Salon Insurance – Frequently Asked Questions

Are Salon Owners responsible for the acts of Independent Contractors?
It depends on several factors…

  • Cause of injury
  • What people were doing at that time
  • Contractual agreement between the owner of the salon and the person renting the booth space
  • Current state of the law

Even when a salon owner should not be legally responsible, if an independent contractor does not have insurance, then the injured party will likely look to the salon when seeking recovery for medical bills, lost wages, and pain and suffering.

How can a Salon Owner ensure Liability Coverage for the acts of Independent Contractors?
There are two way this can be addressed…

Either the independent contractors can be required to carry their own coverage that names the salon as an additional insured.

Or the salon can purchase liability coverage and name the independent contractors as additional insureds.

If the salon owner decides to require independent contractors to purchase their own liability coverage, the written contract between the salon and the contractor should state this requirement. The contract should also state that the coverage purchased by the contract is “primary” and “non-contributory” to any other coverage. This places the independent contractor’s coverage first in line in the event of a claim. In short, the additional insured status provides protection to the salon owner named in a lawsuit for the negligent acts of the independent contractor.

To prevent lapses in coverage, it is also prudent to require that the independent contractor provide the salon with proof of or certificates of insurance every year, and to condition continued ability to work in the salon on that requirement.

On the other hand, if the decision is made that the salon purchases liability insurance and names each independent contractor as additional insured, the salon owner is assured of continuous coverage. However, there is a drawback to the contractors. This coverage would only apply when the contractor is working in the salon. There would be no coverage, for example, if the contractor is working out of her home or is performing services in a customer’s home.

Who insures the Personal Property that Independent Contractors own and keep at the Salon?
If the contractors buy their own liability insurance, that policy should be extended to provide personal property coverage for such causes of loss as burglary, fire, and water damage.

If the independent contractors do not have their own coverage, the salon owner should talk to her agent about whether the property damage coverage of the salon is…or can be…extended to cover the property of the independent contractors.

Is a Salon Owner required to carry Worker's Compensation Insurance to cover on-the-job injuries to Independent Contractors?
Yes, if there is an employer/employee relationship between the salon and the contractor.

There are some important considerations to determine employer/employee relationship…

  • How much control does the salon have over the way the independent contractor performs his work?
  • How are payments made by customers or to the independent contractors?

If all payments are made to the salon and then funds are distributed to the cosmetologists (rather than payments being made to the cosmetologists and then a portion being paid by them to the salon owner,) it is more likely that an employment relationship exists.

  • Does the salon owner provide the place to work, uniforms, products, equipment or tools, and the customers for whom the work is done?

In the cosmetology profession, the difference between independent contractor and employee may be especially vague. Owners never should assume they do not need worker’s compensation. (Consult with your legal advisor and then talk to your insurance agent.)

What is Employment Practices Liability Coverage?
Employment Practices Liability Coverage protects a salon from claims of discrimination or harassment from the independent contractors.

Such claims occasionally arise when the contractual relationship is terminated.

These claims are not covered under a commercial general liability insurance policy and can be very expensive to defend.