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A One of the most and controversial and most discussed subjects in the insurance industry revolves around the special needs of someone who works for others as an independent contractor. The most important issues for consideration are record keeping, taxes, and insurance. Thinking of oneself as a “mini-business” or “mini-salon” can help to demonstrate the need for protection as an owner. Truly, the size of a business does not preclude protecting one’s investment of time and money. In keeping with this concept, it is essential that independent contractors understand certain aspects of their business, to ensure that their investments are properly protected. Many independent contractors make the assumption that they are fully protected by insurance carried by the owner of the salon (department store, electrologist’s office, or doctor’s office). While this may be true in some instances (e.g. professional liability may be extended to cover the independent), there are many situations in which the business owner’s insurance does not cover the independent contractor’s interests, leaving the latter at serious risk. Often the independent contractor is not aware that coverage is available and can be tailored to suit their needs. Mini-business owners should review their investments and decide if they are properly protected, not only in the event of a professional or malpractice claim, but also for property losses and general (trip and fall) liability. In addition, a salon owner’s liability insurance might only protect an independent contractor while working at a particular location. If the individual works at another salon or physician’s office, or is engaged in free-lance work elsewhere, there will be no protection. Most comprehensive policies provide for malpractice coverage to follow the “named insured,” therefore it is important for the mini-business owner to be the policy owner, or named insured. Property, including products owned by an independent, cannot be covered under a salon owner’s policy or a physician’s policy. In the event of a loss due to fire, the independent contractor would not be reimbursed for any property they owned. This could mean a substantial loss, considering the amount of money they have invested in their space. Keeping accurate records of purchases and inventory will help establish a true value of this investment. A second aspect of property coverage – of major importance to the mini-business – is “Business Loss of Income” or “Business Interruption” coverage. Such coverage reimburses the individual for actual loss of income if a covered claim occurs; i.e., if a fire renders a facility uninhabitable. However, the insurance of the salon owner (department store, electrologist’s office, or doctor’s office) would not reimburse the independent contractor for their loss of earnings during the downtime. Serious consequences could arise if an independent contractor was to rely on a salon owner’s insurance to provide coverage for them. The independent has no control over the policy, nor do they have any means of knowing if the coverage is maintained. The policy could be canceled, non-renewed or changed, and the independent would have no knowledge of the situation. This lack of control could result in a financial disaster, and cause the independent contractor to go out of business. With the personal services industries expanding as they are today, the need to deal with a professional insurance agent – one who has knowledge of the esthetics and skin-care fields – has become increasingly important. Choosing an agent who understands the nature of these services, allows the independent practitioner to explain their special needs and obtain optimum protection for themselves and their practice. |
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