Insurance – tips to covering your butt!
For goodness sake – GET YOUR OWN PROFESSIONAL LIABILITY INSURANCE POLICY AND MAKE SURE IT FULLY COVERS YOU IF SOMEONE WERE TO SUE YOU!
I see so many estheticians (seasoned, brand new out of school and everything in between) asking on the Facebook boards if they should have individual insurance, or if they are covered by their employers. The answer is yes!! EVEN IF YOUR EMPLOYER TELLS YOU THAT YOU ARE COVERED BY THEIR INSURANCE, GET YOUR OWN!!!!! I don’t know about you, but I’d rather KNOW I was fully insured for the procedures that I offer, rather than trust that my employer carries adequate insurance to cover me. When you get your own insurance you can choose the type (Claims-made or Occurrence Form), the limits of liability and what equipment / procedures you are covered for. As a business owner and employer, I personally require that my employees carry their own liability insurance for every service they provide – it’s that important.
But which company and type of policy gives you the best coverage? To answer this, let’s first break down the two types of insurance that are offered…
Claims-made or Occurrence Form
Occurrence form provides better protection than Claims-made. The reason being is that Occcurrence form provides insurance protection even if your policy lapses, provided you were insured when the actual incident occurred. Claims-made, on the other hand, provides coverage only if your policy is still valid when the claim is made, NOT just when the incident occurred in the first place! Claims-made policies are generally cheaper than Occurrence form policies, and are thus very attractive to the insured. But you get what you pay for – remember this.
As an example, imagine that you provided a facial waxing service in December 2014 and you lifted your client’s skin and it scarred them. Your client assures you that it’s ok, that they’re not mad, and you never think another thing about it. A few years later, in March, 2016, you decide to retire and you cancel your insurance. It is very common for lawsuits to be filed long after an injury has occurred, and your client may not file suit for several years. For this example, let’s say you are served with a lawsuit in April, 2016 – just a month after you cancel your insurance. If you have Claims-made insurance you will likely NOT be covered, EVEN THOUGH YOU CARRIED INSURANCE WHEN THE INCIDENT OCCURRED! To continue being covered by a Claims-made policy, you must still have insurance coverage in order to be covered for the incident that occurred YEARS before. Alternatively, with Occurrence form policies, as long as you were covered when the incident originally occurred, you will continue to be covered, even if you no longer work as an esthetician and no longer carry insurance.
THIS IS HUGE!!! Keep in mind, there is the possibility of something going wrong during EVERY SINGLE SERVICE YOU OFFER!!! Allergic reactions, issues from lifted or torn skin, injury from a tippy mag lamp, burns from a steamer, PIH from a peel left on too long, or with too many layers, product dripped into an uncovered eye… I could list a million things that can go wrong. If you don’t have the correct type of insurance, there is a possibility that you will not be protected, and could lose everything you’ve worked so hard to build! If you’re unsure whether or not your insurance is Claims-made or Occurrence form, call them and ask! Not knowing the answer to this question can mean the difference between being covered, and getting screwed.
For this reason, it is also imperative that you have a signed consent EVERY SINGLE TIME YOU SEE YOUR CLIENT! If something were to happen, and you don’t have a signed consent on file, your insurance company can 100% deny your claim!
A few more things to note….
There are a few related policies; Tail coverage & Nose coverage. Tail coverage is purchased after you cancel your Claims-made policy, and continues to cover you as long as you continue to pay for Tail coverage. The combination of Claims-made and Tail coverage is very similar to Occurrence form, with one critical difference. When an occurrence policy expires, the premiums stop, while the coverage (on occurrences that happen during the policy period) continues forever. Tail coverage, on the other hand, is something you purchase after your claims-made policy expires… and you continue to pay for it until you decide that the risk of discovering an old occurrence no longer outweighs the cost of the tail coverage premium.
Nose coverage is similar in theory to Tail coverage. Nose coverage is purchased to protect you when moving from a Claims-made policy to an Occurrence form, and is generally provided by the replacement policy.
BEWARE: In some cases, you really need to read the fine print on your insurance policy!
Case in point – a popular insurance company used by Estheticians and other body workers, Hands On Trade, offers General ‘Occurrence’ Liability and Professional ‘Claims Made’ Liability. So, this means if someone slips & falls you’re covered, even after you cancel your insurance, but any professional claims made against you ARE NOT COVERED UNLESS YOU STILL CARRY THEIR INSURANCE!!! I can pretty much hear the ‘Oh crap’ coming out of your mouth as you read this!!!
The type of insurance you purchase is just one part of the equation. You also need to choose your liability coverage. Make sure your insurance policy includes all 3 types of liability; general liability (slip & fall), product liability (a client alleges a reaction to a product you sell) and professional liability (aka malpractice in the medical field) and purchase the most coverage you can afford. It is always better to be overinsured than underinsured.
Please note, these liability policies do NOT cover the contents of your business against damage or loss. That is a separate Business Personal Property Insurance policy, one which is just as important to have, as it protects the contents of your business!
I personally use and recommend coverage with ASCP, Associated Skin Care Professionals. For just $259 annually ASCP provides the member’s skin care business with coverage for professional liability (client alleges malpractice), general liability (client alleges injury/accident due to member’s negligence), and product liability (client alleges reaction to product). ASCP will also defend you if someone sues you alleging your wrongdoing in covered losses; those legal expenses are provided in addition to the policy limits. ASCP insurance covers only those services that your state board allows a licensed esthetician to provide. Esthetics is a constantly changing field, so if you are not sure whether a particular service or device is within your legal scope of practice, your first step should be to ask your state board.
In addition to providing coverage, ASCP offers Business Personal Property Insurance, as well as many additional resources: consent forms, tons of free and reduced-rate educational opportunities, discounts, business building resources, a website builder, etc…
KEEP IN MIND: If you need additional coverage for procedures that aren’t covered by your general ASCP policy (such as that required for ThermoClear, Lamprobe, Skin Classic) and other advanced treatments, ASCP offers a referral service to Allied Professional Services. The gentleman I work with is Nicholas Daum, and you can reach him via email at firstname.lastname@example.org. Tell him that Pro Skin Guru sent you!