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By Katie Armitage


I never thought it would happen to me.

Experts say this is invariably the first reaction of people when they find themselves in a crisis, whether it’s illness, accident, or natural disaster. Though we know bad things happen to good people, it’s still a shock when something dreadful lands on our doorsteps. While nothing can fully ease the emotional blow of a business calamity, having good insurance, and enough of it, cushions you from the considerable costs of a lawsuit. There are strong advantages to independent contractors carrying their own personal liability insurance coverage for both the contractors and the spas or salons where they work.

It pays to think broadly since many attorneys take an expansive approach to naming every possible entity involved in a case. This might include the individual practitioner, the spa, salon, or hotel; the landlord, franchise owner, and parent company. If there is a product involved, plaintiffs may go after you, the manufacturer, and everyone in between who’s part of the supply chain.

We know of cases where independent contractors, and even employees, assumed their employer covered any insurance needs they might have. When unfortunate incidents happened, these estheticians discovered they were not adequately covered. In some cases, the mere cost of defending a lawsuit—however unjustified—presented an overwhelming expense for the lone esthetician. In another case, the spa owner’s insurance had expired and the staffer had no way to know that had happened. Conversely, we know of spa owners who were distraught to learn that people on their staff were dangerously unprotected; obviously they themselves weren’t even sure how much, or how little, their spa plans covered. They also learned they could save money by taking care of their first priority—insuring themselves—and let employees and independent contractors take care of their own needs. All players should be highly motivated to protect themselves and not depend on others for something as important as liability insurance coverage.

In a business that depends a great deal on trust, and where a person’s health and appearance are at stake, it’s likely clients will feel especially betrayed and angry if something goes wrong. There’s really no excuse for betting the farm a disaster won’t occur. Liability coverage is just a cost of doing business.

In the exciting spa, salon, and beauty business, there are a multiplicity of new products and services that widen choices for consumers seeking relaxation, antiaging, and personal care services. Fresh ideas and technologies are coming from every direction. It’s challenging and energizing for all of us who are part of it, but for estheticians especially, staying current with skin care chemistry and new ingredients is daunting. The complexities of new treatments, in addition to the run-of-the-mill hazards business owners always face, are introducing new risks as well as rewards for practitioners and clients.

Even perfectly capable, ethical, and well-prepared practitioners make mistakes. You might have more confidence in a staff member than is justified; what if a new practitioner fudged her experience on her resume and a licensing and reference check didn’t uncover the fib?

At the very least, any consumer can make an accusation and start a nightmare sequence of events for your business. Even unfounded claims and lawsuits are costly in lawyer’s fees, not to mention your time, reputation, and self-confidence.

The question isn’t whether you need insurance, but what kind and how much? If you are a spa or salon owner, what should you expect from your staff in terms of their own coverage? The old saw about getting what you pay for is especially true here.

General liability coverage for a spa or salon is a no-brainer. This covers mishaps like a client slipping in a wet room, a coffee pot catching fire, or a client being injured when your table or chair collapses. For larger organizations, commercial general liability insurance will be most appropriate. For smaller companies a business owner’s policy may be a better fit. The larger and more complex your business in staff, treatments, equipment, and client volume, the more you will pay. Beyond these risks, you need to carry liability coverage that protects you from malpractice, just as health care professionals do.

It’s important to read the fine print in your spa policy to understand exactly what’s covered, and to know the scope of practice for each profession represented at your facility. Since state laws vary, this can be a lot to keep track of. Your care in hiring, training, and supervising people is not to be taken lightly. It might never occur to a fastidious cleaning person tidying up the back bar that consolidating two different lotions into one container may render that product ineligible from an insurance standpoint, even if both products are covered separately.

Manufacturers are generally responsible for the products they provide, but only if products are used in accordance with manufacturer instructions. In most cases your business insurance will cover product failure. But if you alter the product in some way, or become de facto involved in the manufacture of a product by working with a contract manufacturer, you may be assuming some risk associated with its use. It’s possible to mitigate this risk in the contract with your outside manufacturer—the key is knowing exactly where you stand so you can buy adequate coverage.

It’s wise to make sure manufacturer’s training in your facility is covered by their insurance or yours. Checking with your insurance company before acquiring equipment is essential—sometimes sales reps at trade shows are mistaken about what equipment is legal in your state or who is willing to insure its use.

Practitioners should carry their own professional liability coverage. This is something you should look for when hiring, because practitioners who already carry their own coverage display professionalism and business acumen. If they don’t have it, make it a condition of employment. They need to understand your establishment’s coverage isn’t enough to fully protect them—if it were, it would be prohibitively expensive for you as an owner. What’s more, your premiums would be more likely to rise if there were a number of claims. You are doing them a favor by educating them on this point.

Individual coverage is important for employers, but especially so for estheticians, massage therapists, cosmetologists, and nail technicians. Many practitioners work in more than one location, including their own homes and those of clients. Some insurers cover practitioners wherever they work. A complete package includes professional liability (malpractice), general liability in case of an accident (slip and fall), and product liability. If practitioners buy insurance through a professional association, it’s an extra measure of security that the association may be tracking licensing and continuing education, but that shouldn’t be a substitute for your own airtight human resources procedures.

An important distinction in practitioner liability insurance is whether it’s occurrence-form or claims made. This is especially important in esthetics since some insurers offer the less protective claims-made option. Therapists may not recognize the significance of this until it’s too late.

Many lawsuits aren’t filed until the statute of limitations is about to expire, which means a practitioner may be slapped with a lawsuit almost two years after an incident. Occurrence-form coverage means the practitioner who is no longer working, or is taking a break from the workplace, still has certain coverage even if they’ve allowed their insurance to lapse. If an incident during the period of their coverage results in a late claim, they are still protected for that period.

Claims-made policies cover practitioners only as long as their policies are in effect, which means an expired policy and a late claim could leave a practitioner vulnerable. Even a conscientious professional who’s never worked a day without insurance can get into trouble when switching from a claims-made insurance policy to an occurrence-form plan. If a late claim is filed after the old plan expires, it won’t be covered, and the incident precipitating the claim predates the new coverage.

Other precautions to take while choosing an insurer are financial ratings with services like A.M. Best and Moody’s, which can help you gauge the financial health of your insurer. Get your colleague’s opinions and do online research to assess the reputations of companies you are considering.

Finally, train your staff. Education is key. Research has shown the deciding factor for most people who sued their physicians for malpractice was the indifferent or defensive attitude the physician projected when a problem occurred. While you can never completely eliminate risk from your operations, control the things you can, and rest easy knowing your insurance coverage—and that of your contract and employee staff—will take care of the rest.


Katie Armitage is president, Associated Skin Care Professionals (ASCP) and executive director, Associated Bodywork & Massage Professionals (ABMP). Since 1993, she has overseen ABMP operations as the company has grown to 70,000 members—the largest massage membership association in the nation. She spearheaded the launch of ASCP in early 2007 and was named the 2007 Day Spa Person of the Year by the Day Spa Association. ASCP is the only organization of its kind. While some companies insure skin care professionals as a sideline to their insurance business, ASCP works exclusively on behalf of practitioners in the skin care profession, providing industry-specific benefits no other insurer can provide. ASCP offers a low-cost, high-value choice to more than 8,000 members.