This special type of insurance coverage can protect against a wide range of allegations including allergic reactions to products used during treatments, all manners of skin irritations and inflammations, burns from hot wax and steam wands, and sexual misconduct (etc.). The most important point to understand is that anyone can file a suit against you at any time for any reason. All too often, we see groundless suits filed as fishing expeditions against unsuspecting business owners. Proper insurance protection can ensure that your hard earned reputation (and financial resources) are not wasted on defending fraudulent claims. That said, legitimate claims often occur when they are least expected. Equipment can malfunction. Your customer might be less than forthcoming on their medical history form. Your most experienced aesthetician might goof in selecting the appropriate product for her customers’ skin type. Things happen. Be prepared.

What’s in an Agent?

You expect that your CPA knows the tax rules. You expect that your lawyer knows the ins-and-outs of contracts and consent/release forms. Shouldn’t you expect that your insurance agent understands both the policy that they’re offering and the services that they’re covering? Once you’ve gone beyond the traditional “salon” services, you’ve likely also gone beyond traditional “salon” insurance. There’s more to an insurance quotation than the price. Have your services been properly covered? Ask to see a sample policy. What about that new couples hot stone massage microdermabrasion chemical peel combo? Make sure that your agent understands the policy exclusions and is able to clearly explain them to you. Are your services really covered, or did the insurance company forget to “exclude” them? Will your agent be there to back you up with industry expertise if the insurance carrier balks at paying a claim for the newest service?

What’s in a Policy?

Insurance policies are legal contracts. They’ve become easier to read over the last few years…but sometimes it still seems like you need a law degree to understand all of the terms and conditions. Ask your agent to point out two sections—what’s covered and what’s excluded. Buried in that “book” that you might not want to read are the details that will determine whether or not the insurance company will be there to defend you when that lawsuit comes through your door. Does the “what’s covered” section sound like a description of a barber shop or beauty salon? If so, your aesthetic and spa services may not be fully covered. If you’re lucky, the insurance carrier might cover one claim…and then cancel the policy. As a business owner, I’d rather have the policy written correctly from the start.

Nowadays, many insurance policies cover “everything”…except those things that are specifically excluded. The exclusions section has therefore become an increasingly critical component of professional liability policies. Common policy exclusions may include: laser or “IPL” services, pregnancy massage, hot stone massage, Brazilian waxing, genital waxing, microdermabrasion, chemical peels, removal of skin tags or spider veins, communicable diseases, work on minors, services performed by medical doctors, AIDS/HIV, and sexual misconduct. Some policies even exclude work performed by independent contractors. There may also be limitations related to the strength (concentration and/or pH) or chemical peel solutions. Each policy is unique and should be carefully reviewed.

Is the policy yours alone, or is it an “association” policy? Many “association” or “group” policies contain provisions that limit the maximum amount of coverage available to the group at large in a given year. This is called the “group aggregate limit”. Claim settlements seem to increase every year. Has the group aggregate also increased to keep pace with this trend? How many members are sharing the same group aggregate? It’s probably more than you think. Is the group aggregate high enough given the number of members? Should your coverage be limited because some other aestheticians or bodywork professionals had a bad (claims) year? That just doesn’t seem right.

How to protect yourself from claims/lawsuits

Claims happen. It’s a sad fact of doing business. Your exposure to claims can be reduced by treating all of your customers to the same standard of care, thorough and accurate documentation, and by making honest representations of the expected treatment outcomes. Simply put…under promise, over deliver, and keep detailed records of every single treatment that you perform.

“What about my staff?” Quality record keeping and loss-control must pervade your entire business. Even the best staff might not always learn by your good example. Make sure that all staff understands your philosophy and put procedures in place to address potential problems before they spin wildly out of control. If possible, conduct random checks of treatment records to ensure that accurate and complete records are being maintained. Implement an internal loss reporting procedure to capture all pertinent information regarding potential claims while the details are still fresh in everyone’s mind.

“What about my independent contractors/booth renters? I don’t need to worry about them…right?” Oftentimes, spas and aesthetic clinics rely on their independent contractors to carry their own liability insurance. This is a perfectly valid option, but it often fails on the follow through. In order to be properly protected, it is necessary for each and every independently insured contactor to name the business as an “additional insured”. They should also provide a “certificate of insurance” each year as proof of continued coverage. “Additional Insured” status helps you in two ways. First, if you become entangled in a lawsuit arising out of services performed by a separately insured independent contractor, you’ll be defended by the contractor’s policy rather than your own. Second, you should be notified by the contractors’ insurance company if the policy is cancelled during the course of the year. A word of caution…don’t rely on this cancellation notification in lieu of obtaining a new certificate of insurance each year. Cancellation notification diligence is often spotty at best, and there are virtually no rules or regulations that will compel the insurance company to make sure that you’ve been properly notified of a contractor’s policy cancellation.

No matter what happens, never admit guilt or responsibility. Do you best to maintain a polite and courteous demeanor. Notify your insurance carrier promptly. Refrain from discussing the matter with anyone not directly involved. Always let the insurance company handle claims letters from lawyers.

Where does professional liability coverage begin and end?

Though coverage goes far beyond coverage limits and policy effective dates, the realm of potential incidents covered by your professional liability policy is not boundless. What happens if a customer faints following a facial or massage, slips out of the treatment chair, and suffers a concussion when they fall to the floor? Were the injuries a reaction to a product used during the treatment (product liability)? Perhaps caused by the angle of the treatment chair or table (general liability)? Did the therapist do something wrong, or turn away from the customer at the worst possible moment (professional liability)? The easier answer…yes! Any lawyer worth her salt will likely make all of these allegations, and possibly more. Your professional liability coverage is important, but is only one component of a complete insurance program. More complete coverage can be obtained through the inclusion of general and product liability coverage (they’re normally sold together). This supplementary coverage is often most effective when written through the same insurance carrier that provides your professional liability coverage. Consult your insurance professional to build an insurance package that will protect you against all potential events.

(published 2009, Dermascope magazine)

R Charles Stevens II CISR is Vice President at Marine Agency Corporation in Maplewood, New Jersey. Mr. Stevens has over thirteen years experience insuring the spa industry and is available for consultations at 800-763-4775 ext 14 and email cstevens@marineagency.com. Marine Agency Corporation has offered coverage for the beauty and spa industries since the 1930’s. Marine Agency Corporation is available online at www.marineagency.com.

A. The easy answer is YES-so you don’t forget. No money=no coverage. Before you send the check, there are some things you should review and renewal time is a good time to do it.

The usual changes that come to mind are:

• Has your location changed?
• Have you added or changed any services?
• Have you added new equipment or perhaps, remodeled?
• Have you incorporated or perhaps dissolved a partnership?

All these changes can affect your coverage in the event of a loss. Probably the most important change and the most overlooked is a change of location. If the location is not correct on your policy, you will have no property coverage at the new location. Since property coverage premiums are based on building information and actual physical address (street, town, state)—the company must have accurate information. Also not requesting a change of location immediately could also affect the mailing address and you may not receive renewal information and bills. Professional liability and general (premises) liability will usually follow you from location to location but some general liability policies are location specific, so again it is crucial to keep this information accurate.

If you have added a service, for example, you are now offering waxing in addition to your manicure/pedicure services, you should check with your carrier to be sure it will cover waxing. If not covered, in the event of a waxing claim, the company would not be required to respond. This is becoming a major problem as more and more salons become day spas, the new services are generally NOT covered on policies that were previously covering hair and nail services.

Also when adding a new service, such as aesthetics, new equipment is purchased and rooms redecorated to accommodate the new service. The cost for the new equipment and the redecorating should be added to your property values. In the event of a property loss, you will be paid the up to the limit shown on your policy. This amount if not reviewed could be significantly lower than your actual cash value.

A long time client of ours had a recent fire loss that destroyed her entire facility. She had not reviewed her coverage as we suggest each year. Her policy limit was $4000, which was the cost of her equipment when she purchased it many years ago. Over the years she had grown and purchased new machines and office furnishings. She estimated her loss to be $20,000., but she received the $4000. that was her policy limit.

A more devastating claim involved a client who purchased his building for cash. He failed to advise us that he had purchased the building nor did he buy the coverage from a local agent. When a fire destroyed the building, he received the money for his salon contents but he lost the $75,000. he paid for the building.

GUIDELINES: Changes in your status can alter your coverage. If you are not sure about a change you are making, call your agent. Don’t make the decision on your own. If you have not made the change during your policy term–DO IT AT RENEWAL TIME!

If you are paying for coverage, you want to be sure it is correct and will be adequate in the event of a claim.

Questions? Please contact me.

(originally published in the CA, OH, PA, and NW Stylist Newspapers)

Mary Lynne Blaesser, CIC is a certified insurance counselor for Marine Agency Corp., specializing in the beauty trades industry.

For more information or a free no-obligation insurance consultation contact Mary Lynne Blaesser at the Marine Agency Corp. in Maplewood, New Jersey. Call 1-800-763-4775 ext. 15, email mlblaesser@marineagency.com or fax 973-763-1635.

Major parts of the risk of any business are liability to others and the loss of critical equipment. Either incident could cause a loss of income that could force you to close you doors. Insurance allows you to transfer these risks to the insurance company–offering you protection and security!

My clients often ask me how soon should I purchase insurance?” Insurance is needed from day one. If you suffer a loss and have no coverage, no insurance agent will be able to help. Also, certain laws or leases may require insurance before you are able to start operating.

Generally, you will need to have three types of insurance: Professional liability, General liability, and Property coverage.

Professional Liability commonly known as malpractice liability–is bodily injury and/or property dam-age arising out of any personal or professional service you perform.

General Liability will provide coverage for any damages for which you are held legally liable as a re-sult of bodily injury or property damage, including any suit, both for defense costs and any settlement. General Liability claims can result from such things as someone tripping on a carpet or bumping their head.

Your coverage must include defense costs. Often settlements are not paid or are very small, but the defense costs could be thousands. Your insurance must provide you with protection from the start of the claim.

Your liability insurance policy should also include products liability coverage, which in some cases could be secondary to the manufacturers’ coverage.

Property Coverage will provide protection from such perils as fire, lightning, windstorm, water damage, vandalism, and theft. Perils generally not covered would be earthquake and flood. Your property includes your building (if you own it), your contents (including equipment, inventory, and betterment’s and improvements made to the premises). A careful inventory of your equipment and contents will provide you with the amount of coverage needed to properly protect your business.

Property Coverage can be written on either an “actual cash value” or “replacement cost” basis. We recommend replacement cost in order to have your property replaced at today’s’ cost without depreciation.

Knowledge is Your Best Protection. The insurance agent you use can be as important as the coverage you buy. You will want to deal with a licensed insurance professional who is qualified in their field, knows your industry, and who represents “A” rated insurance companies

Do Not Be Afraid to Ask Questions about the policy you are buying, the qualifications of the agency placing the coverage, and the rating of the company writing the policy. Be aware that often a lower price does not determine the best deal. As with any other major purchase you make, be sure to be an informed consumer. If you do not know the questions to ask, speak with other professionals in your field, seek in-formation from trade associations and read trade publications.

Also, keep your insurance up to date. Only you know when you are changing locations, adding services or purchasing new equipment. In order to protect yourself, you must notify your agent of these changes.

(originally published in the CO Society of Aesthetics and Spa Therapists Association newsletter)

Mary Lynne Blaesser, CIC is a certified insurance counselor for Marine Agency Corp., specializing in the beauty trades industry.

For more information or a free no-obligation insurance consultation contact Mary Lynne Blaesser at the Marine Agency Corp. in Maplewood, New Jersey. Call 1-800-763-4775 ext. 15, email mlblaesser@marineagency.com or fax 973-763-1635.

This Privacy Statement applies to our current and former customers who obtain our personal, family, household, or business insurance products, as well as claimants and beneficiaries of those products. Personal information means information that identifies you personally and does not include information that we can get from a public source. We promise to protect your personal information by following the procedures described in this Privacy Statement. Please read the following information to learn more about how we collect, share and protect your personal information.

Information We Collect

We collect personal information about you to completed transactions you initiate, service and manage your account, and inform you about our products and services. We collect personal information about you from the following sources:

Information you provide on applications, other forms, or by phone. This may include information such as your name, address, and social security (or federal employer identification number).

Information regarding transactions with us, such as your payment history, policy coverage, and claims history.

Information we receive from consumer reporting agencies and other outside sources, such as motor vehicle reports, credit history reports, and lien/leasehold reports.

How We Use Your Personal Information

We do not share your personal information with anyone except as permitted by law. We do not sell your personal information to third parties. We do not give your personal information to third parties for any type of promotional or marketing purposes not related to Marine Agency Corporation.

We may share your personal information related to your transactions and experience with us with the insurance carriers we represent to better market and serve your insurance needs.

We may also share your personal information with parties other than the insurance carriers we represent, such as your insurance agent or broker, who help us service your policy, settle claims, process your payments, properly rate your policy and provide additional information to you about our insurance products.

Whenever we share your personal information with these other parties, we will protect your privacy with a confidentiality agreement that limits the use of your information to the service requested and requires consistency with this Privacy Statement.

How We Safeguard Your Personal Information

We maintain physical, electronic, and procedural safeguards to protect your personal information. We limit access to your personal information to employees and others with a valid business need for the information. We hold our employees responsible for upholding our privacy standards.

Updates and Feedback to This Privacy Statement

If we need to amend this Privacy Statement in the future, we will note the date of revision at the bottom of the page. If we make any substantial changes in the way we use your personal information, we will notify you and provide additional instructions as necessary.

Please note that this statement is only a summary of our privacy practices and not a request for information or validation from you. It is not necessary for you to “opt out” or respond to us.

If you have further comments about this statement you may address your comments to us via the “contact us” page or in writing to Privacy Statement, Marine Agency Corporation, 191 Maplewood Avenue, Maplewood NJ 07040.

Effective Date: June 30, 2001

Thank you for choosing Marine Agency Corporation for your insurance needs. We look forward to continuing to serve you – whether it is your home, your auto, your personal or business information. If you should ever decide to end your relationship with us, we will adhere to the policies and practices as outlined in this Privacy Statement

From whom will you purchase the policy? What is their experience related to your industry? Are they licensed to sell insurance in your state?

Insurance policies are sold either directly by the insurance carrier or through an insurance agent. Independent insurance agencies usually represent a variety of carriers and are therefore able to shop around for the best rates. The specialty of an agency is important consideration–determine if the agency staff is familiar with your industry (if they can’t spell “aesthetics”, they don’t know what it is). Insurance agencies must have a state license to sell insurance. If you are unable to get a direct answer regarding the licensure of your agency, your state Department of Insurance will be able to help.

What insurance company will provide the policy? What is their financial rating? Are they an “admitted” carrier?

Insurance carriers are rated on a letter grade scale (A++ is the highest) by a number of rating organizations. The ratings represent a measure of the company’s financial stability, overall size, and claims-paying ability. I do not recommend purchasing a policy from an insurance carrier with any rating lower than “A-”. “Admitted” carriers are regulated by your state. Changes in policy rates or forms must be filed with and approved by the state Department of Insurance. Policyholders with these carriers are protected by a variety of state guaranty associations–if a carrier becomes insolvent (bankrupt), there is a reserve to pay claims. “Non-Admitted” or “Surplus Lines” carriers are not regulated by the states and are therefore not protected by state guaranty associations.

Does the proposed malpractice coverage include all of the services you perform?

Be sure to first disclose all of the professional services you perform. Verify that your policy includes coverage for all of these services. Assuming that your agent “knows” what services your perform or that coverage exists is dangerous territory. You may not realize that coverage doesn’t exist until a claim is denied.

Is the liability coverage to be written on a “claims-made” or “occurrence” form?

Under an “occurrence” form policy, coverage exists for claims which occurred during the policy period regardless of when they are reported to your insurance carrier. Under a “claims-made” policy, claims must occur and be reported while coverage is in force in order for coverage to exist. For example:

1. Your claims made policy will expire on June 15. A client was injured on May 15 and you report the incident on June 1. Coverage will respond.
2. Your claims made policy will expire on June 15. A client was injured on May 15 but doesn’t tell you until July 1. Coverage will not respond unless you renewed the policy.
3. Your occurrence form policy expired on June 15 and you did not renew coverage. A client was injured on May 15 and doesn’t tell you until July 1. Coverage will respond.

These situations are particularly relevant when moving your coverage from one insurance carrier to another. If you are non-renewing a claims-made policy for any reason, consider purchasing “tail” coverage from the original carrier or “prior-acts” coverage from the new carrier in order to protect yourself from situations like that described in example 2 above.

Does the policy include coverage for your business property? Does the coverage include burglary and theft? What about loss of income?

If you’ve invested in equipment, inventory, or furnishings for your business, it is advisable to protect it against loss or damage. You will need to provide your agent with relevant information including the amount of coverage needed, property location, and “protection” characteristics (building construction, sprinkler systems, alarms etc.). If available, be sure that your policy includes coverage for burglary and theft of your property and money. In most cases, the cost savings afforded by eliminating coverage for burglary and theft are not substantial enough to warrant the reduction in coverage. Many “package” policies automatically include coverage for loss of business income. This coverage will reimburse you for loss of income due to a business interruption caused by covered peril (fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot, vandalism, sprinkler leakage, and sinkhole collapse). Business income coverage is provided with a time and/or dollar limit on coverage.

(originally published in the American Society of Esthetic Medicine’s 1999 Resource Directory)

Charlie Stevens is a licensed insurance agent with Marine Agency Corporation in Maplewood, New Jersey. He has received a BS in Business Administration from Rider University. Please contact Marine Agency with any questions at 1-800-763-4775 extension 14.