What Types of Insurance Does a Laundromat Need?

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Laundromat Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Embroker, Hiscox, and CoverWallet all offer easy business insurance quotes at affordable prices.

Quick Reference

A laundromat business brings in customers who will use its machines consistently. Even the occasional customer needing an industrial-sized machine from time to time will often find themselves returning to the laundromat again. Whether the laundromat has a few machines or many, the business can rely on regular customers.

Businesses are not without risk exposures, and a laundromat is no exception. Injuries and accidents may occur, but insurance is the tool that protects your business from experiencing financial hardships from the accidents.

Related: Guide to starting a laundromat

What Are Some Risks for a Laundromat?

Some risks that a laundromat business is exposed to include the following:

  • Fires
  • Theft
  • Sudden loss of income from extended closures
  • Customer injury
  • Employee injury

Many of these risks are not likely to happen often, but the resulting damage can be costly when one does arise. Therefore, good business insurance coverage is essential to protect your business.

Fires

One of the most significant risks to the laundromat is a fire. Unkempt dryers are a major contributor to this risk as they can cause a destructive building fire. In addition, the laundromat uses a considerable amount of electricity for its machines; an ill-equipped building might not be able to handle the electric load, increasing the risk of fire.

Old equipment, gas appliances, lint-filled exhaust tubes, and dirty areas contribute to an increased risk of ignition, explosions, or a fast-spreading fire. Although unattended laundromats are a great way to save on employee costs, a fire could spread unnoticed, causing substantial damage.

Theft

Self-service machines are commonly used in a laundromat, eliminating the need for a cashier. However, coin-operated machines accumulate money over time and are targets for theft. Additionally, coin changers trade out bills for coins and are targets of theft—especially in an unattended laundromat.

Although the business saves on costs without an onsite employee, it could increase exposure to theft. A well-rounded business insurance policy helps cover the cost of a loss, but investing in a good security system and replacing coin payments with card payments will also reduce the likelihood of theft.

Sudden Loss of Income

A laundromat relies on an open and operational building to generate consistent income. If a detrimental loss happens that shuts down the laundromat, the business is without a way to continue making money. Often, relocating is not feasible since it is challenging to find a substitute location to handle the laundromat’s water and electricity demands. This interruption in business operations can quickly drain a company’s reserve resources and leave them without an alternative way to earn money.

Customer Injury

Injury claims happen from customers slipping or falling inside the laundromat. The combination of soap and water on slick floors quickly becomes a safety hazard. Good housekeeping and floor drains help to reduce slippery floors.

Washers and dryers draw a great deal of electricity, injuring customers from electrical shock if they try to unplug or adjust an outlet. Keeping outlets secured and blocked from customer tampering can reduce the risk of injuries—and even fires.

Employee Injury

Injuries from slips, falls, and electrical shocks are also safety hazards for employees. Without proper training, an employee can be injured while fixing or troubleshooting a broken machine. In addition, repetitive motions, such as lifting heavy laundry between machines, can lead to back injuries and muscle strains.

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What Types of Insurance Should a Laundromat Consider?

Although risks can lead to costly repairs, medical bills, and settlements, insurance functions as a financial safety net, protecting the business from the financial strains an accident can cause.

A laundromat should consider the following types of coverage:

  • Property damage
  • Crime insurance
  • Business interruption
  • General liability – premises and operations
  • Workers’ compensation

Property Damage Insurance

Commercial property insurance is typically included in a business owner’s policy and pays for losses to the building and property (i.e., machines, furniture, office equipment, or supplies). Covered losses for property damage include hazards such as fire, theft, vandalism, wind, smoke, and water damage from leaking pipes.

Coverage amounts are initially agreed upon when the policy is purchased, so it is important to understand how your building and property are covered. For example, a policy covering business property at actual cash value (ACV) will pay for lost and damaged items at the replacement cost, minus depreciation. On the other hand, a replacement cost policy will pay for the lost or damaged item at the replacement cost with no deductions for depreciation. Therefore, a replacement cost policy offers more coverage and is generally more expensive.

Crime Insurance

A crime insurance policy covers the loss of money due to theft, robbery, or employee dishonesty. This policy is essential as most property insurance policies don’t insure money. Therefore, an additional policy is needed to cover lost cash. However, as a side note, the property damage policy does cover repairs to machines damaged from theft or vandalism.

The business can reduce its exposure to loss by conducting background checks on employees, regularly removing excess money from machines, and investing in sound security systems. In any case, crime insurance is an excellent option for laundromats to protect earned money.

Business Interruption Insurance

Experiencing a substantial loss doesn’t mean the business will need to drain its resources when the business has coverage for extended closures. Business interruption insurance is a policy that offers such coverage and pays for expenses and costs during an extended closure. Usually, this coverage is an addition to a business owner’s policy and will cover costs such as:

  • Lost income
  • Employee wages
  • Regular bills and loan payments
  • Temporary relocation costs

Business interruption coverage is a great way to protect reserve savings during relocation or rebuilding. The policy typically covers the business for 30 days, but some policies offer coverage for as long as a year.

General Liability Insurance – Premises and Operations

General liability for premises and operations covers claims for bodily injury and property damage from accidents occurring onsite and due to the business’s actions. For example, if a customer falls inside the laundromat and injures themselves, the laundromat could be held responsible for the medical bills and settlements. In addition, standing water on the floor, overflowing machines, and poor housekeeping can increase the likelihood of injury—pointing to negligence on the laundromat’s part. Therefore, robust general liability coverage is another essential policy to have.

Good housekeeping and safety protocols can reduce claims, but if a claim arises, general liability will pay for claim expenses, including:

  • Medical bills
  • Property damage repairs
  • Legal expenses
  • Settlements

Workers’ Compensation Insurance

A workers’ compensation policy covers employees who experience on-the-job injuries. This policy pays for medical bills, lost wages, and disability benefits. Many states require businesses with multiple employees to carry a workers’ compensation policy. However, if the state’s laws do not mandate it, a workers’ compensation policy is still important coverage to consider.

A workers’ compensation coverage is beneficial to employees and protects the business from potential lawsuits. Without insurance to help cover medical expenses and lost wages, an injured employee may bring a lawsuit against the business for these costs.

How Much Does Laundromat Insurance Cost?

Each business has individual needs and unique liability exposures, meaning that insurance will not look the same for every laundromat business. The policies may be similar, but the coverage amounts and exposure levels will vary.

Some factors influencing insurance costs include:

  • The size and condition of the laundromat building
  • The number and condition of the machines
  • How many employees are on the payroll
  • The quality of the laundromat’s security practices and systems
  • Any current or past claims

The best way to determine your insurance cost is to call an insurance company for a tailored Business Owner’s Policy (BOP) quote. Many insurance companies offer the ability to start a quote online or by phone. However, as companies will provide differing coverages, discounts, and packages, it is best to compare quotes by calling multiple companies, as this ensures you receive the best value.

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