What Types of Insurance Does a Car Wash Need?
On a sunny day, it wouldn’t be a surprise to see a line-up at the car wash. As sunlight reveals dirt on cars, it inspires people to stop by the car wash for an easy clean. And, for many, a run through the car wash is much easier than pulling out the hose, bucket, and soap at home. However, many customers mean many possible risks and liabilities for the car wash business.
Related: Guide to starting a car wash
What Are Some Risks for a Car Wash?
Car wash businesses need well-rounded business insurance coverage to protect them from potential financial hardships caused by risks. Some of the risks that a car wash will encounter include
- Employee injuries
- Customer injuries
- Damage to customer vehicles
- Sudden loss of business
Employees have several injury risks and hazards while working at a car wash. One of the more common claims will be injuries that result from slips and falls. The risk of a slip or fall injury is heightened for car washes because their floors quickly get wet and soapy.
Additionally, employees are in contact with many chemicals and substances that can cause injury or illness. Used correctly, the employee can remain safe while interacting with the chemicals. However, extended exposure or incorrect use can lead to skin, eye, and respiratory irritation.
Moving vehicles are another concern for employee safety. Poor visibility or distracted driving can lead to unfortunate, and often avoidable, injuries. For example, car washes that use conveyor belts have potential injury risks if the vehicle is not placed in neutral and propels off the end of the conveyor belt.
Many car washes operate using cash transactions, meaning they likely have a substantial amount of cash on-site. As cash is a target for thefts and robberies, car washes will have an increased risk of robberies. Further, car washes that operate during late hours or 24/7 have a heightened risk of robberies when fewer people are around.
Although robberies are a significant threat to a business’s cash, internal losses are also a concern. For example, employee dishonesty can cause monetary losses in theft, embezzlement, or fraud.
Like employee injury risks, customers also have injury risks at car washes. Again, the most likely injury will be caused by slips, trips, and falls or faulty machinery. Slippery, wet, or cluttered walkways add to the risk of a customer slip or injury.
Other injury hazards for customers include the following:
- Skin, eye, or respiratory irritation from chemical and substance exposure
- Burns from hot steam
- Shocks from malfunctioning or sparking equipment
- Vehicle collisions
Damage to Customer Vehicles
Car washes that have customer vehicles in their care are responsible for any damages or losses to the customer’s vehicle. Additionally, employees driving a customer’s vehicle may introduce other liabilities. For example, colliding with a third party can cause bodily injury or property damage that the business would be responsible for.
While in the business’s care, the customer’s vehicle will be exposed to several damage and loss hazards. All of which the car wash business could be held liable for restoring. Some of those hazards include
Sudden Loss of Business
Car washes rely on open locations to maintain a steady flow of business. Therefore, damage or loss that results in a location closure will cost the business both time and money. In addition to lost income, car washes may lose customers following a closure if the car wash needs to relocate.
Business interruptions generally follow a major loss such as an extensive fire, mechanical breakdown, or accidental damage to equipment. However, disruptions can also be caused by supply chain interruptions.
What Types of Insurance Does a Car Wash Need?
Although a car wash has many hazards, they can protect themselves from financial losses with well-rounded insurance policies. Some of the core policies that a car wash business should consider include the following:
- Workers’ compensation insurance
- Crime insurance
- General liability insurance
- Garage keeper’s legal liability insurance
- Business interruption insurance
Workers’ Compensation Insurance
A workers’ compensation policy insures businesses for employee injury claims. This policy benefits the business because it protects from potential lawsuits while also protecting the employee from financial hardships following an injury. For example, an employee may accrue hefty medical bills and lose income while they are unable to work.
A workers’ compensation policy covers various claim costs, including
- Payment of medical bills
- Reimbursement for lost income
- Coverage for ongoing rehabilitation care
- Coverage for disability income
- Payment of funeral expenses
A crime insurance policy covers the car wash business’s cash and money, which is normally excluded from coverage on other policies. This policy insures against hazards such as
A crime insurance policy protects a business’s cash from losses caused by third parties and employees. However, the policy excludes coverage for losses caused by owners, partners, and executives.
General Liability Insurance
General liability coverage insures claims of bodily injury and property damage. More specifically, this line of liability insurance covers claims that occur on business property or as a result of the business’s operations.
For instance, a general liability policy will cover claims for customers who slip on-site and suffer injuries. Should a claim occur, general liability insurance offers coverage for many claim costs, including
- Medical bills
- Property damage repairs
- Legal defense costs
Garagekeeper’s Liability Insurance
A garagekeeper’s liability insurance policy (or garage liability insurance) covers liability claims and physical damage claims that occur while a customer’s vehicle is in the car wash’s care. For instance, this policy would cover the liability and loss caused by an employee who collides with another vehicle while operating a customer’s vehicle. Additionally, this type of policy would cover the cost of repairs for dents and scratches to cars in their care.
In scenarios where a customer’s vehicle is damaged or is part of an accident, liability costs can quickly add up. Fortunately, a garage keeper’s legal liability covers a wide range of claim costs, including
- Customer vehicle damage repairs
- Third-party bodily injuries
- Third-party property damages
- Legal defense costs
Business Interruption Insurance
Business interruption insurance financially protects car washes for extended closures following a loss. Business interruption insurance is typically added to a general liability policy package and covers many interruption-related expenses such as equipment breakdown coverage or weather-related losses.
Some of the coverages offered in a business interruption policy include
- Reimbursement of lost income
- Coverage for employee wages
- Payments of existing loans and bills
- Reimbursements for the cost of a temporary relocation
How Much Does Insurance Cost for a Car Wash?
Insurance costs will vary from one car wash business to another because each needs differing coverage amounts and has differing exposures to risk. Both risk exposure and coverage amounts affect the cost of a policy. For example, a general liability policy with a coverage limit of one million dollars will cost less than a policy with a coverage limit of five million dollars.
Some of the factors that affect coverage amounts and risk exposure include the following:
– The number of employees on the payroll
– Employee training and certification
– The average or expected number of customers
– Security systems, such as cameras and safes
– Any past or current lawsuits or insurance claims
The best way to determine insurance costs is by getting a quote. Ideally, you should contact multiple insurance companies for quotes to pick a policy package that best fits your business needs.