How to Strategically Approach Your Laundromat’s Business Insurance
Let’s face it, insurance renewals are not circled on our calendars, and it’s certainly not something we look forward to. In fact, if you’re purchasing a business, it’s probably the last hurdle to overcome before you can close the deal.
However, I’m going to explain why you should have insurance renewals circled on your calendar, and why insurance should be top of mind when investing in a new business. I’m also going to provide some tips on best practices to assure that you’re not only locking in the best premium available, but also getting the right coverage.
Be Your Best Advocate
As an insurance advisor and broker, one of the most important things I do is sell my clients to the insurance carriers and underwriters. As a business owner, no one knows your business better than you.
As a laundromat owner, there’s nothing more important to keeping your business running than the plumbing, electrical, and the roof over your head. Yet, all too often when talking to an insured, they don’t know the age of any of these.
If you’re purchasing an existing laundromat, ask those questions before you buy or even make an offer on the business. Besides the maintenance issues it may cause you down the road, it also can be a problem on the insurance side with higher premiums and reduced coverage for older setups.
When it comes to the age and condition of a building’s roof, many insureds who lease their space believe it’s a non-issue because it’s the landlord’s responsibility. That’s not exactly true.
After all, if your roof leaks, not only is it going to impact the way you operate your laundry business, but it also poses additional slip and fall liability hazards. If the leak damages your equipment, drywall, flooring, or any other property within your business, it will result in a claim on your insurance.
When experiencing these issues, relying on the landlord to respond with the urgency needed to repair the building issues so that you can continue business as usual is unrealistic. Therefore, the next course of action may be to file a claim on your insurance. Knowledge is power – and the more you know, the more you can advocate for yourself and your business.
Whether you’re speaking with landlords, brokers, lenders, or insurance advisors, ask the questions. Tell your story and provide reasons why insurance companies should want to insure your business for a low premium.
For insurance companies to remain profitable and provide services when needed, they try to take on low-risk clients. Knowing the history of your space enables you to advocate for yourself and your business, and remain a low-risk insured.
At CLA Insurance, we’ve been advocating for laundromats for more than 30 years. In fact, we recently enjoyed our 35th anniversary of serving the industry and continue to do so on a daily basis. And our best resource has always been – and remains – the laundromat owner.
Hire a Trusted Insurance Advisor
Working with a trusted insurance broker is perhaps one of the most strategic moves you can make. Brokers specialize in navigating the complex insurance landscape – understanding the nuances of different policies and negotiating on behalf of their clients.
As a broker focused on small business and coin laundry insurance, CLA Insurance is used to urgent needs for insurance and can place coverage quickly.
Understand Insurance Loss Runs
Insurance loss runs are detailed reports that provide a comprehensive overview of a policyholder’s insurance claims history. They are valuable tools for underwriters and insurance companies, as they assess the risk associated with insuring a particular individual or business. They allow for a thorough analysis of past claims – helping insurers make informed decisions about policy issuance, renewal terms, and premium pricing. It’s essential for policyholders to maintain accurate records and be prepared to provide loss runs when requested by their insurance providers.
Provide Target Premiums
Don’t be afraid to provide target premiums to your insurance broker. This facilitates a more efficient and customized insurance process. Hiding current premiums is like someone trying to sell their home, while not providing a listing price. Hiding premiums only hurts you.
Underwriters want to prioritize time on opportunities they feel they can win. I know what you’re thinking: “But won’t the other insurance company just slightly undercut the pricing then, and I won’t save as much money as I could?”
The thing that prevents this is the unknown, if all the other underwriters and brokers are given the expiring premiums then no one knows where the others will come in for the renewal. Additionally, you should trust your broker to secure the best price for you and the broker should trust their carrier partners and underwriters to provide the best possible price.
Carefully Review Policy Options
Understanding the risk of owning and operating your laundromat daily is crucial for developing a comprehensive insurance strategy. Everything I’ve stated above is dependent on the insured also knowing what to look for in the policy and how to be sure you are comparing apples to apples in terms of coverage.
Liability Insurance: When reviewing your liability insurance, it’s important to understand how insurance companies determine premiums. The class of business, loss history, your location and, most importantly, your annual gross revenue is how most insurance company’s price liability policies. You shouldn’t be comparing quotes or premiums unless you have confirmed both are priced based on the same annual gross revenue.
If you have an unattended laundromat, you’ll want to confirm your liability policy is rated as such. Damage to rented premises is an important limit that will fluctuate from quote to quote under your liability limits. Make sure you compare even limits, especially if your business is in a strip center with multiple tenants on either side.
Property Insurance: When it comes to property insurance, it’s important to confirm that you have a high enough limit to replace the property you’re insuring. It’s also important to confirm that you have replacement cost coverage and you pay attention to provisions in the policy like coinsurance.
When it comes to coinsurance, try to avoid it if possible – and, if it’s included in your policy, try to avoid anything higher than 80 percent. If you see 100 percent coinsurance on your policy, confirm that you have an agreed value with the insurance company. Do not accept 100 percent coinsurance without an agreed value from the insurance company.
In addition, business interruption insurance is often overlooked but can be a lifesaver. It helps compensate for lost income during periods of forced closure due to covered events, such as property damage. This is especially relevant for laundromat owners, as downtime can directly impact revenue.
Regularly reassessing insurance needs is crucial. As a laundromat evolves, so do its risks. Adding new equipment, expanding facilities, or introducing additional services necessitates adjustments to insurance coverage. Stay in communication with your insurance broker to ensure that your policy aligns with your current business landscape.
