Here's something most salon and spa owners don't realize until it's too late: your business faces different risks than almost any other industry. You're using chemicals on people's bodies, working with hot tools near their faces, and giving advice that could literally change someone's appearance. One unhappy client or one slip-and-fall accident could cost you everything you've built.
That's where proper insurance comes in. But navigating salon and spa insurance feels like learning a foreign language—what's the difference between general liability and professional liability? Do you really need workers' comp if you only have two employees? This checklist breaks down everything you need to protect your business, in plain English.
Essential Coverage You Can't Skip
Let's start with the non-negotiables. These three coverages form the foundation of salon and spa insurance, and you'll likely need proof of them before you can even sign a lease or join a franchise.
General liability insurance protects you when accidents happen on your premises. A client trips over a cord and breaks their wrist. Your shampoo bowl leaks and damages a client's expensive handbag. Someone claims your wet floors caused them to slip. This coverage handles the medical bills, legal fees, and settlements. Most salons pay around $67 monthly for this protection, and many landlords won't rent to you without it.
Professional liability insurance (also called errors and omissions) might be even more important for your business. This covers claims related to the services you actually provide. A client says you ruined their hair with a bad color job. Someone develops a rash from a facial product you recommended. A bride claims her wedding makeup looked terrible in photos. Even if you did everything right, defending yourself against these claims costs money—often thousands in legal fees alone. Professional liability averages $42 to $110 per month depending on your services and location.
Products and completed operations coverage extends your protection beyond the appointment itself. This is crucial because many reactions don't show up until hours or days later. A client develops an allergic reaction to hair dye three days after leaving your salon. Someone gets an infection from a manicure done last week. A keratin treatment causes unexpected hair damage that appears after multiple washes. This coverage picks up where professional liability leaves off, protecting you from claims about delayed reactions to your services or products.
Protecting Your Physical Business
Your salon represents a massive investment in equipment, furniture, and supplies. Commercial property insurance protects all of that. This covers your styling chairs, shampoo bowls, dryers, treatment beds, retail inventory, and even computers and sound systems. If a fire, flood, or theft damages your space, this coverage pays to replace everything.
Business interruption insurance goes hand-in-hand with property coverage, but it's often overlooked. If a disaster forces you to close temporarily, you still have rent, loan payments, and possibly payroll to cover. Business interruption insurance replaces your lost income during the closure and helps pay ongoing expenses. Without it, many salons can't afford to reopen after a major incident.
Consider bundling these with a Business Owner's Policy (BOP). This package typically includes general liability, commercial property, and business interruption insurance at a discounted rate—usually around $162 monthly compared to buying each separately. It's the most cost-effective way to cover your essential bases.
Coverage for Your Team
Once you hire employees, workers' compensation insurance becomes mandatory in most states. The exact requirements vary—some states require it after your first hire, others once you reach three or four employees. This coverage pays for medical care and lost wages if an employee gets hurt on the job. A stylist cuts themselves with scissors. A massage therapist develops carpal tunnel syndrome. Someone slips on product spilled in the back room. Workers' comp protects both you and your employees in these situations.
Don't try to avoid this requirement by classifying workers as independent contractors. Insurance companies and state agencies scrutinize salon worker classifications heavily. If someone works set hours at your location using your equipment and supplies, they're almost certainly an employee in the eyes of the law, regardless of what your contract says.
Optional Coverage Worth Considering
Cyber liability insurance has become increasingly relevant for salons. You store client credit card information, email addresses, appointment histories, and possibly medical information for med spas. A data breach could expose all of that, leading to notification requirements, credit monitoring costs for affected clients, and potential lawsuits. If you book appointments online or store any client data electronically, this coverage deserves consideration.
Inland marine insurance (also called tools and equipment coverage) protects movable business property. This matters if you do off-site work—wedding hair and makeup, house-call services, or booth rental at events. It also covers equipment you transport between locations if you operate multiple salons. Your commercial property insurance only covers items at your fixed business location, so this fills an important gap for mobile operations.
Commercial auto insurance becomes necessary if you use vehicles for business purposes beyond occasional errands. This includes mobile salon vans, delivery vehicles for product orders, or any company-owned vehicle. Your personal auto policy won't cover business use, leaving you exposed if an accident happens while you're working.
Special Considerations for Medical Spas
If you offer medical-grade treatments like injectables, laser hair removal, chemical peels, or body contouring, your insurance needs—and costs—increase substantially. These procedures carry higher risks of complications, which means higher premiums for professional liability coverage. You may also need medical malpractice insurance depending on who performs the procedures and your state regulations.
Make absolutely certain your insurance carrier knows exactly what services you provide. Adding Botox or laser treatments to your menu without updating your policy could leave you completely uninsured if something goes wrong. Medical spa procedures require specialized coverage—your standard salon policy won't cut it.
Your Annual Insurance Review Checklist
Set a reminder to review your insurance every year, ideally around your policy renewal date. Your business changes, and your coverage needs to keep pace. Here's what to check:
Services offered: Did you add any new treatments or stop offering others? Every service you provide needs to be covered by your professional liability policy. New services often mean new risks that require policy adjustments.
Staff changes: Your premium is partly based on the number of employees and their roles. If you've hired additional staff or have people performing different services than before, your insurer needs to know. This affects both your workers' compensation and professional liability costs.
Equipment and inventory value: If you've purchased new equipment or significantly increased your retail inventory, your commercial property coverage limits may need adjustment. Being underinsured means you won't get full replacement value after a loss.
Revenue changes: Your business interruption coverage should reflect your current income levels. If your revenue has grown significantly, your existing coverage might not provide enough to sustain you through a closure.
Location changes: Opened a second location? Started doing mobile services? These changes fundamentally alter your risk profile and coverage requirements. Multiple locations may need separate policies or expanded coverage.
Cost comparison: Shop around every few years. Insurance rates vary significantly between providers, and you might find better coverage at a lower price. Just make sure you're comparing equivalent coverage—the cheapest option isn't always the best value.
Getting Your Coverage in Place
The cost of proper salon and spa insurance is significantly less than the cost of a single lawsuit or major accident. Most small salons pay between $57 and $162 monthly for comprehensive protection, depending on services offered and number of employees. That's a small price for protecting the business you've worked so hard to build.
Start by getting quotes from insurers who specialize in salon and spa coverage—they understand your industry's unique risks better than general business insurers. Be completely honest about your services, staff, and operations. Trying to save money by understating your risks can void your coverage when you need it most. The right insurance lets you focus on what you do best: making your clients look and feel amazing.
