The truth is that barbering may not carry the same risks as a superhero or truck driver, but it comes with plenty of potential challenges that could expose you to damages and lawsuits. That’s why barbers should invest in barbering insurance to protect themselves and their shops in the unfortunate instance that they truly need it.
What is Aggregate Coverage?
Your expertise and passion is barbering, not insurance. It’s not uncommon for barbers to be overwhelmed by (or uninterested in) the nuances and language of liability. To simplify things for you, we’re exploring a key term that you should familiarize yourself with and look for when choosing a policy—aggregate coverage.
In short, aggregate coverage refers to the total amount of money your insurance policy will pay out during the policy period. This is the cumulative limit of payout you can receive from your insurer in a given time (typically a year).
For example, if your barbering business experiences a catastrophic year where professional and general liability claims reach a $4 million total, and your policy has a $3 million aggregate limit, your insurer will pay out the full $3 million, leaving you to cover the remaining $1 million.
Why Aggregate Coverage is a Good Thing
While aggregate limits may sound like exactly that—limits—they’re actually quite beneficial to both the insured and the insurer. Policies will clearly defined limits help establish a healthy balance on multiple fronts, and you should be aware of specific aggregate limits before committing to a particular policy.
Aggregate Coverage Can Lower Your Insurance Premium
As a barber, your work does come with inherent risk. Equipment can get damaged, clients can experience allergic reactions, and a “slip and fall” risk is present on the premises. However, it is not necessarily a high-risk career, and paying pricey monthly insurance premiums is best avoided.
Aggregate coverage allows you to define the level of total coverage in relation to the premium you want to pay. The higher the aggregate limit, the higher the monthly premium (typically). In other words, you can find a policy that offers enough coverage for your perceived risk and tailor it to your budget.
For barbers trying to carve out a space within the industry, the extra capital that is freed by paying lower premiums is truly invaluable.
Aggregate Coverage Differs from Per-Occurrence Limits
One area of potential confusion is the relationship between per-occurrence limits and aggregate insurance coverage. Most liability insurance policies for barbers will clearly define both limits, so understanding the way the two interact is vital when choosing the right insurance for you and your shop.
If you face two general liability claims in a single year, for example, your per-occurrence coverage will apply to both instances individually, but your aggregate coverage will be cumulative. Say your per-occurrence limit is $2 million while your aggregate coverage is $3 million. You will not be left high and dry for the second event. Instead, your policy will still pay out the full $3 million aggregate limit.
Selecting a Barbering Liability Insurance Policy
Now that you’re equipped with essential knowledge regarding aggregate coverage, it’s time to take that information and apply it practically by answering questions such as:
- What should you look for in an insurance policy?
- How much aggregate coverage should it include?
- Can I have low premiums with a high aggregate limit?
These questions set the foundation for your insurance search, and while your needs might vary slightly from another barber, the answers should apply nearly universally.
Any barbering insurance policy should include, at minimum, both general and professional liability insurance. Additional coverages and perks to look for include product liability coverage, rental damage coverage, stolen equipment coverage, and free industry resources (such as training programs, industry discounts, and more).
When it comes to aggregate coverage limits, you should weigh your perceived risk against your budget and select a plan that balances the two. The higher the aggregate limit, the better, but you need to keep your premiums in check. Look for a policy with a reasonably high aggregate limit that doesn’t break the bank—the better the balance, the better deal you’re likely to receive.
The truth is that you can find policies with fair aggregate limits and reasonable monthly premiums. For example, the liability insurance offered by the National Association of Barbers boasts a $3 million annual aggregate limit with monthly premiums that fall well below the competition.
If you’re searching for a barbering insurance policy and don’t know where to start, be sure to check out NAOB. Not only are our policies among the industry leaders, but our free blog and other resources are phenomenal tools for barbers of all skill and experience levels. Be sure to subscribe for the latest updates!