It is often asked: How soon is insurance needed? The answer is: Insurance is needed from the first day of spa operation. If a loss occurs and there is no coverage, no insurance agent will be able to help. Also certain laws or leases may require insurance before a business can start operating. Generally, there are 3 types of insurance needed for most business owners or booth renters:

1. Professional liability
2. General liability
3. Property coverage

Malpractice is bodily injury and/or property damage arising out of any personal or professional service performed. Bodily injury could include injury or disease sustained by a person such as scarring or a burn from a glycolic peel. Property damage could be the result of a product being spilled on clothing. Professional liability or malpractice liability is the coverage needed to be properly protected from either a bodily injury or property damage claim of this nature.

General Liability will provide coverage for any damages for which a person is held legally liable as a result 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 in a massage room or bumping their head. In a recent claim, a client cut her eye on the edge of a lucite shelf causing a major injury - with a resulting payment of 50,000, by the insurance company. Also-most leases require that the lessee carry general liability insurance. This is a common request and can be handled by most insurance packages at little or no cost. The lease will specify the minimum amount of coverage to be carried and detail whether the Landlord will need proof of insurance or is to be named as additional insured. An informed insurance agent should ask these questions and provide the necessary coverage and documents.

An important point with both liabilities: Coverage must include defense costs. Often settlements are not paid or are very small, but the defense costs could be thousands. The insurance must provide protection from the start of the claim. Many liability policies do not have a deductible, but certainly this is a question that must be asked.

Liability coverage is written in two forms, it can be either an "occurrence based" policy or a "claims made" policy. With an occurrence based policy, coverage is provided as long as a policy was in effect at the time of the occurrence even if the coverage has since expired or canceled. This is an important security point for future income as claims can sometimes be presented years after coverage has expired. In contrast, a "claims made" policy provides coverage only if the claim is presented during the policy term or in continuing terms, provided that the insurance is without interruption. For additional protection with a claims made policy, often "tail coverage" can be purchased to extend the policy term after expiration. The occurrence based policy is usually preferable to the "claims made" policy because it provides security long after the insurance has expired or been canceled. However, if a "claims made" policy is the only coverage available, it is certainly preferable to no coverage. A liability policy should also include products liability coverage to provide defense protection in the event of a suit involving a manufacture's product...

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. Property coverage can include the building, contents, including equipment, inventory and betterment's and improvements, made to the premises. A careful inventory of equipment and contents will provide the amount of coverage needed to properly protect the business. It is recommended to start at the front door and list everything in the reception area including pictures and decorations, that would be lost in the event of a major loss. It is easy to forget all the things that are bought as a business is set up or expanded. Many estheticians for example, keep a large supply of product on hand, both for use and retail - it is important to include this in the valuation. Most policies will have a deductible for property claims and knowing what this deductible is can be a cost cuter. Often a large premium can be reduced by selecting a larger deductible. Property coverage can be written on either an actual cash value or replacement cost basis. Replacement cost is preferable in order to have damaged property replaced at today's cost without depreciation.

Some additional coverages that should be included in a policy are:

Spa Business Income Protection- This important coverage provides loss of earnings should a business sustain a loss from a covered peril and render the space inhabitable. This would provide income during the repair process in addition to the payment for actual loss of property. After purchasing coverage, keeping the policy up to date is crucial. The agent must be notified of location changes or additions and new services or equipment added.

Glass Coverage - Provides coverage for glass breakage to store fronts or office fronts, including the beautifully etched and lettered windows so many day spas have.

Losses to Equipment in Transit - Moving from location to location or at a trade show.

Money - Burglary both in the spa or on the way to the bank.

Some optional coverages needed in addition to liability and property coverage include: