Running a beauty salon comes with risks.
But I also know you’ll face many costs when starting a salon business. There are many areas where you can cut costs initially, but your insurance is definitely not one of them.
You need good insurance from the start of your exciting beauty venture, but it could also be your worst nightmare.
But what does it cost to insure a beauty salon?
I decided to find out.
How Much is Salon Insurance?
Full insurance costs about $2,900 annually (approx. $240/month) for a beauty salon, hair salon, barbershop, or spa with two employees. However, the exact salon insurance cost can vary greatly, from $50/month to $1000/month, depending on the number of employees, business turnover, which state it is based in, and the type of services provided. There are also ways you can combine insurance to bring the cost down.
In this article, I’ll explain everything you need to know to optimize the cost of your salon insurance while maintaining full salon protection.
The exact cost of insuring your salon depends on several factors. I’ll cover those factors in this article, but this will still give you an idea of the cost. To know exactly how much to budget for your salon insurance, request a free quote from Hiscox online now.
At the end of this guide, I also list some official government resources that provide valuable information and guidance on insurance for small business owners.
What Insurance Does a Salon Need?
Salon owners should ensure their salon has a Business Owner Policy, Professional Liability Insurance, and Workers’ Compensation Insurance. You may also need General Liability Insurance and Errors and Omissions Insurance, typically covered in the Business Owner Policy and Professional Liability Insurance.
1. Business Owner Policy
The Business Owner Policy combines General Liability Insurance and Commercial Property Insurance. It is, therefore, the most cost-effective way to insure a salon against costs associated with damage and repairs of the salon building and salon equipment, as well as liability claims due to accidents in the salon.
All salon businesses need General Liability Insurance, but if you’re a booth renter or mobile salon, you may not need Commercial Property Insurance. In this case, you should not opt-in for a Business Owner Policy but only a General Liability Insurance.
2. Workers Compensation Insurance
If you have employees in your salon, you must have workers’ compensation insurance in most states. This insurance covers costs if your salon staff gets injured in the salon. Costs include lost wages and medical treatment in case of injury.
3. Professional Liability Insurance
Professional liability insurance, also called errors and omissions insurance (E&O insurance) or indemnity insurance, protects you against any potential risks you may face when conducting your salon services on your clients.
How Much Does Salon Employee Insurance Cost?
A beauty salon workers’ compensation insurance costs about $435 per year (or $36/month) per hair salon, nail salon, barber, or spa employee. However, the cost depends on which state your salon is based in and can range from $0.75-$2.74 per $100 salary you pay. Almost all states require salon owners to have a Workers Compensation Insurance if they have salon staff employed.
The estimated cost of $435 per employee assumes your salon employees are at the average wage. The average salary for salon employees is $24,830 (source: Bureau of Labor Statistics). Each state has a differently regulated workers compensation per industry, so here I’ve assumed the average value at 1.75% of paid salary.
How Much Does Salon Services Insurance Cost?
Professional liability insurance costs about $920 per year (or $77/month). The cost of a salon’s professional liability insurance varies depending on what services you offer in the salon. Chemical peel insurance, micro-needling insurance, or tanning salon insurance can be higher than e.g. a regular salon professional insurance like nail salon insurance cost.
Regular liability insurance doesn’t cover claims for injury due to specific salon services, which is why professional liability is crucial. What services you provide in the salon will determine the cost of your professional liability insurance, which will be specific to your salon.
How Much Does Salon Property Insurance Cost?
A commercial salon property insurance costs about $700 per year (or $58/month) but varies depending on the building your salon is based in and how much salon equipment value you want to insure. Salon owners can save money by getting a Business Owner Policy (BOP) that combines salon property insurance with General Liability Insurance. A BOP costs about $1,200 per year (or $100/month) but also varies greatly depending on the salon’s business size.
The cost of your salon property insurance depends on the state of the building where your salon is located and also on the value of the salon equipment that you want to insure.
To get an idea of the value of hair salon equipment you can check out my list of hair salon equipment here where average costs are included.
How Much Does Salon Liability Insurance Cost?
The average cost of a salon’s General Liability Insurance is $740 per year (or $62/ month). But the cost varies depending on salon business size, years in business, and location. Salon owners who also control the salon location can save money by opting for a Business Owner Policy (BOP) which combines General Liability Insurance with Commercial Property Insurance. A BOP costs about $1’200 per year (or $100/month).
I would only advise you to opt-in for General Liability Insurance if you don’t control the salon location. If you’re a mobile salon, booth renter, or just a hairstylist renting a chair, it may be sufficient with General Liability Insurance. Otherwise, you might as well go for a Business Owner Policy.
Conclusion
Good salon insurance is one of the most important costs when opening a salon business. There’s too much risk associated with not having good salon insurance.
You should now have a good idea of how much salon insurance costs. But as you’ve seen, salon insurance costs vary from salon to salon.
All the best on your new salon business venture!
Stay safe.
Insurance Resources for Salon Business Owners
Here are some official government resources that provide valuable information and guidance on insurance for small business owners.
- U.S. Small Business Administration (SBA) – The SBA provides guidance on insurance types small businesses may need, including workers’ compensation, unemployment, and disability insurance. They also help understand state-specific requirements and find suitable policies through commercial insurance agents. Website: SBA Business Guide on Insurance
- HealthCare.gov provides information on the Small Business Health Care Tax Credit and the SHOP Marketplace. It offers insights into health insurance options for small businesses. Website: HealthCare.gov Small Business
