As a business owner, adding to or changing your salon locations is exciting! There are so many things to do to prepare: sign the lease, turn on the utilities, obtain equipment, do the build-out, advertise, and on and on. The very last thing you’re thinking of is insurance. However, it should be one of the first things you consider.
Premiums on an insurance policy for your business are based on your location, and need to be a cost you consider when determining the acceptability of a new site. What appears to be a “steal” because of the low rent might end up costing you more in insurance. When touring a location, there are questions you should ask the property manager to find out how the answers will affect your insurance. How old is the building? If it’s an older building, how often is maintenance done and when were the last updates to plumbing, wiring, roofing and HVAC systems made? What is the building constructed of? Is there a fire suppression system? Take note of its distance from the fire department and fire hydrants. If you’re looking at a multi-tenant building, who will your neighbors be?
Since you aren’t insuring the building, these questions might not seem relevant, but they affect the risk to your business. If you’re in a building constructed of wood, it’s more likely to have severe damage in the event of a fire than a concrete building would. If the plumbing hasn’t been updated, you run a higher risk of a pipe bursting and causing water damage than if you were in a new building or one in which the pipes have been replaced. If one of your neighbors is a fireworks manufacturer (we really hope not!), there is a greater chance of a fire occurring than if you’re next to an office.
Many leases are now requiring high General Liability limits. Some even ask for Umbrellas. These high limits could substantially increase your insurance costs. Finding out you need to purchase them after you’ve moved in could be quite a shock to your bank account. Some property owners are willing to negotiate this requirement, but the time to do it is before you sign the lease. If they are adamant, it would be wise to find out what the added expense is before you make a decision.
Once you decide on a location, notify your insurance agent right away. You’ll probably be required to have General Liability insurance in place as soon as you sign the lease, even if you aren’t moving in for a while. And as soon as you begin build-out, you will need to insure the materials. Be sure to keep the limit updated as you install equipment.
On the happy day that you are ready to open the new facility, evaluate your limits again. You’ve now got equipment, computers, lotions, all your pretty build-outs, stereos, even towels. You might have a beautiful sign outside … all these things add to your exposure in the event of a loss. And you now need Business Income insurance.
So, get excited about that new opportunity! But, remember to keep your insurance agent in the loop. Hey, your agent is excited for you, too, and wants to make the transition as smooth as possible.
