CHICAGO — Fire, liability or a worker injury is a risk that a coin laundry faces every day. If the business doesn’t have the proper insurance protection in place, an incident could be difficult to recover from. In a worst-case scenario, it could even put it out of business.
American Coin-Op invited representatives from the industry’s major insurance providers to answer some questions that the average self-service laundry owner might have about protecting their business investment.
ACO: How often should a laundry owner evaluate his/her insurance coverage?
Steve Brodie, senior vice president, Wells Fargo Insurance Services USA: Things change all the time. I would review the liability when the lease is coming up for renewal and just keep in touch with your distributor annually on any major equipment price increases so you can raise your personal property value accordingly.
Adam Weber, president, Irving Weber Associates: All insurance policies should be evaluated yearly at the time of renewal at a minimum. If, over the course of the given term, changes are made to the building, machinery, autos, etc., the insurance should be re-evaluated at that time as well.
Anne Hawkins, senior underwriter, NIE: A good agent will contact his insured at least two months before renewal to review current coverage and make possible upgrades or changes. If an agent does not contact the owner in this manner, it may be time to look for a new agent. Don’t let a renewal go by without reviewing your coverage with the agent or carrier. There may be changes that are occurring to the insurance or you may have some new operation that needs to be covered.
I find that many Laundromat owners actually have other jobs and businesses and are extremely busy people. But always take those 15 minutes to remember what’s covered/not covered at the Laundromat. If you can’t be reached by phone, let your agent know that he can reach you by e-mail. I find it a convenient way to communicate, but it’s always nice to speak to the owner so responses are immediate and carry a more personal touch.
Larry Trapani, president, Brooks Waterburn Corp.: The insurance landscape is constantly shifting. In terms of price shopping, I recommend you review your policy about every two years. I do strongly suggest an annual conversation with your agent to review coverages. You may have bought new equipment during the year and the values need to be adjusted. The agent can also review new discounts that become available during the year.
ACO: How does the presence of a surveillance/security system affect a store’s insurance coverage and cost?
Weber: Surveillance/security system would lower the costs of most property coverage as this is a definite deterrent to theft, vandalism and similar situations causing a claim. Surveillance systems can also assist in determining if there was an actual fault on the business owner’s part in a liability claim, such as to whether a water spill caused a slip-and-fall.
Hawkins: That determination would be made on a company by company basis. I find that unless surveillance tapes/discs are kept for at least 2 years, they may not be of help for liability purposes. Why? Someone may fall on your premises and you may not hear a word about it until the statute of limitations is about to run out (two years in most states). In the meantime, the claimant has seen an attorney and been treated by a chiropractor for two years, running up many expenses. Then, out of the blue, you receive a lawsuit. If you haven’t kept the surveillance footage, it’s hard to contest the claim.
Security systems are great, but in many cases someone forgets to turn them on, they aren’t working for some reason, or they are working but the burglar is able to get in and out before the police arrive. They may be a customer during the day, trying to figure out exactly how they are going to pull it off quickly without getting caught. On the other hand, the fire portion of the security system is important. It can keep a small fire from becoming a potential total loss.
Trapani: Every insurance company has different credits for security systems. While most give a credit for alarms, cameras, etc., the discount is relatively small. The real savings occurs when cameras protect you from bogus liability or employee dishonesty claims. I’ve gotten many slip-and-fall and workers’ comp claims denied because the store owner had cameras on the premises and the claim proved to be false.
Brodie: It helps greatly in the defense of a liability case, so many carriers give a small credit for the installation of live, taped security systems (both fire and burglary).
ACO: What new developments in insuring coin laundries have there been in the last two years?
Hawkins: Coin laundries can now be insured on a business owners policy, which was not available to most carriers (for this exposure) two years ago through the rating service that most insurance companies use (ISO). This policy is quick to rate, quick to quote, and pretty much boilerplate. The cost and the use of this policy varies by insurance company.
Trapani: Insurance is a cyclical business. There are long periods of time (often five years or more) of insurance premiums going down and shorter periods of prices going up. Unfortunately, we are in one of the periods of higher prices. It started last year with some modest increase and looks to continue through the end of this year.
Some insurance companies have stopped writing the class of the Laundromat business altogether, while most are just raising their prices. The good news is that these cycles usually don’t last long. I think we’ll start seeing a downward shift in pricing in late 2013.
Brodie: Consider adding employment practice liability if you have employees, as well as pollution coverage. Sometimes pollution covers more than you think; for example, mold is a pollutant that’s excluded from all standard policies, but is covered under a pollution policy. Consider this if you have an apartment above the laundry. The heat and moisture in some stores creates mold, and the tenant then sues the laundry owner. Without a pollution policy, your standard insurance normally will not respond.
Weber: Insurance policies should be reviewed for the business property limits, as these have often changed in recent years. The policy was probably originally taken out to cover a loan taken on the equipment. Since that time, the equipment found in Laundromats has changed greatly with the times, particularly in terms of electronics.
Laundromats now usually contain flat-screen TVs, Wi-Fi equipment, computer connection equipment, key fob and/or card readers, and other electronics, which will add considerably to the property value at the location. Review and update this information often to be sure there is adequate coverage.
Q: What general advice about insurance can you offer a coin laundry owner?
Trapani: The best advice I can give a coin laundry owner about insurance is to be proactive. Read your policy, talk to your agent, and make sure your investment is well protected. You have insurance so you sleep well at night.
Also, make sure your agent has experience in writing Laundromats. While the class of business can be written by virtually any agent, if they don’t know the industry and ask the right questions, they may be missing coverages and leave some serious gaps in your protection.
Brodie: The best advice is to insure with a broker that has experience insuring coin laundries. Many local agents insure small businesses, and in this current economy are more than willing to insure a coin laundry, but they know nothing about the business. Go with a knowledgeable broker that has many stores insured, is recognized throughout the industry, and will be there to help with the claims process.
Weber: Be sure to have the correct insurance for your type of business. Standard business insurance doesn’t take into account the industry-specific needs with regards to water damage, bailee coverage, boiler coverage, etc. It is important that your insurance carrier offers coverages specifically designed for the Laundromat industry.
Also, review and update your coverage limits annually and whenever changes such as new equipment and building updates are made. And be sure that you are up front and honest with your insurer about hours of operation, if your operation is attended or not, and if you have certain systems in place (fire/burglar alarms, cameras, etc.) and that they are in working order; insurers will review this against the application at the time of a claim.
- Insure your property to the proper value because if you do not, there may be penalties involved at the time of a loss.
- Maintain your premises and equipment to keep losses down, which in turn keeps premiums down.
- Be sure you have the proper venting installation. If you are not using class B vents, your premium may be higher. Also, make sure vents do not come into contact with combustible building materials.
- Clean dryer vents daily; lint sparks a fire easily.
- Call your agent or carrier if you have any questions regarding your insurance, your premium or loss-control questions. It’s their job to service your insurance needs.