Operating a spa is risky business. Operating a spa without appropriate insurance coverage can lead to devastating legal fees and even bankruptcy. Liability insurance is a must for any spa operating in the US (let's face it, we're a litigious society). Here are some facts and advice about liability packages for US spas.
A liability package will usually include Professional Liability, General Liability (including Personal Injury coverage), Product Liability, Fire Legal Liability, and libel coverage. General Liability insurance is required by most landlords, and most state boards also require proof of liability insurance. A million dollars of coverage is each area is standard.
In addition to covering your physical property, all technicians performing any kind of service, including independent contractors, will need to be covered. Professional Liability, also known as malpractice insurance, provides coverage for alleged negligence. Product Liability insurance is crucial for spas. In addition to carrying your own policy, your product suppliers should provide evidence of a certificate of insurance as well as include you as additional insured vendor. Most liability packages include Product Liability insurance for all non-private-label products. For private label, a separate Product Liability policy must be purchased.
There are two main types of liability policies--Occurance and Claims-made. An Occurrence policy is broader coverage since a claim will be covered even after the policy has expired, as long as the business or operator was covered at the time the procedure was performed. Even if the claim comes years after the date of the incident. Claims-Made policies are often standard for higher risk procedures. They provide coverage only if a written claim is made during the dates the policy was in effect.
5 Tips for Getting Started
- Choose an insurance package backed by a reputable and highly rated U.S. Company. All states are backed by Guaranty or Insolvency Funds that ensures the policy will be backed if the insurance company goes bankrupt.
- Get the state license number of your agent or broker. Some states have laws requiring insurance agents to have their license number on all advertisements.
- Know what the equipment and furnishings are worth, and strive to insure for 100%replacement. There are variables that will affect the cost, such as location, the quality of the business structure, and quality of your spa's fire protection system.
- Consider what deductibles you can live with. Intuitively, the higher the deductible, the lower the premium.
- Make sure that your spa's more hi-tech procedures are covered under the scope of the agreement and are not considered "medical."