Are You Sure Your Professional Liability Insurance Covers You?

“I have insurance, so I’m covered.” It’s a common assumption, but how true is it?

In the health and beauty industry, professional liability insurance is essential—but not all policies provide the same level of protection. While some offer broad coverage, others come with limitations that could leave business owners exposed to risks they weren’t even aware of.

The question isn’t just whether you have insurance—it’s whether you’ve taken a close enough look to know how it actually protects you. Let’s explore some areas that professionals often overlook until it’s too late.

Who Is Covered Under Your Policy?

When hiring new team members, bringing on independent contractors, or growing a business, it’s easy to assume that insurance automatically extends to everyone performing services. However, some policies only cover specific individuals or require that new hires be added before they’re insured.

For example, imagine a medspa hires a technician to perform laser hair removal. Business is booming, and the owner is focused on running the operation. They assume the new technician is covered like everyone else. Months later, a client experiences burns and files a lawsuit. When the medspa submits a claim, they’re shocked to learn that the technician wasn’t listed on the policy—leaving them responsible for legal costs and damages.

Not all policies work this way, but if yours does, it’s something you’d want to know before a claim arises. The key is to ask:

✔️ Does my policy automatically cover new hires, or do I need to add them?

✔️ If I use independent contractors, are they covered?

✔️ If coverage is limited to named individuals, how do I ensure I don’t overlook someone?

Does Your Policy Cover Everything You Do?

Many policies define coverage by specific listed services. If a service isn’t explicitly included, it may not be covered—even if it’s similar to other treatments that are.

Consider a skincare professional who has been offering laser treatments for years. Wanting to expand, they add microneedling and radiofrequency treatments to their menu. When a client experiences an adverse reaction and sues, they assume their insurance will step in. But the claim is denied—their policy only covered laser treatments, and they never updated it to include the new services.

This isn’t the case with every policy, but it’s an easy trap to fall into. If your business is evolving, it’s important to ask:

✔️ Does my policy cover all the treatments I currently offer?

✔️ What happens if I introduce a new service—do I need to notify my insurer?

✔️ Is there a way to ensure my coverage automatically adapts to new offerings?

Does Your Coverage Follow You If You Move or Offer Mobile Services?

If your business operates from multiple locations, provides mobile services, or has plans to move, it’s critical to check whether your policy only covers scheduled locations. Some policies restrict coverage to specific addresses, meaning that any work performed elsewhere may not be insured.

A stylist offering bridal services on location or a cosmetic technician traveling to clients' homes could be unknowingly working without coverage if their policy is location-specific. Before expanding, it’s worth asking:

✔️ Does my policy cover mobile services or work performed outside my primary location?✔️ If I relocate, is coverage still in place, or do I need to update my policy?

✔️ Are there restrictions on where I can legally perform services under my policy?

Are You Meeting the Policy’s Warranties?

Insurance policies often include warranties—specific requirements that must be met to maintain coverage. These aren’t just best practices; failing to comply with them could mean a denied claim.

For instance, a medspa performing laser treatments may have a warranty requiring signed client consent forms. If they skip this step, either due to time constraints or a simple oversight, and a client later sues for complications, the insurer could deny the claim for non-compliance.

Other common warranties in professional liability policies may include:

✔️ Consent & Release Forms – Clients must sign before treatments, and records must be kept.

✔️ Proper Licensing & Certification – Every technician must meet state requirements.

✔️ Compliance with Manufacturer Guidelines – Treatments must be performed exactly as specified by the equipment manufacturer.

✔️ Use of Certified Equipment – Some policies only cover FDA-approved devices.

✔️ Training & Experience Requirements – Certain procedures, like laser hair removal, may require a minimum of 30 hours of training or six months of experience.

✔️ Location-Specific Services – Treatments must be performed at listed locations unless an exception applies.

✔️ Exclusion for Unapproved Products – Coverage could be voided if non-FDA-approved anesthetics, injectables, or lasers are used.

Most professionals follow these best practices anyway, but the key question is: Do you know which warranties apply to your policy? If not, it’s worth reviewing them to ensure there aren’t any surprises when it matters most.

What Happens If You Cancel Early?

Not every business keeps the same insurance policy forever. Whether switching providers or discontinuing services, business owners sometimes choose to cancel coverage mid-term. However, some policies have non-refundable terms, meaning if coverage is canceled before renewal, the remaining premium may not be returned.

If switching policies is something you’re considering, it’s important to ask:

✔️ Does my policy allow refunds if I cancel mid-term?

✔️ Will I still be covered for past services if I switch policies?

✔️ If I stop offering a service, does my policy need to be adjusted?

The Bottom Line: Awareness Is Key

Not every professional liability policy has restrictive terms, but many do. The biggest risk is not knowing the limitations of your coverage until a claim is denied.

The best way to protect your business isn’t just having insurance—it’s understanding it. Take the time to review your policy, ask questions, and make sure it aligns with the way you actually operate.

If you’re uncertain about whether your current policy meets your needs or you’re uncomfortable with its limitations, let’s chat. The right coverage should protect your business—not hold it back.

At Rikor, we help health and beauty professionals navigate the complexities of professional liability insurance, ensuring they have coverage that truly protects them. We understand that every business is unique, and a one-size-fits-all policy can leave gaps that only become apparent when it's too late. Our approach goes beyond just selling insurance—we work with you to identify risks, clarify policy details, and ensure your coverage aligns with how you actually operate. If you’re unsure whether your current policy fully protects your business, let’s connect and find a solution that works for you.