Many businesses encounter a legal dispute at some stage, whether they involve a supplier, a former employee or the tax authority. From day one, these disputes can incur costs that add up to a sizeable sum. To protect your salon in such a situation, you may need to consider buying a bolt-on “legal expenses” cover. What do you need to know about this?
Augmenting Your Existing Coverage
You may wonder why you need separate legal expenses insurance if you already have other products in place. For example, if you have public liability coverage and need to make a claim, surely the insurance company will cover expenses related to that process. Similarly, if you have professional indemnity insurance in case you advise a client and things go wrong, you might expect this type of policy to cover any legal expenditure along the way.
Certainly, this kind of assumption is correct, and you shouldn’t worry about your general protection. But you may be at risk in a number of other areas that are not directly covered by public liability, professional indemnity or other products.
What Does Legal Expenses Insurance Cover?
It’s worth taking a closer look at all of these potential risks individually so that you can assess the potential exposure.
Commercial Contract Disputes
What if you enter into a contract to supply a particular service for a big customer? For example, you may offer salon services to employees of a specific company as a perk provided by their employer. That company agrees to pay you on an ongoing basis but reneges for some reason or another. In this case, you’d want to pursue that lucrative contract to recover your expenses, but that action comes with its own costs.
Criminal Prosecution
In a worst-case scenario, action may be taken against your businesses under the Workplace Safety and Health Act, which could lead to criminal prosecution. You may therefore be forced to defend your position in a court or to appeal an action brought against your business. You can’t afford to ignore this type of situation and may face significant costs.
Employee Relations
If you suddenly have to deal with a disgruntled employee who decides to bring legal proceedings against you, expect to rack up those legal expenses. The worker may dispute their contract of employment with you or claim that you breached specific employment-related legislation.
Data Loss
If you store certain items of personal information on behalf of clients, you have a duty of responsibility. If that data is compromised somehow, you may find that an action is brought against you under the Privacy Act. Throughout these proceedings, you will need to defend your approach and good name.
Regulatory Disputes
What happens if a regulatory body decides not to renew your operating licence? They may feel that they have grounds for doing so, but you may not agree. However, you cannot appeal a decision without taking legal action and incurring the associated expenses.
Tax Disputes
How is your relationship with the tax authority? It’s best to keep the ATO at arm’s length if you can, but if investigators decide to launch an investigation, you have to tackle this head-on. For example, perhaps there’s a dispute over GST payments, or the authority believes that you have not handled fringe benefits correctly. As a result, you may face significant penalties, back payments and interest and may want to build a counterclaim.
Understanding the Risks
These are just some of the “risk” areas, and as you can see, unexpected or unwanted expenditures can crop up at any stage. While you may sometimes turn to public liability, employers liability or professional indemnity coverage for relief, it may not be appropriate or comprehensive enough in some cases. In fact, a number of different legal issues can arise that will still require professional support not provided by other coverage. In this case, you need legal expenses insurance instead.
Pursuing Your Position
Most of the examples listed above relate to a defence of your position, but you can also use legal expenses insurance to pursue claims. In other words, you can instigate a claim rather than call for support when some correspondence arrives out of the blue. This capability differentiates legal expense insurance from other products. So, if you want to be proactive to protect your position or to recover money that somebody else has refused to pay, consider buying this additional protection.
Expanding Your Safety Net
Otherwise, consider this type of coverage another safety net as you go about your daily business. Remember, the world is increasingly competitive, and disputes can arise at any time. Whenever legal action is initiated, it will invariably lead to higher costs on both sides, and someone will need to pay this. If you don’t have the correct type of insurance in place, you may have to meet those costs yourself. You may also be unable to access the appropriate level of justice, even if you have a strong case on your side. In this scenario, you may have to give up your legal rights if the cost of enforcing your position is too great.
Exploring Your Options
It’s worth having a look at legal expenses insurance and talking with your provider to get further information. You may be able to get coverage to help you deal with legal costs and expenses, should the dispute or legal proceedings be connected to your general everyday activities.
Compliance and regulation have become onerous in the salon industry over the last few years, and you can expect this trend to continue. Therefore, it makes sense to have as much protection in place as possible to safeguard the financial state of your organisation and give you peace of mind.
Getting Your Protection
Talk with Salonsure, Australia’s leading provider in the world of hair and beauty insurance. A knowledgeable consultant will further explain the benefits of the best legal expenses insurance, and they will be happy to extend the appropriate coverage.
General Advice Warning
This information has been prepared without taking into account your objectives, financial
situation or needs. You must consider the insurers exclusions, endorsements, terms & conditions when obtaining legal expenses insurance and therefore assess whether it is appropriate, in the light of your own individual circumstances.