Salon owners are constantly approached by salespeople wishing to provide them with services or products. The opening line is usually “I can save you money.” What business owner wouldn’t be in favor of that? But the legal term “caveat emptor” exists for a reason. The buyer should always beware of a deal that appears too good to be true.
Insurance certainly falls into the category of services where owners are always trying to reduce costs. Always keep in mind that the tanning industry requires very specific insurance. And the fact is, an insurance company might be willing to insure your salon, but the policy’s conditions might exclude coverage you need.
An insurance company might be willing to insure your salon, but the policy’s conditions might exclude coverage you need.
We are often asked what the benefit is to having a specialty agent rather than a local, general agent. Unless the local agent is working with a carrier that understands the exposures related to a tanning salon, the policy they are able to get might not provide the appropriate coverage. We routinely see “tanning salon” policies – even from some agents that say they specialize in them – that exclude vital coverages. One such policy we recently saw excludes bodily injury due to health hazards. Health hazards are defined as diseases (i.e. cancer), eye damage, skin aging, etc. And because the policy says the definition of health hazards isn’t limited to those listed, burns could also be considered excluded. You are operating equipment classified by the FDA as medical devices. If these exclusions are present, what coverage is the policy providing?
Another risk of tanning units that concerns some insurance companies is fire. Because the units draw a large amount of electricity, the fear is that electrical fires are a greater possibility than for other types of businesses. So, they may write a policy that excludes property coverage for the tanning units themselves or for any damage caused by an electrical fire originating in a tanning unit. Or, they may write the policy without exclusions but with very high deductibles. You would need to weigh the financial benefit of assuming more risk yourself against the premium you would save.
Working with a local agent is not, in itself, a bad thing. But you should be proactive in making sure the policy they present meets your needs. Ask them to show you where in the policy it indicates that coverage is provided for your operation of the tanning units. Ask them to explain all the exclusions and how they would affect you in the event of a loss. No one can guarantee that anything that occurs will be covered. However, if there is an exclusion for cancer, you can be sure that if someone claims they got cancer from tanning, your policy would not respond. If the injury is excluded from coverage, it also is excluded from defense. You would be responsible for defending a lawsuit brought against you.
Speaking of defense, check to see if the policy includes the cost of defense within limits. That means that any payments made to defend you against a claim reduces the amount of coverage you have to actually pay a claim. Because defense is so expensive, it would not be difficult to imagine a claim exhausting your entire limit.
When you make a decision on insurance, you are transferring the risk to another company. You should make your decision once you are satisfied that you will be appropriately covered. If you have questions, contact an agent that specializes in tanning salon insurance. They will be happy to review your needs. ■
