Lesley Scher Salon Business insurance

Lesley Scher: In this past year there has been a large rise in Salon Business Insurance claims in the hair & Beauty industry. These have been caused by burglaries, thefts, natural disasters, alleged negligence in treatments and advice, employees alleged unfair dismissals, sickness and accidents. 

When taking out your insurance, it is important to know which party is responsible in the event of a claim. 

In the lease agreement drawn up between your landlord and yourself, one of the sub-titles is ‘Insurance’ The paragraph states which party is responsible for glass damage, which party is responsible for damage to the premises including your improvements to the premises, and what your landlord’s insurance will pay. 

Some agreements are specific; some are very vague, which can mean the owner of the hair salon is responsible for any accident or incident to the property. 

In the event of a claim, please ensure you know where your lease document is and fax the specific insurance clause to your insurance broker so the claim can be settled in days not weeks or in the worst case scenario, months. 

Please note that the lease agreement is secondary to the Property Act. Whatever you own, you claim for. Whatever the landlord owns, the landlord claims for. This means you are not responsible as well for the landlord’s excess and do not pay it. 

If you have paid in the last few years excesses or claims of property for your landlord, you are lawfully able to claim these payments back. We are still getting phone calls from clients who think they are responsible for the landlord’s property because of their lease. 

Unfortunately, some landlords do not understand the Act and the fact that an Act always takes precedence over an agreement. Advice – do not pay at all if you do not own the property.

If you have made tenant’s improvements such as repainting of walls and fixtures, and there is a flood through the building, check your lease to see who is responsible. As leases can be very complicated, send it on to your insurance broker for translation. 

With flooding, you must act immediately by ringing your insurance broker who will arrange for an assessor to be sent to you urgently. This means that you do not have to fill in a claim form, the assessor will take care of any paperwork, and arrange for a company to dry out the premises. Once this is done, the loss to property can be evaluated.

In your rent, expenses such as a proportion of rates and insurance are included. However, sometimes landlords refuse to accept their legal responsibility. In this case, it is up to the Insurer to decide whether they will approach the landlord directly. Again do not pay anything. 

With a material damage claim (business assets) there is always an excess. Please note that from renewal, standard excesses are still $500 for all claims except burglary (forced entry), arson and malicious damage, which now carry an excess of $1000. If your policy includes theft (unexplained disappearances) there will be an excess of $2500 per claim. 

Remember in the event of any claim on your material damage policy, which results in you being unable to trade, your business interruption insurance will pay out for wages and other fixed expenses incurred for the period the salon is closed. 

When a beauty clinic or spa is flooded and the salon closes for some days, it is important to be able to claim not only for your stock and plant, but for business interruption (loss of profits) insurance. 

Ensure that you have up-to-date information on your expenses including wages and fixed costs so that if the worst happens you will not be worse off. Always keep a record of your turnover and your gross profit so you are not under-insured.

In the event of a claim on your business liability insurance, ensure that your client gives you proof of value of the claim. For example, a client claiming for damage to an item of clothing stating the value of the garment as $2,000, must then get you evidence of this. This is to safeguard the insurance companies against fraudulent claims. 

In the event of a professional negligence claim, the client must produce medical bills, proof of loss of income and any other expenses. They must have also have registered a claim with ACC if the client is injured. The claim in this case is also part of Statutory Liability as this insurance pays out on professional negligence claims if the claim goes to court. 

However, the vast majority of claims are for alleged negligent treatment or advice and this is only covered by product treatment and advice – Professional Indemnity. Remember professional negligence covers the area you are working on as opposed to Public Liability, which is everything but the area you are working on. 

Please check your insurance policies to make sure that you have this cover. With all colour treatments, head massage and treatment advice, not having the Salon Liability cover can make the salon emotionally and financially vulnerable. 

Employment Practices Liability protects against claims for unfair employment and constructive dismissal. Before taking any steps, ensure you follow the employment rules. If you decide to dismiss a staff member before the 90 day trial period has finished, give a reason now. If you decide to dismiss a staff member because of their behaviour, check you have had the meetings and everything is in writing. 

If you are sick and cannot work for a short time, or up to 52 weeks, a claim is made on your Business Accident and Sickness Insurance (Salon Income Protection), which pays out after 7 days of sickness. 

To make a claim requires a letter from your doctor stating that you cannot work for a certain period because of illness or accident. Please note that this product is now only available through the Group Package. With an accident, there is no waiting period at all and the unique product – no waiting for ACC acceptance of claim.

There are three simple rules for claiming successfully. 

Claim quickly after an event so it is clear exactly what happened. If you are unclear ring your broker immediately.

Put as much information as you can on the claim form, including proof of ownership and values. 

Act quickly to minimize any damage to yourself and/or your property. 

Because of the nature of hair salons, with appointments often being booked well in advance, it is important that an unexpected event does not affect your cashflow or service. Before renewal of your insurance policies, ensure that you have the appropriate insurance cover in place. There is no advantage in being under-insured.

Any situation requiring an insurance claim can be an unpleasant experience, but by having appropriately customized insurance protection such as the Salon Business Pack, your claims experience should be as painless as possible.

Lesley Scher, QPIB, FIBANZ (Fellow), ANZIIF(SnrAssoc), CIP, is Managing Director of The Insurance Brokers Limited, the Preferred NZARH Insurance Supplier for over 20 years and developer of the Salon Businesspack for Association Members. For further details of the Salon Businesspack and related Group Discounted products, contact Lesley or one of her team at Ph: 09 360 4219, Fax: 09 360 4220, email: lesley@tib.co.nz or info@tib.co.nz or website: www.tib.co.nz.