You can easily to work out most of your business costs. You know how much it costs to rent your salon, and you know how much your equipment and stock costs. Working out how much your public liability insurance policy will cost is not so easy because the cost depends on a wide range of factors.
How much your public liability insurance will cost is based on whether your public liability insurer thinks that it will have to pay a claim. It also depends on your insurer’s assessment of the likely value of any claim that you might need to make. The main factors that are taken into account are:
- How much experience you have and your track record
- What you are doing
- How much you are doing
- The cover you require
How much experience you have and your track record
Freelance hair and beauty public liability insurers base their premiums on how experienced you are in the same way that a new driver will pay a different premium than someone who has been driving for a number of years. They will also base their premiums on whether you have any qualifications and you will pay less if you are fully qualified in the same way that someone who has passed their test will pay less than someone who is still on a provisional licence.
Although it isn’t guaranteed that you won’t need to make a claim if you have several years of experience, the chance of a claim is lower. Similarly, someone who has undertaken formal training is less likely to have to make a claim.
If you have been in business for a while, your previous claims history will be used when the insurer determines your insurance premium. In the short term, taking safety measures may seem expensive, but in the long term the cost of taking safety measures can be more than repaid in the cost of your insurance because they reduce the chance you having to claim and, as such, keep your future insurance premiums down.
What you are doing
There is more risk with certain hair and beauty services than there is in others. A hairdresser is less likely to injure someone than someone who is performing quasi-medical procedures is. Similarly, if your clients are members of the general public rather than rock stars and supermodels, any claim that is made against you is likely to be less expensive to settle.
This doesn’t mean that you should necessarily turn down the top-end work. But if you do take on this type of work you will need to consider the additional insurance cost and factor it into your pricing.
How much you are doing
How many clients you have will affect the chance of a mistake occurring. If you deal with 10% more clients the chance of a claim occurring will be 10% higher so you will be paying 10% more to reflect this additional risk.
Public liability insurance is usually based on the annual turnover of your business.
The cover you require
A standard public liability insurance policy will not include treatment risk cover. Hair and beauty public liability insurance policies should include this policy extension, but as a result the insurance will cost more. You should not try to cut costs by buying a policy without this treatment risk cover because if you don’t have it, many claims could be uninsured.
You should also think about the indemnity limit that you need. The standard public liability indemnity limit is £1,000,000. Although this sounds like a lot of money, public liability claims are often expensive to settle. For a small additional premium, you can increase the limit to £2,000,000 or £5,000,000. If there is a serious incident the small additional premium might end up being a worthwhile investment.
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