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Risks and insurance for the beauty industry – see examples of insurance for your industry

Recognising what insurance is needed, and how it applies in different situations, may sometimes be difficult for new and even experienced beauty industry business owners. This page contains information about insurance for the beauty industry and risks faced by beauty industry business owners.

Medical expenses and accident insurance

Employees in the beauty industry are required to use a wide range of hair salon and cosmetics products such as lotions, hair products and cleansers on a daily basis. Because of this, over the course of a day, the business owner and employees are exposed to a variety of chemicals that cause irritation and even allergies. Studies show that as many as 70% of hairdressers suffer from work-related hand dermatitis at some point in their career (source: Finnish Institute of Occupational Health). 

The most common occupational diseases among hair stylists are work-related toxic contact dermatitis and allergic contact dermatitis. In addition to these, work-related respiratory irritation symptoms are fairly common and can in the worst case lead to asthma, for example. Barbers are twice as likely to have symptoms of asthma than the general population, and their risk of developing bronchitis is twice that of the population on average. 

The most common accidents in the beauty industry are knee, ankle, shoulder and wrist injuries caused by slipping and tripping (source: The Centre for Occupational Safety).

Example: Work-related asthma

A person has worked as a cosmetologist for two years when they begin to experience symptoms. First, the eyes begin to water, then the nose becomes runny and eventually, the cosmetologist feels as though they have a cold year-round. However, they notice that the symptoms disappear entirely during the summer holidays. The cosmetologist wonders if they weren’t just going through a longer bout of the flu. In the autumn, the symptoms return, however, and they decide to take an allergen test to find out what is going on.

The test is unable to identify the cause of the symptoms, so they ask for a referral to additional examinations. They are referred to Helsinki University Central Hospital for more extensive allergen tests. The tests reveal that the cosmetologist has become allergic to instant glue used in eyelash extensions and a chemical used to dye lashes and eyebrows. Upon learning this, they stop doing eyelash extensions and the symptoms go away. 

The cosmetologist is out on their morning job when they gets their first sudden shortness of breath. They aren’t worried by this, however. A week later, the cosmetologist has another similar episode. Alarmed, they decide to see a doctor. The doctor suspects a mycoplasma to be the cause and prescribes him antibiotics. The symptoms return after the course of antibiotics, and the second and third treatment no longer ease them. Finally, the cosmetologist is referred to a doctor where they are diagnosed with asthma. 

In the above example, worker's compensation insurance covers the medical examinations and consultations and medication related to the treatment of asthma.

Example: Accident on the way to work

It’s a sunny March morning. The winter is nearly past, and the temperature outside hovers around the freezing point. The weather is nice, so our self-employed hair stylist decides to walk to work from their flat in the city centre. 

Before arriving at the salon, the hair stylist visits a café for a cappuccino to go. Their hair salon is just around the corner when they step on black ice on the pavement and slip and fall hard. They try to get up right away but their ankle is in so much pain they can’t put any weight on their foot. They call a taxi to the doctor, where they learn that their ankle is badly sprained. The doctor prescribes the hair stylist a few days of painkillers, and they head home with their ankle taped. After the accident, the self-employed hair stylist sees a physiotherapist they’ve been prescribed two sessions with to treat the ankle.

In the above example, workers' compensation insurance covers the taxi ride, painkillers, doctor’s consultations and physiotherapy.

Special Corporate Insurance

Special Corporate Insurance is the most suitable property and business insurance solution for the beauty industry. It is an insurance package that includes property, business interruption, business liability and legal expenses insurance. The premium is based on the company’s net sales. See below for more about insurance included in Special Corporate Insurance.

Property insurance

Beauty industry businesses often use a wide range of expensive hair and cosmetics products, such as lotions, oils and cleansers. In addition to these, hair salons and barber shops may own high-quality hairdressing tools. Special Corporate Insurance covers movable property that is related to the company’s line of business and included in the net sales used as the premium basis.

Business interruption insurance

The operations of a beauty industry business can cease unexpectedly due to fire, water damage or other property damage. Business interruption insurance provides cover in these situations. Business interruption insurance indemnifies financial loss caused by business interruption (loss of estimated gross profit).

Example: Fire in a beauty salon

A self-employed cosmetologist owns a beauty salon on rented premises in the city centre. Property in the salon include cosmetic products, furniture, cash and houseplants. The owner arrives at work normally on Monday but as they approach the salon, they notice that the building is charred and there is nothing left inside but ashes. A fire that broke out over the weekend has destroyed everything in the building.

In the above examples, property insurance covers damage to property, while business interruption insurance covers estimated lost gross profit while operations are interrupted.

Business liability insurance

Business liability insurance covers bodily injury and material damage caused to another party by your company’s operations.

Example: Damage to a client’s scalp

A regular customer walks in asking for a hair perm. The self-employed hair stylist curls the client’s hair and applies the perm lotion evenly. The hair stylist waits the 15 minutes required for the chemical to take effect and returns to the customer. The hair stylist is just about to rinse the client’s hair when their phone rings. The caller is another client who wants to cancel their appointment. The call takes longer than usual as the client has forgotten the day of the appointment.

In the end, the hair stylist finds the right appointment and continues working on the hair perm. When the perm is ready, they notice that the client’s scalp has been damaged. The self-employed hair stylist is found liable for damages.

In the above example, business liability insurance covers damages resulting from the damaged scalp to the client according to the insurance terms and conditions.

Insurance for business interruption caused by an employee

At an additional premium, the Special Corporate Insurance package can be extended to cover business interruption caused by an employee. Permanent employees or entrepreneurs may become ill or have an accident resulting in disability. This in turn may hamper or bring an end to the business, causing financial losses (loss of estimated gross profit).

Example: Illness of an employee

A barber shop owner has one long-time employee. It’s the busiest time of year for the barber shop, and nearly all appointments are booked for the next six weeks. The next day, the long-time employee comes in with a sick note. The employee has just been diagnosed with long-term depression and must take a few months’ sick leave immediately. 

The barber shop owner is in a difficult situation as the reservation calendar is full and their only employee is unavailable. Luckily, it happens to be Friday and they have the weekend to find a substitute. The barber shop owner calls their colleagues from the barber school and manages to find a competent substitute before Monday. 

In the above example, Insurance for business interruption caused by an employee covers the additional costs incurred by hiring the substitute in order to reduce the loss of estimated gross profit.

YEL pension insurance

In the event of sick leave, the beauty industry entrepreneur can apply for a daily allowance from Kela. With YEL insurance, the entrepreneur is entitled to the allowance even after just one day of illness. The amount of the allowance depends on the earned income specified for the YEL insurance.

Musculoskeletal disorders are commonplace among people working in the beauty industry. The most common places with symptoms are the lower back, neck, shoulders and hand and wrist. Barber, hairdressers and cosmetologists, for example, suffer from back problems more frequently than workers in other industries. What is also alarming is that according to one study, self-employed barbers and hairdressers had a 67% risk of developing musculoskeletal disorders, while the same figure for employees was only 30%. (Source: OSH Professionals)

In light of these facts, it can be said that self-employed persons in the beauty industry have a relatively high risk of suffering from musculoskeletal disorders at some point in their career. Precisely in such situations, the YEL daily allowance offered by YEL insurance can be of assistance. Work inability due to musculoskeletal disorders was the largest reason for increases in the allowance in 2020 (Source: Kela).

Beauty industry entrepreneur – ask for an insurance offer

Whether you are a new or experienced beauty industry entrepreneur, we are always ready to help you identify and select the right insurance for you. Contact us using the request for offer form below, and our experts will help you find the most suitable insurance for your beauty care business.

The insurer is Pohjola Insurance. The losses will be covered in accordance with the law and the insurance terms and conditions. TyEL and YEL insurance is issued by Ilmarinen Mutual Pension Insurance Company.