What Kind of Insurance Does An Auto Detailing Business Need?
Auto detailers are renowned for their ability to rid cars of dirt, smells, and stains. But, of course, working on a customer’s car puts the business at risk of losses and liabilities if accidents occur, which is why insurance is essential in any auto detailing business plan.
Related: Guide to starting an auto detailing business
What Are Some Risks for an Auto Detailing Business?
Risks are dangers that threaten the financial security of a business, and auto detailing companies face several risks. Some of these include the following:
- Employee injuries
- Customer injuries
- Damaging a customer’s vehicle
- Fire damage
Employees will encounter several injury hazards working at an auto detailing business. One of the more significant risks is injury or illness caused by chemical exposure. An auto detailing business uses several chemicals to clean cars, treat stains, and remove odors. When misused, an employee may suffer harm to the skin, eyes, or respiratory system.
Another injury hazard is bodily harm caused by a vehicle. For example, vehicles coming off a conveyor may run into an employee if the car had been left in drive. Additionally, back injuries or muscle strains are a risk for employees working on cars in tight or uncomfortable positions.
Additional workplace hazards include
- Slip or fall injuries from wet, soapy floors
- Electric shocks from malfunctioning equipment
- Hearing damage from the noisy environment
- Burns or scalds from steam cleaning equipment
Many auto detailing businesses operate using cash transactions. As a result, cash is usually a target of theft, making auto detailing businesses targets of robbers. Additionally, robbery hazards may increase at locations open for extended hours or operating 24/7.
Further, employees tempted to steal money present another risk for car detailing businesses. As many cash transactions occur, there is a risk that a dishonest employee may short-change the register or steal.
The greatest injury threat to customers is slips or falls on slick flooring. A car detailer business is prone to slippery floors caused by water and cleaners. This customer injury risk increases for car detailing businesses that offer self-serve stations, where no attendant assists the customer.
Additionally, customers may be injured by the car detailing equipment. Hoses and electrical equipment may cause injury if they are used incorrectly or malfunction. Some hazards include shocks or injury from triggerless hoses that whip around uncontrollably.
Damaging a Customer’s Vehicle
At some auto detailing businesses, customer vehicles are left in the business’s care for the duration of the cleaning. During this time, the business is responsible for any damage to the customer’s vehicle. For example, scratches, stains, and dents may occur, and the business would be liable for the damage.
Also, if an employee gets in a car accident while operating a customer’s vehicle, the detailing business is responsible for the resulting damages. This type of hazard may increase if the employees are inexperienced drivers. Even if the employee only drives the car a few feet to a car wash tunnel, the company would be liable for damages that occur during that short time.
Auto detailing businesses have several factors that may raise the risk of fire. First, several fire causes are present, such as faulty wiring, malfunctioning equipment, and smoking. Second, auto detailing business has many flammable objects, including cleaners, oils, rags, and furniture.
Further, an auto detailing business likely has a large supply of cleaning materials available to serve regular customers. However, the cleaning materials are combustible, meaning the business stores many flammable materials on-site, raising the fire load. A high fire load suggests fires will be fast-spreading and hard to extinguish.
What Types of Insurance Should an Auto Detailing Business Consider?
Given that there are many hazards an auto detailing business will encounter, ample insurance coverage is essential. Some of the core policies an auto detailing business should consider include the following:
- Workers’ compensation insurance
- Crime insurance
- General liability insurance
- Garage keeper’s liability insurance
- Commercial property insurance
- Commercial auto insurance (mobile detailers)
Workers’ Compensation Insurance
Workers’ compensation is beneficial for businesses with employees because it covers a work-related injury. An employee injured at work accumulates medical bills and loses income if they cannot work during their recovery. Fortunately, workers’ compensation coverage provides many benefits to injured employees. For example, the policy covers
- Medical bills
- Ongoing rehabilitation care
- Lost income
- Disability income
- Funeral expenses
In addition, a workers’ compensation policy also benefits the business, protecting it from potential lawsuits.
Insurance policies that cover business property usually exclude cash. However, a crime insurance policy protects monetary assets. Auto detailing businesses regularly transact with cash and therefore benefit from this coverage. This insurance policy protects money from hazards such as the following:
- Robbery or theft
- Employee dishonesty
Some exclusions do apply. For example, this policy will not cover theft or embezzlement caused by partners, owners, or executives.
General Liability Insurance
Bodily injury and physical damage claims that occur on the business’s properties or due to its actions are covered by a premises and operations general liability policy. For example, a customer who slips on a wet floor and injures themselves may sue the business for their injuries. But, a general liability policy protects the auto detailing business from this type of lawsuit.
The general liability insurance policy is intended to prevent accidents from causing financial strain on a small business and offers several claim coverages, such as the following:
- Payment of medical bills
- Payment on property damage repairs
- Lawyer costs
- Legal fees
- Coverage for settlements
Garage Keeper’s Liability Insurance
A garage keeper’s insurance policy insures the customer’s vehicle for damage that happens while their car is entrusted to the auto detailing business. For example, this policy covers fire, collision, and theft hazards. However, a garage keeper’s legal liability doesn’t insure faulty work completed by the company. It also doesn’t cover existing damage, personal property inside the vehicle, or defective parts.
This policy benefits auto detailing businesses, even if the vehicle is only in the business’s care for a few minutes. Accidents can happen within minutes, so a garage keeper’s legal liability policy is considered a core policy.
Commercial Property Insurance
A property insurance policy protects business-owned structures and property (i.e., equipment, materials, inventory, and furniture). Business structures and property are covered for the following hazards:
- Malicious mischief
- Water from leaking pipes
Structures are covered up to an agreed policy limit, which is determined by the rebuilding cost. Qualities such as customization and built-in specialty equipment can drive up the value of the building’s structure, thereby increasing the insurance policy’s coverage limit.
Business property (or items not permanently affixed to the structure) are covered separately from the structure. This line of coverage insures all the business items under one aggregate limit based on the total value of the business property. Usually, the policy reimburses lost or damaged items based on a replacement cost basis or an actual cash value basis.
Commercial Auto Insurance
As a mobile detailer, one of the most important insurance policies is commercial vehicle insurance. This type of policy helps to financially protect you in case an accident occurs and someone is injured or property is damaged while you are operating your company’s vehicle. Not only does it provide liability coverage, but it also can include damage protection for the actual vehicle and trailer as well as uninsured motorist coverage that covers bodily injury and medical expenses to you or your passengers caused by an uninsured driver.
A vehicle accident, whether your fault or not, will put an immediate stop to a mobile detailing business, until the vehicle is repaired. It’s important to note that most personal auto insurance policies won’t cover an accident either.
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Detailing Insurance FAQs
How Much Does Auto Detailing Insurance Cost?
Auto detail business insurance costs fluctuate for auto detailing businesses based on their insurance needs. For example, an auto detailing company with many employees, a large location, and numerous services has a significant liability exposure and likely needs high coverage. As a result, both high coverage amounts and high risk will increase the cost of insurance.
Different factors will influence insurance costs because they alter the risk exposure or the required amount of coverage. Some examples of these factors include
– The size and condition of business-owned structures
– The value of the equipment and materials, especially custom equipment
– Employee training and certification
– Loss prevention measures and safety procedures
– The number of employees on the payroll
– The average number of customers
– The average number of vehicles held in the business’s care
– Any past or current lawsuits or insurance claims
In the end, the best way to determine the cost of insurance is to get an insurance quote from multiple insurance companies. This allows you to compare prices alongside package options, discounts, and the quality of customer service. Although minor, good customer service is often an overlooked quality that can make all the difference in a claim process.