The advent of medical spas has brought forth new issues related to risk management and insurance in general. The usual suspects include property and liability coverage, with the added wrinkle of professional liability or malpractice coverage. Further, no two medical spas seem to be quite the same; as such, each spa will need a customized insurance program to ensure that all exposures have been properly covered.
Insuring your new medical spa shouldn’t create a major headache, but there are a number of critical factors to consider. Let’s build an insurance program from the ground up.

Property Coverage
You’ve made a considerable investment into equipment, furnishings, supplies, and likely improvements and betterments.1 Improvements and betterments, or sometimes called “build outs”, include the pre-opening construction items like partition walls for treatment rooms, floor and wall coverings, permanently installed equipment and fixtures that weren’t already there (like sinks and counters in treatment rooms). Everything is perfect…. Now what?
Property insurance coverage will include your business personal property (that’s insurance speak for everything listed above) and your building (if you’re the owner). Coverage varies from policy to policy but will ordinarily insure against all perils except those that are specifically not covered.2 These are the policy “exclusions” and should be carefully reviewed with your insurance agent before you purchase the policy. Many property insurance policies also include a host of coverage enhancements such as coverage for theft of money, back-up of sewers and drains, glass and signs, and business interruption coverage. Business interruption insurance protects against loss of business income resulting from a covered loss at your location such as fire. Coverage normally includes ongoing expenses, payroll, and loss of net income.
When purchasing property insurance, opt for special form coverage (side bar). The policy should also provide coverage on a replacement cost basis. Replacement cost policies pay claims based on the actual cost to replace the damaged or destroyed property without deducting depreciation.

General Liability Coverage
General liability coverage is often sold as a package policy with property coverage. Whether sold as a package or a stand-alone policy, the coverage is the same. General liability coverage protects against lawsuits arising out of the operation of your business. Policies normally include trip and fall accidents, product liability, allegations that your business has committed libel, slander, and trademark infringement,3 and fire legal liability. Fire (or tenant’s) legal liability coverage protects you against lawsuits arising out of damage caused by your business to the premises rented to you. For example, this would cover damage to building from a fire caused by unattended candles in the spa. General liability policies normally exclude intentional acts (like assaulting a customer), professional liability (malpractice), and workers’ compensation. As with property insurance, the policy exclusions impact coverage tremendously and should be reviewed with your insurance agent.

Commercial Automobile Coverage
If your business owns any vehicles, a commercial automobile policy would be appropriate. The coverage is nearly the same as your regular personal automobile policy. You should remember however, that even businesses that don’t own any vehicles may still have some exposure to an automobile liability claim. Any time you rent or borrow a vehicle for business use, or send an employee on a business errand in your own vehicle, there is a chance that an accident could occur. If the accident happens on company business, your spa could be held liable for the resulting injuries and/or property damage. Businesses without any owned vehicles should give consideration to the purchase of hired and non-owned automobile liability coverage. In some cases, coverage is also available to insure damage to rented vehicles. Hired and non-owned automobile liability coverage is generally inexpensive and is often an optional coverage on a general liability policy.

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R. Charles Stevens II CISR manages the specialty programs division at Marine Agency Corporation in Maplewood, N.J. Stevens has specialized in the insuring the beauty industry for over 12 years, and is a recipient of the Certified Insurance Service Representative designation. Marine Agency Corporation provides customized policies in all 50 states for medical and anti-aging spas, cosmetic laser and IPL clinics, day spas and salons, massage therapists, aestheticians, electrologists, micropigmentation technicians,
tattoo/body piercing studios, and compounding pharmacies. Stevens
is available to answer questions by e-mail at cstevens@marineagency.com.