Setting up a dry cleaning and laundry services company is a huge task that takes time and effort. It requires buying expensive machinery, choosing the right location, getting the required permits and licenses, and marketing the business. In addition, business owners should consider the financial risks involved in operating a laundry and dry cleaning store and protect it from insurable losses if something goes wrong.
Moreover, customers expect dry cleaners to handle their apparel with care. A business where customers and employees can trust each other requires dedication and commitment. Thus, commercial insurance for laundry and dry cleaning stores is handy and protects against unfortunate incidents and third-party liabilities.
Risks and Liabilities
The business of a dry cleaning store is prone to numerous risks and liabilities, such as:
- Instances of slip-and-fall accidents due to wet or uneven floors.
- Fires can happen due to the gas dryers, excess lint, and chemicals used for the dry-cleaning process for clothes.
- Employees can get physically hurt while working with the equipment or at the store.
- Vandalism, theft, or other crimes may cause loss of money.
- Loss or damage to business-owned property from covered hazards like lightning, hurricane, fire, riot, or theft.
- Losses from equipment breakdown because of sudden and accidental malfunction.
- Customers and visitors could get hurt at the shop from a fall and demand compensation. They can also file a lawsuit against the owner.
Coverages Included in Laundry Dry Cleaning Station Insurance
Laundry dry cleaning station insurance provides coverage against possible risks. Some of these coverages include the following:
General Liability Insurance (GL)
General Liability insurance protects the insured for third-party injuries or property damage caused by the business's operations. If a customer slips and falls at the laundry or dry cleaning station, GL can pay for damages resulting from medical care and economic loss suffered by the injured party when the insured is legally liable. General Liability will provide the insured with a legal defense when an injured party sues the business owner for the injury suffered.
This insurance can also provide coverage against personal injury- both libel and slander and advertising injury. Suppose the business owner accidentally uses a similar advertising idea of a competitor. General Liability insurance can provide a legal defense if you are sued for covered claims.
Some general liability policies include a Medical Payment provision with a lesser limit of $5,000 or $10,000. Medical Payment coverage is considered a "goodwill" coverage that the insurer may apply to pay for incidents of lesser severity. Legal liability is not required for medical payment coverage to apply.
Business Property Insurance
Also known as commercial property insurance, this insurance provides coverage for company-owned physical assets used to run the business. It helps protect old or rented equipment and the personal property of the company. The coverage can also include owned buildings, equipment, tools, appliances, furniture, inventory, computers, accounts receivable, and other valuable documents. These assets are covered under insurance in case of theft, fire, or damage due to natural disasters such as hurricanes.
Equipment Breakdown Coverage
The dry cleaning business relies on industrial washers, dryers, and machines. Hence, it's important to have equipment breakdown coverage that could provide coverage against the cost of repair and replacement of sudden and accidental breakdown of equipment. This can pay for losses when equipment breaks down due to covered internal forces such as power surges, mechanical breakdowns, and motor burnout.
Business Interruption Insurance
Also known as business income insurance, this provides coverage against lost income if the business shuts down temporarily due to a covered loss. It can help pay operating expenses like revenue, mortgage, rent and lease payments, loan payments, taxes, payroll, relocation costs, extra expenses, and training costs. This insurance could help the business get operational again after an unfortunate incident. These incidents can include a hurricane, fire, or riot.
Workers' Compensation Insurance
Businesses with more than one employee should opt for workers' compensation insurance. An employee could get hurt on the job as the dry cleaning business involves handling heavy machinery and other dangers. Workers' compensation insurance can pay for medical costs, partial lost wages, ongoing care, death benefits, and legal costs.
Employment practices liability insurance is a part of workers' compensation insurance and can provide coverage in case an employee sues the business owner for injury.
Commercial Auto Insurance
Laundry and dry cleaning businesses usually own or lease vehicles for picking up or delivery of cleaning orders. Commercial auto insurance can provide coverage against third-party property damage and bodily injury liability claims arising from the use of these vehicles for business purposes. This policy can also provide coverage for damage or loss to the company vehicle when one purchases comprehensive and collision physical damage coverage. The business owner can also include personal injury protection or no-fault coverage in No-Fault states and Uninsured Motorist Bodily Injury Liability coverage where applicable.
Cyber Liability Insurance
Laundry and dry cleaning businesses involve storing sensitive personal information of customers, such as credit card numbers, residential addresses, and social security numbers. The cyber world is exposed to data breaches and cyber-attacks. This can leak the personal data of clients to hackers, causing them harm. Cyber liability insurance can provide coverage in such incidents for both first and third parties.
Cost of Dry Cleaning Insurance
The cost of dry cleaning insurance depends on the following factors:
- Business revenue
- Company size
- Number of employees
- Location
- Deductibles and policy limits
- Type of policy purchased
Securing Your Dry Cleaning Business
Insurance for laundry and dry cleaning companies is an important aspect of the overall risk management strategy that is needed in this industry. The coverage can protect the business from financial losses due to potential accidents and other types of damage to the dry cleaning station or its vehicles.
Before buying an insurance policy, it's ideal to understand its terms and conditions along with the coverage limits. This can help you choose the right policy for your company's needs. Luckily, we at Insurance Advisor can help you find the right insurance for your needs. We offer commercial insurance for all business needs, comprehensive quotes, easy payment options, and helpful guides and business insights. Contact us today for a quote!
Frequently Asked Questions (FAQ) about Laundry Dry Cleaning Station Insurance
1. Why do dry cleaning stores need insurance?
Insurance is crucial for dry cleaning stores as it helps protect the business from various risks. From accidents and injuries to property damage and legal liabilities, insurance helps cover the financial consequences of accidents and claims.
2. What types of insurance should dry cleaning stores have?
Dry cleaning stores should have the following types of insurance:
- General Liability: This insurance covers third-party bodily injury and property damage claims made against the business. It helps pay for medical expenses, legal fees, and settlements. Also, part of this coverage is Bailee insurance which insures your clients’ clothing and other items that are in your care, custody or control from loss or damage by covered perils.
- Pollution Liability: The chemicals used in the dry-cleaning process can harm the environment if they escape containment. Accidents happen whether one happens at your location or at a place where you dispose of the used substances. Fines, penalties and clean-up costs can bankrupt your business.
- Property Insurance: This insurance protects the dry-cleaning store's physical assets, such as equipment, inventory, and buildings, from perils such as fire, theft, and natural disasters. It covers the cost of repair and replacement.
- Business Interruption: This insurance helps cover the business' financial losses during interruptions caused by an insured event, such as a fire or flood (if you have flood insurance). It provides reimbursement for lost income, so you can meet your ongoing expenses like rent, taxes, payroll and loans.
- Employee Dishonesty: This insurance helps protect the business from employee theft and dishonesty. It covers financial losses due to fraudulent activities committed by employees.
- Auto Insurance: If dry cleaning stores have vehicles used for business operations, they should have commercial auto insurance. It covers liability from at-fault accidents, injuries, and property damage related to the business's vehicles.
3. What factors affect the cost of insurance for dry cleaning stores?
The cost of insurance for dry cleaning stores depends on various factors, including:
- Location: The location of your business can have an impact on insurance premiums. Areas with higher crime rates or a higher likelihood of natural disasters cost more to insure.
- Business Size: The revenue size of the dry-cleaning store and its payroll can influence insurance premiums. Larger businesses typically pay more for insurance.
- Years of Operation: The number of years the dry-cleaning store has been in business can affect insurance rates. Newer businesses may face higher premiums due to less experience.
- Industry Risk: The dry-cleaning industry may have specific risks that insurers consider when determining insurance rates. Factors such as the number of claims filed by similar businesses in your area can play a role.
- Employee Dishonesty: This insurance helps protect the business from employee theft and dishonesty. It covers financial losses due to fraudulent activities committed by employees.
- Claim History and Safety Measures: The dry-cleaning store's claim history, including past claims and any preventive measures in place, can impact insurance premiums. Insurers prefer businesses with a strong safety track record.
4. How can dry cleaning stores save money on insurance?
Dry cleaning stores can save money on insurance by:
- Ensuring Accurate Insurance Information: Providing accurate details about your business, including its revenue size and location, can help insurers assess risks accurately.
- Implementing Loss Prevention and Safety Measures: Implementing safety measures, such as security cameras and employee training programs, can help reduce the risk of accidents and insurance claims.
- Completing Site Inspections: Regularly conducting safety inspections and addressing any identified risks can minimize the likelihood of accidents and insurance claims.
- Reviewing Policies Regularly: Regularly reviewing insurance policies to ensure that coverage remains adequate and competitively priced can help save money in the long run.