Insurance: How Much Coverage is Enough? (Part 2)

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: Where are the greatest areas of risk in and around the average vended laundry?

Jodie Millino, vice president commercial lines-producer, HUB International Insurance Services: Fire is the main area of risk around the vended laundry. Dryer fires and lack of general maintenance (cleaning of the dryer ducts, etc.) are the leading cause of loss on the vended laundries. There has also been a rise of fires due to homeless as well.

Larry Trapani, president, Brooks-Waterburn Corp.: The greatest areas of risk in and around the average laundromat can vary depending on factors such as location, operational practices, and the level of safety precautions in place. However, some common areas of risk in and around laundromats include:

Slip-and-Fall Accidents — This is our most frequent type of claim. Laundromats often have smooth, hard flooring surfaces, and water or detergent spills can make these surfaces slippery. Customers and employees are at risk of slipping and falling, which can result in injuries.
Fire Hazards — Dryers in laundromats generate heat, and lint buildup can create a fire risk. Regular maintenance and cleaning of dryers are crucial to mitigate this risk.
Security Concerns — Laundromats may be susceptible to theft or vandalism, particularly during off-hours when there may be minimal staff or surveillance.
Electrical Hazards — Laundromats have various electrical components, including washing machines, dryers, and lighting. Faulty wiring or electrical issues could lead to fires or electrical shocks.
Customer Altercations — While rare, altercations between customers can occur, potentially resulting in liability issues for the laundromat owner.

Anne Cobb, customer service representative and sales, NIE: Fires are the biggest risk in the sense that they can cause the most devastation. However, the most frequent risk is trip- or slip-and-fall. People come to the laundromat in flip-flops, slippers and a variety of other shoes that can contribute to a fall. Make sure your tables and chairs are steady, and get rid of any broken ones right away.

Lawrence Larsen, owner, Lawrence Larsen Laundry Insurance: The most common claim made against liability portions of laundromat policies relate to customer slip-and-falls. Appropriate warning signs, warning cones, available mops and proper maintenance (especially on front-loader door gaskets) will reduce the common causes of water on the floors. To keep your rates low, don’t have a folded-up towel placed under your leaking front-load washer but repair the door or gasket as soon as possible. The towel on the floor demonstrates to insurance underwriters and potential claims attorneys that your store maintenance is below industry standards.

Q: How much liability insurance should a laundry owner have to protect against customer accidents or injuries while on the premises?

Trapani: While I recommend a minimum of $1 million, there is no one-size-fits-all answer to this question. It’s crucial to strike a balance between adequate coverage and affordability. You want to ensure that you can handle potential liability claims without jeopardizing your business or personal assets.

Cobb: Always go with at least $1 million general liability coverage. You may also want to consider an umbrella policy, (which) is extra insurance that provides protection beyond existing general liability limits, workers’ compensation liability limits, and auto liability limits. Umbrella can provide coverage for injuries, property damage, and certain lawsuits.

Larsen: Although inflation and increasing jury awards are increasing potential payouts, standard liability coverage of $1 million is still the most common liability coverage. I believe $2 million liability will eventually be offered by some carriers.

One of my laundromat clients was involved in a million-dollar claim in 2022, when a young child stuck his finger into an uncovered electrical outlet. The laundromat owner had provided the outlet for customers to charge their cellphones. I advise laundromat owners to conduct regular inspections of their business to ensure that potential sources of injury are identified and removed. In the meantime, consider an umbrella policy if available.

Millino: The customer first needs to refer to the lease agreement to confirm what the requirements are from the landlord. We recommend not going any lower than $1 million per occurrence with a $2 million aggregate, but the customer needs to make sure that the coverage will be enough to protect their assets in the event a patron tries to sue them for negligence.

Come back Thursday for the next installment covering the need for property insurance and loss-of-income coverage