Review any document before you sign it & don’t be afraid to ask questions or have a trusted adviser read it, as well.
Lease agreements are like insurance policies – boring and difficult to read. But because a lease is a contract, it’s very important to understand what is in it. As a salon owner, the most common types of contracts you will sign are leases for your space and tanning equipment, applications for insurance policies and finance/loan agreements.
It’s very exciting to start a new business or obtain new equipment; in those situations, the tendency is to let your emotions take over and sign whatever is put in front of you. But the best advice anyone can give you is to review any document before you sign it. Don’t be afraid to ask questions or have a trusted adviser read a contract. If you have an attorney, refer contracts to him/her for review.
Many real estate leases are now placing the burden for anything that occurs on the premises – whether in the salon, walkways or parking areas – on the tenant. That’s you. Your landlord is probably asking for a hold harmless or waiver of subrogation. This means that even if you were not at fault for an event, you cannot go back against your landlord to recover any payments made by you or your insurance company. The lease may make you responsible for damage to or theft of air conditioning units, glass or other attached features. If your lease does include such clauses, you must confirm with your insurance agent that your policy would cover these items. If it does, you may incur an additional charge for them.
Another consequence to keep in mind is if your landlord is non-responsive to maintenance issues, yet pushes the burden of insurance to you, it may become more difficult – or expensive – to purchase insurance.
Your lease may also make you responsible for maintenance of common sidewalks or parking areas. Do you live in an area that requires ice or snow removal? Make sure your landlord, and not you, will take care of it and that it is a provision of the lease. Otherwise, if a customer slips in one of those areas and the removal has not been done, the lease may push the liability from the landlord to you. If you are responsible for the snow and ice removal, be sure to have it done.
Most leases spell out the types and limits of insurance the tenant is required to carry. The time to be made aware of this is before you sign on the dotted line. Your landlord will most likely require proof of insurance, and if it does not meet the requirements, you will need to purchase the additional coverage. Be particularly aware of liability limits. Some leases may force you to purchase an Umbrella policy, which can substantially add to your cost. You may also be required to provide proof of auto insurance, Workers’ Compensation and Business Income. These are types of coverage you need to protect yourself; but they will not be optional if they are required by your lease.
Before you sign on the dotted line, know what you’re getting into. Contact an insurance agent who specializes in tanning salons, plan for the cost and build it into your business plan.
Jenny is Vice President of Universal Insurance Programs, based in Phoenix, AZ. She works with new and existing salon owners to determine and provide insurance coverage for their unique business models. Contact Jenny with any questions regarding your insurance at 800.844.2101 x1480 or email email@example.com.
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