Medical Spa Insurance Overview
Gallagher Healthcare :: Industry InsightsBy Hal Williams | 6/5/2014
Medical Spas are unique businesses with unique insurance needs. When I speak with new MedSpa owners about insurance, they are sometimes surprised to hear that a typical spa’s “business owner’s policy” does not adequately cover their operations and the associated risk.
Medical Spas are the result of a relatively new integration of traditional day spa services with cosmetic medical services and, sometimes, wellness care. Most of the cosmetic medical and wellness services offered at MedSpas require physician oversight; this is where the higher liability risk comes into play. Whether you’re a physician owner or a non-physician owner of a MedSpa, it is important that you partner with an insurance broker who is familiar with the specific coverage needs of your business.
What types of insurance does a MedSpa need?
There are three important lines of insurance that every prudent Medical Spa owner should purchase:
- Professional Liability Insurance
- General Liability Insurance
- Business Personal Property (Contents) Insurance
Other coverage considerations include:
- Workers Compensation Insurance
- Provides injured employees lost wages and medical benefits
- Covers the business against claims from employees alleging wrongful termination, discrimination, harassment, etc.
- Protects your business in the event of a data breach and loss of customers’ personal information—including violations of the HIPAA privacy law.
The Professional Liability policy is typically written on a stand-alone basis, while the General Liability and Business Personal Property policies are usually written as a package called a “Business Owner’s Policy” or “BOP”. We do have markets, however, that can write all of these lines of insurance on one policy form. We will help you to assess which direction is the best for your particular business and budget.
What do the Professional & General Liability and Business Personal Property Insurance policies cover?
It is a common misconception that a MedSpa’s medical director’s individual malpractice insurance policy will cover the MedSpa’s staff and operations. Most physician malpractice insurance companies will not insure MedSpa operations, as they fall outside of the [traditional medical practice] box. Medical Spas need to have their own insurance written in the name of the business entity or corporation.
The Medical Spa professional liability insurance policy will cover the spa’s corporation and its staff, including aestheticians, laser technicians, registered nurses, nurse practitioners, physician assistants, and physicians or medical director for all approved services performed on its behalf. Services covered include but are not limited to:
- Botox and Dermal Fillers
- Laser Treatments (including hair and tattoo removal)
- Chemical Peels
- Tanning Services
- Medical Weight Loss Services (hCG, Adipex, etc.)
- LED Teeth Whitening
- Cellulite Reduction
- Laser Lipo
- Massage Therapy
- Beautician Services
- Permanent Makeup
- Hair Restoration
The professional liability insurance policy will provide your business and staff with defense and (if necessary) indemnification against claims alleging negligence or errors in the services performed.
- The typical limit of liability on MedSpa professional liability policies is $1,000,000 per claim and $3,000,000 annual aggregate.
- Policies are available with No Deductible or a Low Deductible
- Annual premiums fall in the range of $3,500 to $12,000 depending on the menu of services offered and the type and number of professionals employed.
The business owner’s policy (BOP) is a package policy that all types of businesses purchase to insure against various liability claims and property loss. It’s very similar to the homeowner’s policy you would purchase for your house and covers a lot of the same things, except it’s written for commercial operations.
The BOP general liability coverage will insure a business for claims arising from things other than professional services, such as: a customer tripping and falling on premises, slipping on an icy patch on the front walk, medical/first aid expenses, property damage caused by employees, damage to property rented to your business, and personal & advertising injury.
The Business Personal Property (BPP) coverage insures all of the contents of your MedSpa. You can think of BPP as all of the items inside your building that you would take with you if you moved. These items include: furniture, computers, décor, and equipment. This coverage is especially important if you have laser equipment (owned or leased), because these items cost anywhere from $50,000 to $175,000 to replace if they are stolen or damaged.
What information is needed in order to get a Medical Spa insured?
We’ll need basic information in order to obtain quotes from the entire Medical Spa insurance market in all 50 states such as:
- A completed Medical Spa application
- Medical director’s CV/Resume
- Description of services offered
- Employee roster, including job title and any credentials
Contact us today to have one of Gallagher Healthcare’s advisors perform a coverage analysis on your existing insurance program and to discuss what alternate cost-savings options are available in your area.