Monday, 26 August 2013 14:58

Are you Covered?

Written by   Susan Etter

Let us take a look at this scenario: you have decided to get laser hair removal. You first visit Spa A, which promises to give you six treatments – all for the incredible price of $99 and the offer is only valid if the first treatment is done immediately. Next, you visit Spa Z, where a consultation visit is scheduled first. During this consultation, possible treatment times are provided based on your propensity to burn and heal, the technician advises you of the effectiveness of the procedure in regards to your skin type, walks you through the common after effects, tests an area of your skin for any reaction, and then schedules you for your first appointment to come back in for treatment.
Which spa would you choose to do business with? Spa Z would be the better choice since they would take the time to make you feel comfortable and to explain the treatment so you understand how long it could take to achieve results and what to expect when you get home.

This same concept holds true with insurance companies and insurance agents. Some will offer you a premium, ask for a signature, take your credit card and never say more. Do you know what you just bought? Do you have any idea what happens in the event of a claim?
Insurance is one of the most important parts of being an aesthetic or medical professional and just like laser hair removal, there is no one-size-fits-all approach. Your needs will depend upon a number of criteria, including where you are located, what services you offer, if you have any employees, and how much in the way of assets you have to protect. A good insurance broker should discuss these items with you to determine what insurance plan will fit into the puzzle for your business. Ultimately, they should help you understand, and have confidence in, what you are paying for.

Better Safe Than Sorry
Many professionals believe that if they are good at what they do, they do not need to purchase insurance. None of us are perfect; everyone will make a mistake from time to time. Maybe that client really was a skin type IV, not III, and you needed to be less aggressive in treatments. Or maybe the power surges and the laser emits an intense burst that burns someone. Perhaps someone is down on their luck and simply wants to declare an injury to try to get some extra money. These are all real examples of claims that insurance deals with on a regular basis. Can you be sure none of these scenarios will ever apply to you, and are you prepared to pay legal fees out of your own pocket?
Some professionals have said that if they do not have insurance, they can-not be sued. If someone retains an attorney, they ask about insurance after the lawsuit has been filed, not before. Attorneys may be comfortable going after your personal or corporate assets if there is no insurance coverage in place to handle the problem. In fact, nothing is available, they could seek to garnish your future earnings. Consider this scenario: the coffee shop next door leaves their machines on all night; one overheats and starts a fire. Their building and yours are gone by the time the fire department shows up. You have no equipment, no treatment room, no product to sell, and no income for the next 90 to 120 days, while you wait for the landlord to rebuild. You do not have insurance, so you decide to pursue reimbursement of damages from the coffee shop. Guess what? They did not think insurance was important either, and they do not have the money to pay you!

suiteSimple Definitions to Start With
Now that you have decided that insurance may not be such a bad idea, let us take a look at at few basic concepts in the insurance world.

Commercial General Liability
This coverage is sometimes referred to as slip and fall insurance, as that is a frequent type of claim under this type of policy. However, there are a few subsidiary terms under this umbrella.
Bodily Injury and Property Damage Liability– Simply put, this coverage is if someone or their property gets hurt/damaged while at your facility or in your care. For example, this could cover someone slipping over a cord that was stretched across the floor or a damage caused by a chemical solution spilling on a client’s new Gucci purse.
Personal Injury and Advertising Injury – The old adage, “If you do not have something nice to say, then do not say anything at all,” is still good advice, but something we all tend to forget. This coverage can protect your business if someone in your facility says or writes comments in poor taste about another facility or an individual. This coverage also may apply to copyright infringement and using others’ information without permission. The key here is that it must be unintentional. If you go out of your way to break the law, your insurance is not going to protect you.
Product Liability – This applies to the sale of take-home products. Maybe that face cream caused an allergic reaction or those eyelash growth products glued your client’s eyes shut. Sometimes the client does an improper application by not following instructions, but on occasion there could be a problem with the product itself. In that case, a client may come back to your spa for restitution. This may be a brand name, nationally sold product, but in this case, their first thought is to go back to the business or person that sold them the defective goods.
Fire Legal/Damage to Premises Rented to You – The final piece to commercial general liability coverage is fire damage liability. Many people believe this is protection for your own equipment against fire. Not so. In reality, it has nothing to do with your property; it is a liability coverage. That means that it protects a third party. Let us go back to the coffee shop that left their machine on all night, which caused a fire. If the coffee shop had insurance, this coverage would have protected against you coming back to the coffee shop owner to pay for damages they caused through their own negligence.

Professional Liability
This covers the one-on-one services you provide, whether it be massage, waxing, microdermabrasion, or even nutrition counseling. If you are giving advice to someone or touching them in any way, you have a professional liability exposure. Someone could get burned, hyperpigmented, or even receive a bad haircut and this type of coverage could be triggered.

Commercial Property/Business
Personal Property

This coverage applies to your equipment, stock on hand, or furniture in the case of damage from fire, theft or vandalism, to name a few basics. The types of events covered under this insurance may vary from policy to policy but most policies cover those basics. The simplest concept for determining what falls under the category of business personal property is if you can pick it up and walk out of the building with it. If it is bolted in and permanently attached, then it usually falls under Tenant Improvements and Betterments, another coverage within a property policy. These are items that if you choose to move locations, would not be taken with you and for which you paid to have done. A very important and frequently overlooked part of property coverage is Loss of Business Income. This is meant to provide assistance in the case of a fire, theft, or other covered losses for ongoing expenses and lost profit. This could be used to pay rent, employee salaries and utilities.

blueSpecial Coverage
While the foregoing are basic coverage items, there are many specialized coverages that could apply to your business as well. The aesthetic industry has many exposures that say, a realtor office or retail store does not. When looking for an insurance policy, talk with your broker to see if these options may benefit your facility and if they are available under the program being offered you. Try to find an insurance broker who has experience with this type of business, or is willing to take the time to sit down and really understand what it is you do.
Sexual Abuse – This is protection against allegations of inappropriate behavior in your facility. Most of the time this comes down to he said/she said arguments and can be very costly to defend. This is highly recommended for massage businesses.
Communicable Disease – Staph infections are running rampant throughout the country. Although the bacteria can be picked up in a wide variety of places, a person is likely to accuse the last place that opened up their skin. Even though your spa may be cleaner than your mother’s kitchen, you still will have to defend the allegation and prove that no such bacteria can be found within your facility. Again, this can be costly! This coverage is highly recommended for nail salons and people breaking the skin, such as offering permanent makeup or tattooing.
HIPAA – If you collect personal health information, the information must be treated carefully according to the national HIPAA rules. If you violate this, there can be steep penalties. This simple and innocent mistake provides a good example of how this could turn into a claim: a receptionist e-mailed their client an appointment confirmation with very personal information in regards to the treatment being performed. The problem? The e-mail was sent to the wrong client. When told, the client whose information was released was very upset. She was something of a high profile figure in her own town and did not necessarily want that information shared with the public.
License Action Reimbursement – This can help pay penalties that are handed down by the licensing board governing your services in your state or defense costs to protect your license status. In the aesthetic industry, rules and legislation change constantly. Rules can be vague and sometimes confusing to interpret. With this coverage, you are protected if you are unknowingly operating outside the scope of your license. The coverage is usually a set limit such as $25,000.

The Best Offense
While insurance can help when there is a problem, the best advice is to start with good operating procedures, guidelines for all to follow, and a little common sense. A smoothly run, organized business can handle most situations that arise without panic.
Keep medical history forms and consent forms neatly filed, in date order, in the client’s file. Be sure the technician performing the procedure is signing off, as well as the client. Keep up-to-date treatment notes by jotting down notes as you go, making sure to mention any discomfort the client feels or anything that might trigger future problems. covered
Sit down with the client and confirm that they feel comfortable with the procedure steps and the risks before starting. Do not feed into their false expectations about results and do not make guarantees to the client under any circumstances.
Keep an inventory list of equipment in your facility and all assets that belong to the business. Include serial numbers and receipts for expensive items. Make a backup of this information and keep a copy offsite in a secure location.
Perform periodic but regular inspections of your facilities. Do you notice anything broken or loose? Spot check client files for thoroughness. Have regular staff meetings to review client reactions and keep everyone informed. Be sure that ongoing training is encouraged and desired.
Train your staff to treat your clients as you would. Make it clear that the whole facility is to act accordingly to your customer service requirements and rules. Have written, clear instructions for your staff as to how to handle a problem should it arise. What is your facilities policy on refunds? Who do they call if a client is burned? Having these preemptive measures will reduce panic in your employees and in turn from your clients.

Above all, protect yourself with insurance for those times where you experience bad luck or an off day. It is the best offence and simply put… good business!

Susan-EtterWith an already established 16 year background in insurance, Susan Etter joined the underwriting team of Professional Program Insurance Brokerage (PBIB) in the spring of 2010. During her time at PPIB, she has developed a strong knowledge of the issues that face medical spa, beauty and body art businesses. From this expertise, she is becoming a well-known speaker and writer within these industries, advising ways to develop a successful business and implement procedures to increase loss control and prevention. When she is not in the office, she is spending time with her three boys running them around to baseball and soccer games.

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