In recent years, salon and spa owners have become all too familiar with shutdowns and slowed appointment bookings. From unforeseeable, longer-term circumstances such as the COVID-19 pandemic to annual weather events that seem to worsen every year and disrupt both the beauty business and daily life, salon and spas owners know the resulting interruption to business can be devasting.
In late April a salon in Florida had to quickly and suddenly evacuate due to a salon fire. While all parties got out of the salon safely, one client was left with potentially harmful chemicals in her hair. The salon worked quickly with firefighters on the scene to access hose water and rinse the chemicals out of the clients’ hair. Fortunately, no one was injured and the fire was quickly controlled in this situation, however it showcases how quickly interruptions can happen and how they can impact a business in many different ways. Similar, and even more devastating stories of salon business being interrupted or shut down can be found in communities all around the US.
Preparation is key when faced with potential business disruptions, like catastrophic weather events. Many salon and spa owners have learned the hard lessons of not being prepared for interruption. They know lack of preparation for a range of situations could cost them their business. For instance, while property insurance is a must for all business owners, what happens when a salon or spa is temporarily closed due to fire damage or a natural event? The business still has expenses to cover. Salon and spa owners depend on the spaces they work in to be safe and fully operational. If it is not, the business could lose income for months or even years as they repair and rebuild. By the time the business reopens, if it reopens, owners may never recover their losses.
Fortunately, there are ways salon and spa owners can prepare and protect their businesses from unforeseen or unplanned interruptions. Perhaps the most reliable protection a business can have is proper insurance coverage.
Business Interruption Coverage
Although a standard property insurance policy covers damages or losses a business endures, there are many specific factors it will not cover if a business is forced to close for any substantial amount of time. For instance, a standard policy will not cover rent, mortgage payments or payroll expenses while a business is unable to gather revenue. Business interruption (BI) coverage is an effective option for salon and spa owners to preserve their businesses as Summer approaches and the potential for business interruption via weather related incidents like earthquakes or wildfires comes into focus. Those who operate in disaster prone areas should consider carrying business interruption insurance.
In addition to offering salon and spa owners peace of mind, business interruption insurance can cover:
- Lost income: A salon or spa’s financial records will be considered to understand how much revenue they would have brought in if they remained open and the insurance company can reimburse accordingly.
- Rent and mortgage payments: Although the business may not be operational, rent and mortgage payments are still due. BI coverage can help cover rent bills for mortgage payments for space and equipment.
- Payroll: BI coverage can help businesses keep paying employees while it is closed. Uninterrupted payroll will help incentivize employees to stay with the company and keep working when the business reopens.
- Taxes: Just like a business must keep making rent payments and paying employees, they also must keep paying taxes. BI coverage can help ensure a business has the funds to meet their obligations.
Closing a salon or spa because of unavoidable loss is devasting to small business owners. For all the unknowns that business owners face, exploring a business interruption policy can be a good approach to avoiding unplanned disruptions and ensuring your salon or spa is covered in the event of an interruption.
Kathy Lopez, Account Manager for SASSI, the Salon and Spa Specialty Insurance program at Brownyard Group. She can be reached at klopez@brownyard.com.
