As a commercial insurance agent, I am frequently asked by clients if they should install advanced security measures for their carwashes and how much they should spend. My response is always the same: “Yes, you should install advanced security measures, and spend as much as you can afford.” This is usually followed by a series of additional questions from clients.
In this article, we will discuss how proper insurance and security know-how can help secure your carwash and its profits.
Deterring carwash crime
Crime is unfortunately a common occurrence in the carwashing world, and thus a key concern for most, if not all, owners and operators. So, how does an insurance company typically factor into this equation? From an insurance carrier viewpoint, that answer is to deter theft and damage.
If a criminal is caught after committing a crime, the insurance carrier still must pay to repair the facilities. However, if a potential intruder decides to pass up your carwash because of deterrent measures you have implemented — motion lighting, audible warnings and alarms, visual signage, etc. — insurance providers would not have any payouts for claims.
Investing in advanced security systems
Many owners and operators might think purchasing/upgrading advanced security systems is too costly. However, most insurance carriers will offer some level of a basic discount for implementing and maintaining various security systems. And, this is not the only discount to consider, because insurance carriers also have the ability to offer “soft discounts.”
Soft discounts are at the discretion of the underwriter reviewing the account. These discounts can be substantial — 15 to 40 percent — and are based upon the underwriter’s overall impression of the account. An account that has excellent security systems, loss review processes in place and regularly trains employees is far more likely to receive greater soft discount credits than accounts that don’t implement these measures.
In addition, you should improve security at your carwash for many other reasons, such as to protect customers, to have a reputation of being a safe environment, to avoid hidden costs of claims not covered by insurance and to have greater peace of mind, just to name a few.
Minimizing premium increases
As many of you may already know, the claims history of any operation has a significant effect on overall insurance rates, and the most effective means to minimize claims is to avoid them. An insurance agent familiar with your operations should be able to assist you with the implementation of loss control programs, which will help to identify and control risk exposure.
When determining which program(s) are right for a business’ operations, insurance carriers will not only look at the severity of a loss, but also the frequency of losses — both of which present concerns.
After an accident occurs, take a moment to assess the event by asking the following three questions:
- How did this happen?
- Could it have been avoided?
- What can we do to prevent this from happening again?
If you take the right measures to reduce future claims and learn from previous accidents that occurred at your site, it can help to minimize your chances of premium increases.
Selecting the right basic coverages
When determining which basic coverages to include in a new insurance policy, develop a strategy based on your carwash operation’s unique exposures and needs.
However before making a decision, carefully review several lines of coverage with an agent who is familiar with your operations, including:
- Business income: This can help replace lost income due to a covered property loss resulting in suspended or decelerated operations during the time needed to repair or replace the damaged property. Crimes potentially resulting in coverage would include: fire (arson) and vandalism — any crime that would cause property damage severe enough to halt or slow down operations.
- Property: Proper valuation of all property is critical when setting limits for property coverage. This should include: buildings, wash systems, vacuum systems, signs, inventory and all items used by the business. Deductibles should be set based on a carwash’s appetite to assume a portion of the risk.
- Commercial general liability: This is standard coverage that protects carwashes against liability claims for bodily injury and property damage arising out of premises, operations, products and completed operations — in addition to coverage for advertising and personal injury. Available limits range from $300,000 up to several million dollars and should be set based on a carwash’s specific needs.
- Workers’ compensation: This coverage is for exposures arising out of work-related injuries sustained by an employee. Most states have very strict guidelines which must be followed to remain in compliance and avoid substantial penalties.
- Data breach: This policy covers the release of a customer’s “personal identifiable information.” Even if a carwash utilizes the services of a third-party credit card system, a data breach policy is still recommended for any size operation.
Implementing additional security measures
Basic crime prevention precautions should always be followed, including: installing adequate lighting at all areas of the wash, developing and implementing specific closing/lock-up procedures, and adhering to safe handling procedures for cash at all times.
Moreover, contact your local law enforcement agency or closest state police department, because most offer free services to assist in reviewing a business’ security measures and systems.
Dan Tharp, RWCS, is licensed in all states, except Alaska and Hawaii, and is the vice president of sales for The Insurancenter. The Insurancenter has been helping carwashes protect their operations, customers and employees for over 30 years. For questions regarding this article or other insurance matters, Tharp can be reached by email at DTharp@theinsurancenter.com or by calling 800-444-8675.