One of my clients just had a major claim in his Laundromat and it got me thinking about the Laundromat Insurance coverage we sometimes take for granted. Our client, located in upstate, NY suffered an electrical fire that destroyed his business. The fire apparently started in the middle of the night and quickly spread throughout the building. The fire department called him at home in the middle of the night and by the time he got there, his investment that he dedicated his life to has been destroyed.
Before we get to what happened to him here is a little background. A little over 7 years ago, the Laundromat owner built his Laundromat from scratch in a 3,500 square foot leased space. Besides equipment, he spent over $100,000 on the build-out. This included plumbing, HVAC, electrical, new flooring, and walls. Basically, he took an empty space and made it into a Laundromat. In addition to the build-out, the equipment cost about $400,000.
For the roughly $500,000 investment, the customer put in $150,000 of his own money and financed the balance. In order to protect their loan, the finance company required he have insurance for the outstanding amount of the loan ($350,000). This is typical of lenders. They are concerned that in case there is a fire or some sort of other catastrophe, they are protected. There is nothing wrong with this business practice on the part of the lender, but they fail to recognize the entire investment.
Fortunately for him, he spoke to one of our specialists about the Laundromat Insurance. While speaking to him, we did a detailed fact finding. You see, we are Laundromat Insurance experts. Brooks Waterburn protects over 1,000 Laundromats nationwide. Your average insurance agent would not know to ask questions about the “build-out” or total investment.
Back to the fire….. Basically, the store was destroyed. All the washers and dryers needed to be replaced ($300,000), re-do the build out, ($100,000) and was out of business for 5 months (Business Interruption-$75,000) While he was devastated about the fire, he was relieved that he was able to re-open.
After everything was settled, I did a coverage comparison from his old policy (prior to coming to Brooks Waterburn for Laundromat Insurance) and his current policy. What I found was both astonishing and scary. You see, in the old policy, he had a contents limit of $300,000 (same as us). What the old broker never asked him and therefore never covered was the cost of the build out. Also missing was the Business Interruption coverage. In total, the old policy would have paid out $300,000 for the claim. Because of our expertise and asking the right questions, our policy actually paid out about $475,000. This is the difference between re-opening or just paying off your loan and you are out of business!
I’m not saying our policy was cheaper than his old one. In fact, it was about $300 more. I had to do a rather lengthy sales job to convince him that my policy was the better value. Needles to say he was grateful. The moral of the story is this: There is a huge difference when comparing policies other than price. How experienced is your agent/broker? Do they specialize in your industry? What about the insurance company? Is the policy specifically designed to protect your business?
If you would like to find out more about Laundromat Insurance, contact us at 888-997-9801 or online at www.brookswaterburn.com