Public liability insurance covers you if a compensation claim is made against you by a member of the public.
It’s a type of insurance that all businesses need because compensation claims can be expensive to settle and difficult to handle. However, the public liability insurance that hair salon insurance includes is slightly different to the public liability insurance that other businesses require.
Public liability insurance cover
Public liability insurance covers compensation claims made by members of the public who allege that something you’ve done, or failed to do, has resulted in them being injured or their property being damaged.
It’s important to note that public liability insurance doesn’t cover compensation claims made by your employees. For that, you need employer’s liability insurance – a type of insurance that’s a legal requirement if you employ anyone – even if your employees are only employed on a temporary or casual basis.
Public liability insurance also provides you with legal defence if a compensation claim is made against you. Your public liability insurer will have a legally trained team that specialises in the complex legal arguments that compensation claims can involve. Having this type of insurance means that you don’t need to worry about dealing with claimants’ solicitors directly yourself.
The cost of compensation claims
We’re living in a compensation culture and every day there are adverts everywhere from “no win, no fee” accident management companies. This means that you’re more likely to have a compensation claim made against you. And, as mentioned previously, those claims can be expensive to settle.
A relatively minor injury will cost over £1,000 once the legal costs and associated expenses are factored in. A slightly more serious injury, such as a broken wrist, could well cost £20,000 – and if the claimant had lost wages because they were unable to work due to their injury, that cost could be considerably more.
Compensation claims for serious injuries, such as spinal injuries and injuries where the injured person will never fully recover, will be a lot more expensive to settle. It’s not uncommon to see settlement figures in the region of £250,000 and if the claimant’s disability means that they need to have their house adapted or need special equipment, that figure can end up being even higher.
Products liability insurance
Public liability insurance for hair salons usually includes products liability insurance cover. This is similar to public liability insurance, but rather than covering compensation claims arising out of things that you have done or failed to do, it covers compensation claims arising out of defects in any of the products that you have sold or supplied.
Financial loss cover
Public liability insurance only covers compensation claims involving injuries or damage. It doesn’t cover compensation claims for purely economic losses.
This means that, if a model is unable to work due to their hair being incorrectly dyed, but hasn’t actually suffered any injuries as a result of the treatment, that model’s lack of earnings wouldn’t be covered. Similarly, if a photographer or film studio incurred additional hire charges or other costs as a result of the model not being able to work, a compensation claim for that wouldn’t be covered.
A financial loss cover extension extends the public liability insurance cover so that such compensation claims don’t go uninsured.
Treatment risk extension
This is the main difference between a hair salon public liability insurance policy and a standard public liability insurance policy.
A standard public liability insurance policy will not cover compensation claims arising out of a professional activity. This means that, although a compensation claim made by someone who had injured themselves by tripping of falling would be covered, a compensation claim arising out of hairdressing services might not be covered.
It’s therefore essential that hair salons make sure that their public liability insurance includes a treatment risk extension to cover this risk.