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 four-part 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: How have factors like inflation, natural disasters and financial market instability impacted the insurance industry recently? What has been the result for policy holders with laundry operations?
George Ingram, vice president of marketing and sales, NIE: Insurance companies do not know the cost of their product until years later. That means the insurance industry is not immune to inflation, natural disaster or financial market instability. Perhaps insurance is more affected than other industries when one considers that insurance companies must anticipate future costs of all these factors.
For example, an insured buys property insurance in November 2024. Then a natural disaster hits with record losses, such as the 2025 California wildfires of approximately $38 billion of insured losses. The materials to rebuild have increased significantly since the initiation of the policy. For example, a box of roofing nails that in 2024 cost $100 costs $300 today. Compounding the problem further, insurance companies use investment income to help offset the cost of claims. When investments become volatile, a whole host of additional problems manifest. Ultimately, this means the cost of insurance has to increase for everyone, including laundry operations.
Lawrence Larsen, owner, Lawrence Larsen Laundry Insurance: “The dollar doesn’t go as far as it used to” means receiving the same service or product but now at a higher price because of inflation. Costs are increasing in general, including adequate insurance coverage. These costs are impacted by governmental regulations, price controls and the need for insurers to recover from extraordinary events.
Floods, fires, storms and rain have wrecked the expected income of many insurance carriers. Particularly hard-hit are California, Texas and Florida, but all areas are going to see price increases in the purchase of business coverage because of inflation.
In California, the insurance commissioner reportedly refused rate increases for companies doing business in this state and the result is a large number have abandoned or greatly reduced coverages offered. Why would any insurance company want to sell policies that didn’t give them a return on their risk?
Jodie Millino, vice president commercial lines-producer, HUB International Insurance Services: All businesses big and small have been greatly affected by inflation as costs of utilities, water and vending supplies have gone up substantially. Along with that, the cost of equipment over the past two-plus years has gone up over 30%. Natural disasters such as wildfires have affected the insurance industry, particularly placing property insurance. Many carriers are no longer writing this class of business, so we are limited in the options for our customers, and the prices have increased 30-50% over the last three years.
Larry Trapani, president, Brooks-Waterburn Corp.: Inflation and the increased frequency of natural disasters have significantly impacted insurance costs across the board. For laundromat owners, this often means higher premiums and more scrutiny on building valuations. Many carriers are requiring strict adherence to insurance-to-value standards, which can be a shock to business owners who haven’t updated their property values in years. Financial instability has also led to tighter underwriting guidelines, making it harder for marginal risks to find affordable coverage.
Q: At a minimum, what coverage(s) would you suggest for the average vended, self-service laundry with a couple employees?
Larsen: In light of increasing awards in lawsuits, the liability coverage of laundromat owners at $1 million and $2 million aggregate should be increased to $2 million and $4 million aggregate. Second, you need to have your workers’ compensation insurance in place to protect you from employee labor injury and claims.
Finally, if you own or are buying a fairly new store, you should consider insuring the true replacement cost of the equipment. This can be very costly to the laundromat owner, but can be reduced with careful consideration of what items actually belong to the landlord if the location is a leased property. There is no rebate or benefit if you accidentally double-insure property that is already being covered by the landlord’s insurance carrier, such as the water heaters, walls, pipes, fixtures, heaters and other items attached to the real property.
Millino: Building coverage, if they own the building; business personal property coverage for the equipment and the tenant improvements and betterments; business income coverage; general liability coverage; and workers’ compensation coverage if they have employees. The trend we are seeing on building coverage is that if there is not a central station alarm, some insurance carriers will only write “basic form” and not “special form.” On the business personal property coverage, some carriers are putting a coinsurance clause on the policy, which will penalize the business owner if not insured to value.
Trapani: At the very least, a self-service laundromat should carry general liability, property insurance, and workers’ compensation. Property coverage should include the building (if owned) and contents, especially washers and dryers. Equipment breakdown coverage is a smart add-on, given how essential those machines are to daily operations. You’d also want coverage for business interruption to protect income during downtime caused by a covered loss.
Q: How might the insurance coverage you suggest for the average business offering wash-dry-fold services (through drop-off and/or pickup and delivery) differ from your previous answer?
Millino: The business owner needs to make sure there is coverage for goods that are in their care, custody and control. If using a vehicle to pick up and deliver, that vehicle should be registered to the business and a commercial auto policy should be written.
Trapani: Businesses offering wash-dry-fold or pickup/delivery services need to consider bailee coverage; this protects customer property while it’s in your care. Additionally, commercial auto coverage becomes essential if you’re using vehicles to pick up and deliver laundry. The liability risk increases with these services, so higher general liability limits or even an umbrella policy may be advisable.
Larsen: This raises a question about laundromat insurance. Does a laundromat (by definition, a self-service business) policy provide adequate coverage for a second business entity (fluff and fold or pickup and delivery) operating in the same facility? The answer, in my opinion, is unclear. Most insurance companies created and priced their policy rates on laundromat/drycleaning services. The addition of expanded exposure to outside risks, such as delivery services, has not been clearly addressed by the insurance companies.
Consider the consequences that have developed for companies such as Uber where a rogue employee is involved in a crime or an assault during their time on the job. Will these claims be covered by the insurance companies? Has the owner properly informed the insurance company of their exposure and risks?
A second policy for laundry services (not self-service) might be the proper course for those owners engaged in the additional business of processing and delivery for others, perhaps even for those who also engage in fluff-and-fold services. Does the insurance policy of your delivery driver provide any protection to the laundromat owner when they are engaged in work-related activity using their personal vehicles? It’s something to consider.
Coming in Part 2 on Thursday: Areas with the greatest need for insurance protection, and the basics of bailee coverage
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].
