key policy to take out for any business that makes important recommendations or conducts sensitive personal modifications for its clientele.
Business Interruption Insurance
Ideally, a business can persist through the toughest of times. In reality, many successful businesses suffer temporary lulls or shutdowns due to possible disasters like fires, flooding, illness, or extended power outages. Depending on how your makeup artistry business operates, interruptions may leave you unable to access your crucial business supplies or prevent you from personally fulfilling scheduled sessions with clients.
If your business is interrupted for a significant amount of time, this policy can help to make up for estimated losses during the covered interruption. Business interruption insurance is frequently offered in business owners’ policies laid out by insurance companies.
TYPES OF COVERAGE SOME MAKEUP ARTISTS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your makeup artist business 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.
Workers’ Compensation Insurance
If you manage a business with employees working under you, workers’ compensation insurance may become mandatory, depending on state requirements. However, no business is perfectly safe from on-the-job accidents, and this policy can come in handy for something as simple as an employee falling off a ladder while reaching toward a high shelf. Employee health, disability, and death are all covered under this policy.
Product Liability Insurance
You may choose to expand your makeup artistry business with the sale of a product line. This can be a patented product of your company’s own manufacture or your sale of a third party’s product. Either way, cosmetic products are generally purchased under the assumption that they are safe for use on a customer’s body.
If a product from your shelf is misused or found to contain ingredients that demand a recall, product liability coverage can protect your business from serious customer health claims. This type of policy will be customized to your business, focusing on the type of product you are selling as well as anything that might go awry through the products’ use.
Commercial Umbrella Insurance
This insurance is a secondary measure that works to enhance certain existing policies your business may have taken out. As long as your other policies are upgraded to the highest limits offered, commercial umbrella insurance can extend their functionality even further. This is a measure for business owners who like to have every last base covered. If you are concerned that the limits of your existing policies will not quite leave you feeling secure, an umbrella policy may be the way to go.
For instance, if your makeup artistry business is located in an area where crime has begun to rise, your insurance company’s provided policy for break-in protection may be based on an earlier estimation of lower risk. An umbrella policy could be a way to gain extra protection by acting as a supplementary provision where your original policy stops its coverage.
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.