Professional Carwashing & Detailing

Carwash insurance breakdown

October 11, 2010
At the carwash, you never know what dangers lurk around the corner: fire may destroy your building; an employee or customer may be injured on your property; wrongful termination or alleged sexual harassment can rear its ugly head and now, you’re being sued.

Carwash owners must protect their business with insurance specifically designed for it. Carwash insurance can insure most everything and everyone who comes in contact with the business. Not having the right amount or the correct coverage is like setting off to cross a desert with a quarter tank of gas and then running out halfway across — the results can be devastating.

Types of insurance
There are specific insurance coverages for all American businesses. For example, workers’ compensation is a required insurance that all businesses with employees must purchase; it’s the law. Workers’ compensation covers your employees during the time they are working for you.

A carwash owner also has a legal responsibility towards customers and the public. If a customer or a member of the public is injured and the carwash is found to be at fault, the carwash owner is legally liable and can be sued.

What happens when an employee delivers a car that was detailed to a customer’s office and wrecks the vehicle on the way? Who pays? More often than not, the carwash owner and their insurance provide this type of protection.

Carwashes can require different types of coverages such as a full-service conveyor insurance program compared to an express format where no employees touch or drive a vehicle. However, a flex-service wash may have the same insurance requirements as a full-service conveyor based on the employee activities allowed by the flex-service operator.

Choosing the right coverage
It’s not an easy process to choose the right coverage for your carwash.

While there are several variables when it comes to adding specific endorsements and benefit amounts to a carwash business policy, the following is a recommended foundation to a solid carwash insurance program:
  • Workers’ compensation: It’s the law for businesses with employees;
  • Property insurance: Indemnifies car wash owner for damages to premises;
  • Liability insurance: Pays on the behalf of the carwash owner (insured) for loss arising out of legal liability to others
  • Property and liability purchased together: Called a packaged program (insurance term);
  • Umbrella liability policy: A policy written beyond various primary liability limits and coverages, for covering catastrophic losses
  • Employment practices liability: Protects the employer from the cost of litigation, including:
    • Judgment brought by employees as well as third parties like customer and vendors. These lawsuits could involve harassment and…
    • Discrimination, wrongful termination, etc.; and
  • Endorsements: Changes the original insurance programs, including broadening the scope of the insurance coverages, clarifying the application of coverages to some unique carwash business exposure.
Review the facts
It’s imperative to review every facet of your carwash business. Be sure to research the BOP (business owner policy) and examine what the coverage extensions are and the limit of insurance is (dollar amount) for each coverage.

Compare apples to apples in the search for the right insurance coverage for your business. There are a few insurance organizations that concentrate only on insuring carwashes and nothing else.

When purchasing an insurance program for your carwash, make sure that the insurance representative knows — and most importantly — understands the insurance program requirements for your carwash.

Interview several insurance representatives; just because they have an insurance license does not make them an expert in the carwash industry. Do they know what your daily business risks are? It’s critical that the carwash owner walks through each section of the proposed insurance policy not only to ask questions, but to better educate themselves. It’s certainly better to do this now than to wait until there is a catastrophic loss.

Take the time to educate yourself by talking with other carwash owners, carwash consultants and individuals in the carwash industry that you trust. Look up carwash insurance on the Internet to get a good understanding of what types of insurance programs are out there and who is offering them. Try to look for companies who specialize in carwash insurance programs. They are more apt to provide the specific knowledge that you’ll need when discussing your carwash insurance requirements with their representative.

Remember, no one knows the risk or operations better than the carwash owner and the management. As a carwash owner, always be aware of the risks of customer vehicle damages, employee injuries, and customers who may get hurt on your property.

Sam Furno is the vice president of sales for the Western Carwash Insurance Agency and the former owner/operator of a full-service carwash, detail and smog center. Furno can be reached via email at: sam_furno@wellsfargois.com.