Insurance: How Much Coverage is Enough? (Part 1)

CHICAGO — Trapeze artists, balancing acts and tightrope walkers thrill circus audiences with their daring acts high above the arena floor. But you can bet that before each show, these performers test that a safety net will catch them should they fall.

Self-service laundry operators don’t share the same risks as death-defying acrobats but they do share the same need for protection in the event of catastrophe. For these small businesses, their “safety net” is having the proper insurance coverage to protect against losses from personal injury, fire, theft and other events.

American Coin-Op invited four insurance providers with laundry industry experience to answer some questions about the options that’ll allow operators to best utilize their money while also avoiding heartache when the unexpected happens.

(Editor’s note: The information provided here is for educational purposes only. Readers should consult an insurance services professional regarding their specific situation.)

Q: What types of insurance coverage does a vended laundry business need?

Anne Cobb, customer service representative and sales, NIE: Business personal property; business income; utility services – time element; utility services – direct damage; liability; signs – attached or detached; awnings or canopies; crime; bailee (when laundry owner is doing drop-off dry cleaning and/or wash/dry/fold); equipment breakdown; workers’ compensation; and building when the building is owned by the laundry owner.

The limits of insurance are ultimately up to the business owner, but we strongly suggest using our building replacement cost survey for the building, and our equipment replacement cost survey for business personal property. When calculating the amount of business personal property insurance needed, the owner must include delivery, installation and taxes, plus all operating supplies. These items are often overlooked when the owner is giving his agent the desired limit of insurance, but they all need to be paid when recovering from a loss.

Lawrence Larsen, owner, Lawrence Larsen Laundry Insurance: The three areas of insurance needed by a laundromat owner are liability, property damage and theft. You carry liability to both protect yourself from liability lawsuits and, perhaps more importantly, to ensure that you have sufficient resources available if your actions or inactions have injured a customer or landlord. Property damage insurance, most often for fires, protects the equipment and assets you have in your business from unexpected loss. Finally, theft protection protects against the theft of washers, dryers and related equipment.

Jodie Millino, vice president commercial lines-producer, HUB International Insurance Services: Vended laundries need to carry coverage on a replacement cost basis, making sure that they understand the equipment values have tripled or quadrupled over the last two to three years. The intent of the insurance company is to put you back whole if you were to have a covered loss.

Larry Trapani, president, Brooks-Waterburn Corp.: A laundromat owner typically needs several types of insurance to protect their business, property and liabilities. The specific needs can vary depending on the size of the laundromat, location, and other factors, but here are some common types of insurance coverage that a laundromat owner should consider:

Commercial Property — Protects physical property, including the building, equipment and inventory from perils such as fire, theft, vandalism and natural disasters.
General Liability — Provides coverage for bodily injury or property damage that occurs on your laundromat premises. It can also cover legal expenses if you’re sued by a third party for accidents or injuries that happen at your business.
Business Interruption — Helps replace lost income and covers ongoing expenses if your laundromat needs to temporarily close due to a covered event.
Workers’ Compensation — If you have employees, workers’ compensation insurance is typically required by law. It covers medical expenses and lost wages for employees who are injured on the job.
Equipment Breakdown — Helps cover the cost of repairing or replacing equipment that breaks down due to mechanical or electrical failures.
Commercial Auto — If you have company-owned vehicles used for pickup and delivery services, you’ll need (this) insurance to cover accidents and damage to the vehicles.
Umbrella — Provides additional liability coverage beyond the limits of your other liability policies, offering extra protection in case of a catastrophic event or large lawsuit.
Flood — Depending on your laundromat’s location, you may need flood insurance; it’s typically not included in standard commercial property insurance policies.

The specific insurance needs of a laundromat owner can vary, so it’s essential to work with an insurance agent or broker who specializes in laundromat insurance. They can assess your business’ unique risks and help tailor a policy package that provides the appropriate coverage.

Q: Are there specific insurance policies tailored for laundromat businesses?

Larsen: The majority of insurance policies are not specifically tailored for laundromats but are combined with dry cleaners and therefore have provisions that just don’t seem to apply to the laundromat business. These coverages may not be needed by laundromat owners but are not a major factor in setting policy premiums, so any request to eliminate these coverages is not worthy of the effort.

Millino: Generally, the insurance policy(s) are written on a business owner policy that will write this class of business. It is the job of the insurance agent to make sure they pick the proper coverages and advise the customer with the important items they should look for on their insurance policy.

Trapani: Yes, there are insurance policies and insurance packages tailored specifically for laundromat businesses. Insurance providers often offer specialized coverage options to meet the unique needs and risks associated with laundromats. These policies can provide comprehensive protection for laundromat owners.

Cobb: Do business with an insurance professional who knows the coin laundry business, specializes in this industry with years of experience in the laundromat industry, has a good company reputation, and has great customer service.

Check back Tuesday for Part 2: Areas of risk, and how much liability coverage should a laundry carry?