How to Buy Laundromat Insurance
Next to owning a home, buying a Laundromat can be one of your biggest investments. Considering the terms of the lease, cost of washers and dryers and cost of the “Build-Out” many potential owners use their home as collateral against the investment. Given that so much is at stake, wouldn’t it be prudent to make sure your business is properly protected?
Enter your friendly neighborhood insurance writer. They could be a local insurance agent who handles your home and car insurance or a direct writer such as Allstate or State Farm. I’ve been in the insurance business for over 25 years and the truth is that simply insuring a Laundromat is relatively simple. Most insurance companies want to write this class of business and are willing to do it at competitive prices. But are they really capable of analyzing your unique situation so you are adequately protected? Perhaps, but wouldn’t it be prudent to ask a few basic questions just to make sure you have the right person or company behind you. Here are a few questions that you should ask even before you request a laundromat insurance quote:
- How Many Laundromats do you insure? The truth is unless the answer is over 100, they probably do not have much expertise in the field.
- How does the agent cover the “Build-out” of the space? (The build-out is how much you invested in the leased space. It could include things such as plumbing, carpentry, electrical). If they answer “huh?”, maybe it is best you look elsewhere.
- What markets do you have that specialize in Laundromats, and is the policy you give me specifically designed with coverages for a Laundromat owner? While this might seem obvious, many agents and almost all direct writers only represent one insurance company. What happens when they stop writing Laundromats or the price goes up too high?
- Other than the basic coverages, please tell me what specialized coverages are included in your policy. At the very least they should answer with items such as coverage for “customer’s goods”, “Hired and Non-owned Auto” and “Business Interruption Coverage”. All of these coverages might mean the difference between re-opening after a loss or not. They are not automatically included!
- Are might hot water heaters and boilers covered? These “pressure vessels” are generally excluded from a traditional package policy. Some Business Owners policies do include coverage but you need to ask. If a boiler explodes, it could destroy the entire building as well as everything inside.
- Here’s the most overlooked coverage, Workers Compensation. Given that this is a cash business, not all owners pay their employees on the books. The truth is the IRS is cracking down on traditional cash businesses like restaurants and Laundromats. They need their tax revenue, and are going after easy targets. Workers Compensation is relatively inexpensive and you also protect the worker if he or she is injured on the job. In addition, attendants who do drop off service do not qualify as a 1099 contractor. They do not fit the definition of independent contractor.
The past several years, most owners have been asking me how we can save money. The economy is down and like most businesses they need to cut down. As the economic recovery progresses, I do see a recovery for Laundromat owners too. Wash/Fold service is picking up and good times seem to be slowly returning.
With a few extra dollars to spend, I am often asked how can I make sure my business is completely protected. The easy answer is to buy as much insurance as they can afford. For example, for only a few hundred dollars a year more, you can add an “Umbrella Liability” policy. Basically this is an additional million dollars or more of liability coverage over and above the basic liability policy you have on your Laundromat policy.
As business picks up even more, another option is to include policies on yourself such as Disability Income or Life Insurance. If you become disabled, this could hurt your business almost as much as a fire. Who is going to do all the day to day operations? Can you even afford to hire somebody else? A disability policy would give you the money and most important, piece of mind if you are partially or permanently disabled.
Similarly, Life Insurance is a good option to protect your family and investment too. If you die, who is going to pay back the loans on all your equipment? Perhaps your spouse does not want to run the Laundromat after you are gone.
Bottom line, you have made an investment in a wonderful industry. A well run Laundromat can support a comfortable lifestyle. With a little planning with an insurance professional, you can protect your family, business and ensure that your lifestyle can continue.
To find out if your Laundromat is completely protected, call us for a free evaluation of your current protection package. 888-997-8901