Should You Consider Salon Insurance to Help Protect Your Reputation?
Updated: Jan 18
When you run a busy salon, ou may rely on your good name, outstanding service and stellar reputation. After all, you are certainly in a 'people' business, providing a personal service often viewed as an essential part of their daily lives. But what can happen if something goes wrong that is beyond your control? What if it causes damage to that reputation, probably your most important intangible asset? Would you be prepared to deal with the situation quickly and minimise any financial losses?
Reputation. It isn't easy to actually define in real-world terms. The Cambridge dictionary refers to it as 'the opinion that people, in general, have about someone or something, or how much respect or admiration someone or something receives based on past behaviour'. One thing is for sure: it can be fragile. Warren Buffett famously said it could take '20 years to build it and five minutes to ruin it'. And the circumstances that may ruin it are not always under your control.
Where Do You Start?
Certainly, some existing insurance products can help your organisation deal with mistakes, errors, or omissions.
Professional Indemnity Insurance Coverage
As a salon owner, you need professional indemnity insurance if you or one of your staff makes a mistake when applying a procedure. After all, in this scenario, repercussions could be costly. The client may decide to pursue you for damages, and you would need to defend your position, potentially in court. Professional indemnity insurance is designed to give you support if anyone were to make an error or omission during the course of your business. Some policies can also provide coverage if you need to hire a PR agency to counter some of the negative press.
Management Liability Insurance Coverage
You should also consider management liability insurance. This covers you as the owner, director or part of the management team and is more focused on the actual running of the business rather than giving advice or offering procedures to a client. For example, this type of protection can cover any unfair dismissal or defamation or defend you if you've been accused of any breach of confidentiality or similar act.
Cyber Insurance Coverage
As you will undoubtedly use the internet and social media to help you promote your business, you might want to consider cyber liability insurance. Hackers could breach your firewall and access confidential consumer information in some instances. In this case, you may also be accused of negligence by regulators who are very focused on customer confidentiality these days.
Understanding the Risks
There are so many potential risks to a salon owner's reputation, over and above those that are more obvious. For example, what if some of the products you use were maliciously tampered with by a third party? What would happen if a major supplier was unable to provide you with essential everyday products due to some issue with their supply chain? Again, some losses may be covered under the policy types above or through business interruption coverage, but it should also be possible to protect your salon against direct reputational risk.
Reputational Risk Insurance
This type of coverage will protect you in the event that adverse reporting in the media damages your 'brand' reputation and may make it more difficult for you to attract new clients. The insurance can provide access to funds to help you manage a reputational crisis as quickly as possible. After all, time is definitely of the essence when a situation like this unfolds. You'll want to salvage the confidence and trust of your clients as quickly as possible so that you can return to a positive financial position soon.
These policy products come in all shapes and sizes, and you will need to get a solution that is tailored to your operation.
How Policies Work
Some policies cover direct financial losses, which can be defined as falling net operational profit, from the day that the reputational harm is initially discovered. You may be able to get several months of protection, including the extra expense associated with managing the situation. For example, you may need to bring in an accountant to help quantify your loss so a claim can be processed.
Reputational Harm Expert
Additionally, you may need to bring in a reputational harm expert who can help you identify exactly why the crisis emerged in the first place. They may be able to identify risk areas that you hadn’t noticed and give you advice, and steps, to help you prevent such a crisis from happening in the future.
More sophisticated coverage may bring you round-the-clock access to consultants who can react to negative media as and when it emerges. They may have media monitoring tools that can assess how things are going in real time and potentially generate new content to help mitigate the situation.
Enhancing the Good News
In essence, you may need to focus even more on press coverage or social media presence. Perhaps you should focus on good news stories or draw attention to other business areas that may have been unaffected by this direct event. Of course, you should do this carefully and with purpose and not aim to inflame the situation that may be unfolding. This is another area that you could discuss with a reputational harm expert assigned to your case by the insurance carrier.
Expect the Unexpected
In an ideal world, your future involves business as usual and does not have any unforeseen issues. Still, you never know when a critical event could happen that could cause short- to medium-term damage to your operation.
As insurance coverage is meant to protect against the unexpected, you should discuss reputational risk with your salon insurance broker. Salonsure has experience in this area and can provide you with information and analyse your existing coverage. We can give you more detail about reputational harm insurance and how it should be an important consideration for any established salon owner today.