Esthetician Insurance – cost and types of policies
Whether you prefer the title Esthetician or Aesthetician, your business activities involve specific and particular risks because of your influence on your customers’ daily lives and so, one of the first things you should be thinking about when putting together your business plan is making sure that you have secured the proper and necessary Esthetician insurance.
Generally, skincare professionals who specialize in medical cosmetology prefer the term aesthetician—those who concentrate on servicing the wider public choose to be known as estheticians.
However, when considering the exposure that your business has to risk, there is no essential difference.
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So, in the rest of this outline, we will use these two terms interchangeably.
What are the primary business risks faced by estheticians?
Any business that is involved in direct daily contact with its customers confronts fundamental common risks.
Managing the risks properly comes down to understanding the liability you accept as soon as you offer your services to a customer.
How does an esthetician become legally liable?
You become exposed to some level of liability as soon as you start providing your services.
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The essential services you offer could end up being held responsible for injuring a third party or damaging their property.
Either of these instances can lead to a customer filing a legal liability claim against your business.
As a consequence of such a claim, unless you are prepared to pay whatever the customers are demanding, you could go on to be faced with a costly lawsuit.
Can your esthetician business be held liable for accidental damage?
In general terms, any person that comes inside your sphere of activity has entrusted you with a level of care.
The legal definition is that you have assumed responsibility for third-party risk.
This goes for an actual customer, potential customer, member of the customer’s family or even a casual visitor who happens to have walked into your space.
If any action relating to your business causes injury or damage to a person or their belongings and property, you can be held liable.
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Accidents can occur at any time while conducting your business activities.
Other bases for liability suits can include damage to property, such as spilling an abrasive product onto a client’s clothing.
In such a case, if the client sues the esthetician, she could be awarded a substantial amount, not just for the value of the damaged clothing, but even for consequential losses, such as if the clothing was custom-made for a specific occasion like a wedding, and now the client could not attend, leading to claims of emotional pain and suffering.
To protect yourself, you should take sufficient general liability insurance to cover you against all possibilities.
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It should cover you against claims for injuries or losses caused to third parties by bodily injury or property damage, as well as any related medical or legal expenses.
Some companies offer cover for ancillary covers such as slander and libel.
As a business owner, the law says you have a primary responsibility to exercise “duty of care”.
It means you will conduct your work in a manner that doesn’t endanger anyone in the immediate work area and will protect their physical property against damages resulting from your work.
For most start-up professional businesses like aestheticians, a cover of $1 million for a single claim, and $2 million for total claims in one year, should be sufficient.
Typically, cover at this level would cost around $600-$800 per year, depending on your location, years of experience and claims history.
For an esthetician, does liability mean fault?
This is one of the most essential things any esthetician should understand.
There is no way to measure or grade your work, other than through the level of satisfaction of your customer.
You may not have done anything wrong in your own eyes, yet you could still find yourself facing a lawsuit arising from a liability claim from a dissatisfied customer.
Regardless of your level of confidence in your own case, litigation is expensive, takes time and can damage your business reputation.
Insurance can protect professional service providers from the potential harm coming from allegations of negligence or error in delivering your services.
In most forms of business, this is generally known either as Professional Liability insurance or Errors & Omissions Insurance, but in the case of aestheticians, a more relevant term would be Aesthetician Malpractice Insurance?
Is there a difference between Professional Liability Insurance and Esthetician Malpractice Insurance?
Professional Liability, sometimes known as E&O insurance, protects a business against claims of negligence, mistakes or misrepresentation.
Usually, an allegation is made that services you or your employees caused some kind of damage to a customer while you were performing services for which you were being paid.
This is the fundamental difference between liability for injuries to third parties and injuries suffered by customers while you are doing your designated function.
For the first such claim, you need Public Liability insurance, whereas you need Professional Liability (E&O) cover for the second claim.
Both of these provide cover for financial damage.
As an aesthetician, because you engage in physical treatment of a customer’s body, you may be advised to consider adding malpractice insurance to your portfolio of covers.
In general, both malpractice insurance and professional liability insurance provide the same coverage for you against claims of losses related to the performance of your functions.
There are no fundamental differences in the type or level of cover – it is more a case of standard terminology.
For example, medical practitioners, dentists and lawyers usually seek malpractice cover.
In principle, the same would apply to medical esthetician insurance.
Accountants, realtors and software programmers look for E&O policy cover, while consultants, engineers and architects require professional liability insurance.
What are the key benefits of Professional Liability / E&O / Malpractice Insurance for Aestheticians?
Aestheticians also offer advice for skin care and suggest products and treatments.
This introduces a whole new element into the field of claims, since customers can now demand compensation not for actual actions, but even by questioning your underlying basic knowledge and motivation for suggesting a course of treatment.
Even in the most carefully and professionally run business, sometimes, mistakes are made through no fault of your own.
However, you can still be held legally responsible for the consequences.
By having the right insurance, you will secure coverage for any amount agreed to in a settlement of the claim, or an amount awarded against you in a court case.
A typical case in esthetics practice is the consequences of laser hair removal.
Many cases have been brought after customers consulted with their skincare esthetician and took their advice to proceed.
In many instances, customers have failed to understand that the treatment does not permanently remove hair from the treated area, it only effectively delays hair growth for long periods.
As well, multiple laser hair removal treatments are needed, and maintenance treatments might be required as well.
A common danger associated even with correctly performed laser hair removal procedures is skin burns, which happen when the skin rather than the hair follicle absorbs the laser energy.
Disgruntled customers have brought many cases, and even though in the end the decision of the court went in favor of the esthetician, the expenses and long drawn-out procedure, as well as the damage it can do to reputations, have made it clear that proper insurance against such claims is the only way to go.
Estheticians who are providing services such as:
- Chemical peels
- Hot stone therapy
- Salt glow body treatment
- Body sugaring
Should be familiar with the possibilities of complications leading to claims of improper services, but in the case of laser hair removal, it has become more common.
Even when the more conventional services provided are such as:
- Body wraps
- Spray tans
- Eyelash extensions
- Eyebrow tinting
- Make-up application
are the main activities, there are similar risks of complications and claims for compensation.
Probably the most important benefit you will get from having professional liability insurance is the full legal power that the insurance company brings to bear.
Coverage is provided for all attorney fees and other legal expenses from the outset.
It ensures that you are adequately represented right through the process and that your interests are being protected.
When you are working inside a group or co-operative that has negotiated its own insurance policies, you should make sure that you are fully covered for professional liability, and if not, you can negotiate your own esthetician insurance for individuals to fill in any possible gaps.
For the average small esthetics practice, malpractice or professional liability cover of $30,000 for a single claim, and $60,000 for the full year would be the norm.
Such cover usually costs between $400 and $500, but it could vary by state, and in accordance with your level of experience and claims history.
Does an esthetician business require commercial insurance?
The answer to the question of esthetician business insurance depends mainly on the degree to which your operation is dependent on tangible assets.
Like any owner of property, fixtures and fittings and stock-in-trade, you should have appropriate levels of insurance to cover the possibility of loss through events such as fire, flood and storm.
As well, robbery and vandalism can deprive you of your valued assets.
On top of the actual loss, you may suffer loss of income, and so a comprehensive bundle of esthetician professional insurance should be taken out to cover all of these possibilities.
These need to be tailored to your own specific situation, so the descriptions below should be taken as general guidelines.
What type of insurances do estheticians need?
Commercial insurance – covering tangible assets such as buildings, fixtures, fittings, products for usage and resale.
Equipment insurance – as the field of esthetics has grown more technically advanced with time, the dependence on sophisticated equipment has increased.
You should make sure that your valued gear is fully covered both for its intrinsic worth and also with the realization that your day-to-day business depends on the availability of the equipment.
When considering the most valuable items.
You should be taking into account essential equipment such as:
- Facial steamer
- Facial bed
- High frequency toner unit
- Microdermabrasion machine
- Air-lift Stool
- Wax heater
- Cosmetic laser
The levels and costs of these insurances depends primarily on the value of the assets you are looking to cover.
Commercial vehicle insurance – if you are visiting customers in their own homes, or in public facilities, clubs, hotels, etc., your use of a private vehicle will not be covered by the regular insurance.
An accident, theft or any other loss, including theft of contents like equipment and products, will not be covered unless you have taken out commercial cover.
In general, the cost of such cover depends largely on the type of vehicle, and could range between $1400 for an ordinary sedan up to $2500 for a light truck.
Workers Compensation insurance – if you employ any other people, whether full time, part-time or on a casual basis, you are required by state law to take out workers compensation insurance for them.
The cost of workers comp is based on the weekly pay, and it varies from state to state, so you should make enquiries with the appropriate state bodies, such as those listed on the US Department of Labour web page.
Business Owners insurance is a common bundle offered by major insurance companies, since it combines commercial property and liability insurance into a single insurance policy.
It is often a good choice for small and medium-sized esthetician businesses that are operating out of self-owned or rented premises.
Does an esthetician require full-time insurance?
If your business is seasonal or subject to other calendar factors, then you may find it is cheaper to negotiate short-term insurance cover for only the periods when you are actually working.
There can be some good savings in premiums if your business patterns are predictable.
When you are considering the necessity of having insurance, you should be considering the strong difference it can make to the viability of your business.
Without the proper, and proper level of, insurance you are exposed to open-ended risks from every aspect of your activity.
You should be considering not “can I afford insurance” but rather “can I afford to not be insured?”
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