So, what is a sub-contractor, and why would I need a professional liability insurance policy? Putting simply, “a subcontractor is a person who runs their own small business inside a spa, clinic or studio.” They have a contract, clients, maintain their sub-contractor professional liability insurance policy, pay their bills, and, most importantly, pay their taxes.
Twenty or thirty years ago, there were very few (if any) “subcontractors” in the health and wellness industry. If you were looking for employment, you filled out an application, maybe showed the owner some of your skills, and voila you were an employee.
Fast forward to today’s marketplace, and I would guess most health and wellness businesses only have one or two employees, and they are probably the vital receptionist. All the business owner does is keep the lights on and provide a beautiful space for you to work. They no longer worry about payroll, taxes, and a whole host of other things.
The subcontractor relationship can take many different forms. You can pay monthly rent for access to the whole space, you can rent just your chair, or you can do a commission split. Each one has its pros and cons, so ask a lot of questions before you decide which one is good for you. And it is essential to know what their spa insurance policy is and to ensure they have sub-contractor professional liability insurance policy
One of the most important things you need (in the eyes of the taxman, especially) is a contract. It should lay out the responsibilities of both parties and clearly state that the relationship between the two parties is that of a subcontractor.
One of the unwritten rules the taxman uses is “if you look like an employee and act as an employee, you probably are an employee.” There are many cases where even the receptionist is on contract, and the taxman has disagreed with this. The receptionist does not set their hours, they do not bring in revenue, and they work under the direction of the manager or owner. “If it looks like a duck and acts like a duck, guess what? It’s a duck!”
As a subcontractor, you are your own small business, and as a business, big or small, you must carry a professional liability insurance policy. Having your health and wellness professional liability insurance policy is a good thing for several reasons. You own your insurance (and not the spa), so you get to control it and make all the decisions. You get to choose your liability limits (although the spa, clinic or studio may set some minimums), and you can customize your sub-contractor beauty professional liability insurance policy to suit your personal needs.
Let’s assume for a minute the spa business has the sub-contractor was covered under their insurance policy. You are thinking great, one less thing to pay for and nothing to look after. But what if you wanted to work part-time at a different location? Do they have a professional liability policy for you? What if you did odd jobs on the side for cash? Maybe you are helping friends or neighbours. The location’s insurance policy will only cover services billed under that location’s business name.
So, the best option is to own and control your policy. Most personal plans are usually under $500 a year, and you can purchase limits up to $10,000,000. Make sure it INCLUDES Commercial General Liability (CGL). Believe it or not, the insurance industry pays out FOUR times more CGL claims than professional liability claims. Why is that you ask? Good question. More people will slip and fall in and around the studio. Wet feet on a highly polished floor or an errant towel left on the ground causes someone to trip. How about you forget to turn off a tap completely, and it starts leaking in the middle of the night all over your floor and the units next door. These are all Commercial General Liability Claims.
Most businesses will make sure you have a Professional Liability policy in your name as the sub-contractor. It is a level of protection for both the company and yourself. If you don’t have a plan, you can be personally liable for any claims (lawsuit) that arise. With lawyer’s hourly rate starting at $400 or more, it does not take long for the legal bills to add up. Even if an accident looks like the spa owner is responsible, you will most likely be named in the lawsuit and must get legal help to get your name removed from the suit. So please make sure you have your sub-contractor health and wellness professional liability insurance policy.
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If the spa, studio or clinic you are working at needs insurance, please let them know about your business insurance at https://medi-spa-insurance.com/
