The Ins & Outs of Insurance

Many years ago, when I purchased my first small salon, I asked a friend in the insurance business if I really had to have insurance. It wasn’t a tangible purchase; it felt as though I was just handing someone money for nothing, and with a newly purchased business, I had lots of other things to do with my limited funds.

“Do you have employees?” she asked–she knew I did. “It’s illegal not to have workers’ compensation insurance. If they get injured at work, you will be fined for not having it. Then you’ll know what it feels like to pay out money for nothing. And you’ll have to pay all their medical bills out of your own pocket.”

Insurance suddenly started looking like a better deal.


What Could Happen?
Here are a few possible scenarios that could occur in a grooming salon, and how they might play out with and without insurance:

Scenario #1: A customer is hurrying into your salon at 8:00 a.m. on a mid-winter morning and slips and falls on ice.

No insurance: Perhaps they are sensible and realize that ice happens in the winter, as do accidents. But more likely, given that our society seems to have gone litigation happy, they will sue you. Will they win? Possibly, depending upon a number of factors, including whether you have done everything reasonably possible to remove the ice or not. If you are sued, the best possible outcome is that you will win–and waste an unknown amount of time and lawyer’s fees defending yourself.

With insurance: Premises liability insurance would protect you. The insurance company would most likely try to settle the claim, but if a lawsuit did result, the insurance company would provide your defense. And if you lost the case, they would pay the claim up to the amount of coverage.

Scenario #2: A dryer shorts out and a fire results. This causes severe smoke and water damage,  not only to your business, but also to three others in the same strip mall.

No insurance: You are out of business with no way to pay the rent or make income, and you are responsible for all damage to the other businesses as well.

With insurance: Property insurance on business contents would cover all your own equipment and a fire policy would insure that the smoke and water damage repairs do not come out of your pocket. General liability would cover any damage to other businesses.
Scenario #3: A perfectly nice dog that has never been aggressive before suddenly reaches out from the tub and chomps your bather’s arm, causing three puncture wounds and a trip to the emergency room.

No insurance: At a minimum, you will probably be paying the emergency room costs. More than likely, you will end up paying for any follow-up care, as well as wages for time lost while your bather recovers.

Scenario #3: A perfectly nice dog that has never been aggressive before suddenly reaches out from the tub and chomps your bather’s arm, causing three puncture wounds and a trip to the emergency room.

No insurance: At a minimum, you will probably be paying the emergency room costs. More than likely, you will end up paying for any follow-up care, as well as wages for time lost while your bather recovers.

With insurance: Workers’ compensation would pay for it all. This type of insurance may only be required by law if you have three or more employees (laws vary by state), but it’s a good idea to have it even if you only have one employee.

These examples may seem unlikely, but all it may take is a single occurrence of bad luck to put you out of business. Insurance allows you to continue under circumstances that would otherwise bankrupt your business.

My friend Liz Holden, who is still a successful agent, says that insurance isn’t meant to provide a convenience; it is designed to cover those losses that cannot be absorbed by the business. It’s for catastrophic events. For example, if you have $10,000 worth of property insurance with a $250 deductible and a $400 dryer is stolen, you probably shouldn’t bother filing a claim for the $150. This is because it costs the insurance company money to process each small “nuisance” claim, so they will eventually raise everyone’s premiums to cover those costs. However, if the salon’s equipment–dryers, clippers, scissors, bathing and clipper vacuum systems–is stolen in one night at a $5,000 value, by all means call your agent immediately–this is exactly why you purchased the insurance.

Purchasing Insurance
Do you need to go to a pet industry specialist to purchase insurance? You can, but it isn’t necessary. Various programs are available to independent agents. The only question is whether these agents  know how to access them and whether their carriers offer the specific programs needed.

Select your insurance agent very carefully. This is the person who will see that you have all that you need, and you are not paying for anything you don’t need. A pet industry specialist may know the options without having to research, but you still need to make sure they are the right agent for you.

Should you get all of your insurance through the same carrier? You may not be able to. Although it is recommended to get general liability and professional liability coverage through the same carrier (this will help avoid possible coverage disputes between companies) you may get a better quote from another firm on premiums on, for example, fire insurance. Some carriers with great prices will not sell you liability insurance until you have been in business for three years. Your agent should be checking all resources to find you the best coverage at the best price.

When Stephanie Costa of German Shepherd Resource and Rescue Center needed to buy insurance, she began by asking friends in the pet industry where they got their insurance. She emailed some of the contacts but mostly found agents that wanted to quickly pigeonhole the organization into a convenient classification and get a check.

“I had to look hard to find an agent that would go the extra mile and find the right answers,” says Costa. The needs of a rescue are not like a kennel, which is what most agents wanted to list her as. A breed rescue needs to hold fundraisers, which are not covered under the usual kennel categorization. A rescue has volunteers at various locations, including foster homes, and kennel insurance would most likely cover only the kennel location. Standard kennel classification would not have worked in this instance.

Her best advice on finding a good insurance agent is to ask as many questions as you can think of. “Insurance is another world, with its own terms and jargon, and the agent knows this,” she says. “They will either use it to confound the issue and get you to buy their recommendations, or they will make sure you are comfortable with your understanding of the issues.”

Think of everything that can possibly go wrong at the salon and ask if it is covered. For instance, what if a dog gets loose? Recently, my sister had her old English sheepdog at the vet and a technician handling the dog accidentally set it loose–outdoors. The dog took off at high speed, right into the middle of a busy intersection. A chase ensued; the dog was caught–unharmed except for some torn paw pads–but what if the end of the story was the nightmare that it so easily could have been? My sister might have suffered the loss of a dog, but the veterinarian would certainly be liable for a lawsuit. This could also happen with merchandise if the salon does retail, so ask if you are covered if someone is injured with a product purchased at your store. Also, does your policy cover injury to animals and/or humans in case of a dogfight?

If your grooming business includes mobile or house-call grooming, there’s a whole new set of questions to ask: Is your vehicle and its contents covered? Are you covered in case of a theft in a client’s home on the day you were there?

A good agent will ask a lot of questions, too, making sure they understand everything the business does in order to provide the best coverage. Many pet businesses have multiple facets that cannot be categorized easily, and good insurance will cover every eventuality. Do your research, and make sure you have found an agent who will do theirs. And remember, you aren’t paying out money for nothing; you are buying peace of mind if catastrophe strikes.


Carol Visser is a Nationally Certified Master Groomer and Certified Pet Dog Trainer. Formerly a pet product expert for PetEdge, she and her husband Glenn now own Two Canines Pet Services in Montville, Maine, which provides grooming, boarding, training and day care services to Waldo County.