Water and Other Slippery Slopes

THE DAY SPA INDUSTRY HAS BECOME
more sophisticated over the course of the last few years. Along with an increase in the amount of services available at a day spa comes a surge in potential liability. A larger spa with tanning units, saunas, lasers, permanent cosmetics, massage and Brazilian waxing services will have more liabilities than a smaller business. No day spa should ever be without liability insurance, as many have been caught off guard by unexpected accusations.

Water
If the day spa has a water source, there is a potential for claims. If there is water on the floor, guests are likely to slip and fall, and a lawsuit is likely to ensue. Water sources include showers, pools and coming in and out of saunas and steam rooms. Recently, a guest at a spa died sitting in a hot tub when he manager “forgot” about her. The insurance company paid hundreds of thousands of dollars in the settlement. Another example of a liability is the doors on the steam rooms; this seems innocent enough unless they are slammed into a client, who may wind up with a broken Achilles heel. Spas with water sources need high limits of liability.

Communicable disease
Brazilian waxing procedures have become increasingly popular. This service has given rise to a new category of claims: communicable disease. Many people who get this procedure are likely to have acquired the disease from some other source. However that will not stop the lawsuits from coming. Often the waxing procedure will make symptoms worse, which is why the claimant assumes they did not already contract the disease from another source. In a lawsuit, they often cannot prove that the waxing led to the communicable disease, but by then the spa is already out thousands of dollars in legal fees and their reputation is tarnished. It is recommended that spas get communicable disease insurance to cover the costs of the legal fees arising from this type of situation. More insurers are making this coverage available. Another source of communicable disease claims comes from manicures and pedicures. A fungal infection is a communicable disease, so if the insurance policy excludes it, there will be no coverage. This is one of the biggest exposures a nail salon will have.

Sexual abuse
In our stressed-out society, massage services have represented a tremendous business opportunity during the past few years. This is a wonderful thing, except that it increasingly leads to allegations of sexual abuse. Historically this would be from a man working on a woman, but those days are gone. The only way for a spa to protect themselves is to know that their insurance offers coverage for these situations. Again it is often difficult to prove the allegations, but that does not stop the lawsuits. If there is no insurance for this type of allegation, the spa owner will have to hire an attorney to help them defend themselves.

Getting covered
One of the big advantages of having insurance for these types of situations is that the burden is on the insurance company to find an attorney who can assist the individual business owner if they are sued. Lawyers who work for insurance companies are often more capable than random attorneys because of their experience in general or professional liability for spas. Also the business owner does not have to come up with an upfront retainer. If your spa has independent contractors, they may or may not be included in the lawsuit. The entity that almost always gets sued is the business name on the door. Stating that the person who did the service is an independent contractor is rarely a defense in law. The spa owner should either insure the independents or require they have their own insurance and name the spa as additional insured. The problem with separate insurance is that it should include endorsements such as communicable disease and sexual abuse, and many independent contractor policies will not offer those coverage types. Avoid the slippery slope of self insuring by making sure that your business is adequately covered.

Susan Preston is the owner and president of Professional Program Insurance Brokerage and co-founder of the Society of Permanent Cosmetic Professionals. She has provided insurance and supplies to the permanent cosmetic and beauty industry for more than 20 years, and has worked with states to develop
industry regulations.