CHICAGO — While buying Laundromat insurance may be a less-than-glamorous task, few things are as important to your survival as a self-service laundry owner as protecting your business. Your investment must be looked after. For example, could you afford to rebuild after a disaster? Gambling is for Las Vegas, not the self-service laundry industry.
Have you changed insurance carriers lately? Have you looked for a better deal? Do you know what questions to ask when shopping for insurance?
Take a moment out of your busy business life, and think about the last time you reviewed your coverage. Are the limits adequate? Think about the laundry. Have you made any changes to the store? Have you added any washers or dryers? All of these things have an impact on your coverage.
There’s another way to look at your insurance coverage. Has your carrier contacted you lately? If not, maybe you should ask yourself why. It’s never a bad idea to give a new carrier a chance. The worst thing that can happen is you get to compare prices and coverages. A new deal may be beneficial for your operation.
Before you rethink your coverage, be prepared. Larry Larsen, an industry insurance veteran, offers tips on how best to shop for Laundromat insurance.
Avoiding Key Mistakes
Insurance shopping poses a unique challenge, says Larry Larsen, a 30-year industry veteran and agent for Crusader Insurance Co., Woodland Hills, Calif.
“Everybody wants to save money in the Laundromat business, but when it comes to insuring your Laundromat, you have to be careful you don’t save so much money that you increase your risk,” he cautions.
The most common mistake Laundromat owners make is the failure to properly value their business, Larsen says. “The starting point of any Laundromat insurance policy is the evaluation of what it would cost to rebuild the Laundromat in the event of a total loss.”
Trying to save money by lowering the amount of your property insurance means there could be major problems if you experience a total loss, Larsen explains. “No insurance company is going to pay you more money than the face value of your insurance policy at the time of a total loss.”
You can carry lower insurance amounts, he adds, when you have made the decision to close down and quit the business if you have a total loss. “This applies to people who only have a short term left on their lease, or are leasing on a month-to-month basis. If your store burns and is declared a total loss, your long-term lease may not be cancelled and it will be your obligation to rebuild the Laundromat.”
Confusion often exists when owners buy replacement-cost insurance with the belief that their store will be replaced regardless of how much face-value insurance they have purchased. It’s quite a “surprise” when an owner discovers that the insurance only covers up to a maximum of the insurance purchased, Larsen explains.
Do you know what it would cost to rebuild your store? Read your lease or look at your other building insurance (if you own the building), he says. “As a tenant, many of the items will be covered by the building owner if there is a loss. Absent a lease provision to the contrary, all fixtures you will be required to leave behind at the expiration of your lease may be covered by the building owner’s policy.” This can include the bathroom, water-heating system, water softeners, heating, air conditioners, swamp coolers, electrical panels, gas lines and interior walls.
The lease plays a crucial role in any shopping experience. No one can give you the proper assistance unless the lease is reviewed, Larsen adds.
“The valuation of your Laundromat is not the responsibility of your agent! Your agent probably has not seen your Laundromat, and is only as aware of the condition of your store as you have provided in answers to a few questions.”
Your agent may be the expert in Laundromat insurance, but you’re the expert when it comes to knowing the value of your own business, he notes.
“The second most common mistake is the failure of owners to take the time to understand their insurance. Most owners spend hours evaluating the income-and-expense potential of a Laundromat purchase, but only spend minutes evaluating their insurance coverage. Spend more time evaluating your insurance.”
How does an insurance “amateur” evaluate coverage? “Read the insurance provisions of your lease, learn the definitions of insurance terms, and discuss your potential insurance with your potential agent,” he advises. “A professional agent has allocated up to one hour for each new client to engage in a question-and-answer session. No question is silly, and any agent who avoids your inquiries should be crossed off your list of agents worthy of your business.”
If you have any questions or comments about this article, contact Larry Larsen at [email protected].
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].