As a Laundromat Owner, you are responsible for the property of your customers while it is in your care custody and control. The question is how much insurance do you need to protect it and do you need to purchase what is known as “Bailee Coverage”?
First let’s look at some definitions on a standard Business Owners Policy:
- Business Personal Property (aka contents coverage). A Hartford Business Owner policy states: The following coverage is added: We will pay up to $10,000 in any one occurrence as a Limit of Insurance at each “scheduled premises” to apply to personal property that is in your care, custody or control…..
What this means is that coverage is afforded for your customers goods for up to $10,000. For example, if there is a fire and in addition to your equipment, your customers wash & fold clothing were destroyed, you would be covered up to $10,000.
- Bailee Coverage: This coverage is defined as: … direct physical loss of or physical damage to “Customers Goods” you accept for processing for a fee…
It goes on to give coverage for: Customers Goods resulting from processing or work performed upon the Customers Goods, but only when such physical loss or damage exceeds $1,000 and only for the amount exceeding $1,000…..
Basically, what this means is that if you or your machines damage your customers clothing, they will provide coverage. Note that this coverage is not afforded on the Business Personal Property form.
So what kind of coverage do you need? What will protect your laundromat? That depends. First it is important to know what limit your current policy gives for Property of Others under your Business Owners Policy. On one end, some companies give no coverage. Standard companies give up to $2,500. Our Hartford form provides $10,000. Also, some companies will allow the limit to be increased.
Next, think about the extra coverage you get from the Bailee Form. Customers Goods resulting from processing or work performed upon the Customers Goods but only when such physical loss or damage exceeds $1,000 and only for the amount exceeding $1,000. While this is a definite improvement in coverage, It is our opinion that the average laundromat does not need Bailee’s coverage. While you do have the exposure to loss, the exposure is relatively small and should be self-insured. In most cases, the loss would probably be under the deductible anyway. Also, filing small claims (under $1,500) will usually result in rate increases in excess of the claim. We generally discourage small claims.
So to sum up, your customers’ goods are covered for most causes of loss under the Business Personal Property part of your policy. Check your policy and learn how much coverage you have. Unless you are doing a very significant “Wash & Fold” service, Bailee Coverage is probably not necessary.
If you have any questions about this or any other laundromat insurance coverage, please give us a call at 888-997-9801 or check out our website at www.brookswaterburn.com