CHICAGO — As our industry continues to evolve through technological advancements and amid changing customer expectations, it’s never been more important to secure comprehensive insurance coverage for your laundromat or laundry service. From water damage and equipment breakdowns to customer liability and employee safety, operators face a wide range of risks that demand careful attention and proactive management.
Featuring input from four insurance providers with vast laundry industry experience, this article explores the current state of insuring laundry businesses, offering expert insights into the challenges facing the industry, effective risk maintenance strategies, and key considerations when evaluating insurance policies.
(Editor’s note: The information provided here is for educational purposes only. Readers should consult an insurance services professional regarding their specific situation.)
Q: Minimizing the number of claims filed seems to be key in keeping one’s insurance premiums affordable. Do you have some advice for laundry owners about how they can do that?
Jodie Millino, vice president commercial lines-producer, HUB International Insurance Services: Putting real-time cameras in the store with signs up advising the customers that there are cameras in the store has helped mitigate and reduce claims.
Larry Trapani, president, Brooks-Waterburn Corp.: Regular maintenance is key, especially with plumbing, electrical systems and laundry machines. Implement safety protocols for slip-and-fall prevention, and invest in security systems to deter theft or vandalism. Train employees to handle minor issues before they escalate. The fewer claims you file, the more attractive your business is to insurers.
George Ingram, vice president of marketing and sales, NIE: In order to minimize claims, keep your business well-maintained, clean, tidy and safe. Make sure to have video cameras with backups. Many locations have video cameras that have short recording times or systems that overwrite previous recordings. A video is excellent evidence for a liability claim. We have seen claimants spill their own drinks and then intentionally “slip” on their own spill. They then file a claim against the business owner, which must be defended even though the claimant caused the spill.
Lawrence Larsen, owner, Lawrence Larsen Laundry Insurance: I think the most overlooked aspect of laundromat ownership is the failure to select knowledgeable insurance agents who specialize in the laundromat field to provide their insurance policies. The right coverage and an experienced person to contact in the event of a claim is an extremely valuable potential service that many laundromat owners are not afforded because they elect to use a generalized insurance agent.
Q: In your experience, in what area(s) of insurance coverage is the average laundry business most likely to fall short?
Trapani: The two areas where laundry businesses most often fall short are in properly valuing their equipment and carrying enough business interruption coverage. Many owners underestimate the true replacement cost of their equipment, especially with how expensive it’s become to replace washers, dryers and supporting systems. At the same time, business interruption coverage is often overlooked or under-calculated. In the event of a major loss, the time and cost it takes to get back up and running can be much greater than expected. Both of these gaps can leave a business vulnerable when they need protection the most.
Larsen: The most frequently seen issue in which laundromat owners fall short is a failure to read their policies prior to a loss. Perhaps the most overlooked document for laundromat owners beyond their lease agreement is their insurance policy. There are coverages that are not being offered, and activities that you must avoid, and they are all detailed in the policies and exclusions. Read your policy and your rights and you’ll avoid the traditional owner comment to their agent of “What did I pay all this money for? Why isn’t this item covered?”
Millino: Workers’ compensation insurance. Many business owners think if they are paying workers on an IRS Form 1099, they are considered an independent contractor, but that is no longer the case. If that person working in the store is taking direction from the business owner, they are considered an employee, and each state has penalties for not having workers’ compensation insurance.
Q: Electronic data gathering is playing a bigger and bigger role in small business as time passes. How do today’s insurance products reflect that?
Larsen: A caution light should be glaring in the minds of laundromat owners that the privacy previously protected in laundromat ownership will likely disappear in the future. Artificial intelligence and other entities will be able to verify the square footage, 24-hour service, income, previous carriers, previous claims, equipment age, condition, internet reviews and general information that insurance carriers will likely learn to utilize more frequently to understand their risks when insuring laundromats.
The result will likely be increased premium costs to laundromat owners. At present, the insurance companies are not using all the information they will be able to gather in the future to assess the risks of insuring your business. Electronic data may be good for laundromat owners but it will also be good for gathering a more detailed picture of your business by the insurers.
Millino: Standard carriers may pick up a small amount of coverage for this but the carriers that are willing to write self-service laundries currently do not write the coverage. The challenge is that even if there is a stand-alone policy that could be written, the premiums are quite expensive. Card reader systems collect card number, expiration dates, and potentially other personal information. While these systems use encryption and other security protocols, some systems store and process data on their own servers, which can be a point of vulnerability. The business owner should check with the card reader manufacturer for details.
Trapani: Insurers are increasingly using digital data to assess risk and tailor coverage. Some carriers offer premium discounts based on connected devices that monitor water usage, smoke, and temperature. For the laundry industry, this means that integrating smart tech can lead to both operational efficiency and better insurance rates.
In Thursday’s conclusion: How the laundry insurance marketplace may change over the next few years, and how you can act to make sure your laundry business remains insurable
Miss an earlier part? You can read them here: Part 1 — Part 2
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].
