As many operators have learned the hard way, maintaining the proper level of insurance coverage is an integral step for any and all small operations. In today’s litigious society, carwash businesses can be held liable in a number of scenarios that go far beyond the typical vehicle damage claim. Unfortunately, the growing list of issues carwash owners must now consider includes robbery, facility damage, employee or customer injury claims and cyber breaches.
Only by maintaining a solid knowledge base can carwash operators hope to ensure their businesses are fully protected during everyday operation. Still, there is always more to learn when it comes to insurance options for modern carwashes, including essential coverages for common business emergencies. Insurance companies stand ready to provide industry expertise and best practices for researching and selecting the proper coverage for car care businesses of all shapes and sizes.
Coverage scenarios
The best insurance coverage options for an operator will assist a carwash business with both its exposure to loss as well as the consequences of loss, according to Scott Brothers, CEO of Sunstar Insurance Group dba The Insurancenter. Every owner should work with an insurance broker who understands the carwash industry. It is important that the broker is familiar with the typical wash business model so he or she can help secure the proper insurance coverage for the wash’s possible exposure.
For most carwash operations and especially for new builds, an individual has invested up to a few million dollars to open the doors. The plan is to give customers clean, dry, shiny vehicles every time they visit the site, notes David Snyder, risk management program specialist with McNeil & Co. Yet, in many cases, having the proper insurance coverage is a bigger deal than many business-savvy operators comprehend. First, an operator should ask some basic questions as he or she thinks about business insurance needs:
- If my carwash building burns down tomorrow, can I write a check for a replacement?
- Do I have enough money set aside for lost business income while I rebuild after a fire or other damage to the building or tunnel?
- If a client slips and falls on my property, can I pay for a potential claim in the six-figure range for severe injuries?
- Can I afford to write a check for a high-end vehicle if one is totaled on my property and the business is at fault?
- Am I prepared to settle a claim for an employee who becomes injured with a permanent disability or a fatality?
- Do I have any idea how to handle a cyber breach?
“These questions are a good start for deciding what coverages you are going to need in place to protect your hard-earned investment and future retirement,” Snyder says.
Researching insurance
When it comes to selecting the perfect coverage for a carwash operation, an insurance company — being the carrier — cannot tell an owner the exact coverage that a business may or may not need, Snyder states. Instead, the key factors considered should be protecting the operator’s personal interests along with the carwash and finding an insurance agent to work through as an advisor. Snyder recommends finding a company that has a producer who specializes in carwash insurance. This will be someone who has taken the time to learn about the industry, its daily operations, the hazards on-site and the cost of the equipment and chemicals stored in the facility. This individual should understand the multitude of claims a carwash could potentially see.
Other carwash owners can be a valuable research resource as well. “One of the greatest things I have seen in the carwash industry is the networking and camaraderie between operators who are willing to share with each other,” Snyder reveals. “There is a real team style of operation in this business unlike any other I have worked with. My advice is this: Talk to other operators. Ask them who they use and why.”
Another opportunity for continued learning would be going to carwash trade shows and talking to the companies there, Snyder notes. These are the companies that are investing and taking the time to know the carwash business. Further, operators can talk to carwash vendors who may have heard many insurance stories — good and bad.
Brothers agrees, suggesting that operators should travel to the various carwash trade shows and attend the educational sessions that discuss topics related to insurance. Again, networking is key, especially to meet insurance brokers that are familiar with the carwash business. Next, owners can read various trade journal publications that cover industry topics, including the importance of insurance coverage.
Addressing emergencies
Experienced carwash operators are well aware that on-site emergencies can come in many forms and can happen at any time, Snyder states. An owner or manager may pull up first thing in the morning to find vandalism or a break-in attempt at pay stations. A storm may roll through causing loss to a property in many forms — wind or hail damage and lightning strikes that can take out computer systems. The property may suffer a fire, causing catastrophic losses. Other insurance coverage concerns can be personal injuries from slips, trips and falls or from motor vehicle accidents on-site. The age is here that businesses also have to worry about different cyber threats.
Those examples are just a few of the legitimate claims insurance companies see on a daily basis, Snyder continues. Sadly, there are many more examples where people with creative minds try to make a fast buck at the expense of the wash owners and insurance carriers. Having a qualified agent and the right insurance company are a step in the right direction for handling all types of claims properly.
Once something occurs at a wash, the first steps to getting the claim handled properly start with the staff on-site at the time of the incident, Snyder notes. There are a few things operators should keep in mind to protect their interests. The clock starts ticking the second the claim happens, and how well it is handled and documented can save an owner a lot of money. Are staff trained on how to complete a proper incident report and to get witness statements? Are employees set to take pictures of the incident scene at the time it happens? Up-close photos can aid in the settlement along with any video footage being saved and turned over to the insurance company.
Related: Keys to claims reporting
“As I alluded to, timely reporting is very important. In the claims world, statistics show the more days that pass before we get the claim, the higher the dollar amount paid out seems to go,” Snyder explains. “Without proper documentation and evidence from the start, the harder it is for us to defend the claim. Once we get the information, we rely on the operator to also timely return calls and emails so we can keep the ball rolling for all involved. Both sides need to work together to get the claim settled and behind us.”
Protection best practices
Brothers’ list of best practices to protect a carwash business include training and education. These steps should ensure that the carwash owner and employees understand the carwash operation and its equipment in an effort to keep the facility running properly. Training should cover what needs to be done in the event of an on-site problem. Further, it is important to keep good records and documentation of possible claims or events, no matter how incidental they may appear.
Every operator’s goal is to provide the best customer service on the planet and to pump out one clean, dry, shiny vehicle after another, according to Snyder. To achieve this, a wash must provide a safe, clean environment for both customers and staff. Staff should maintain the property and equipment at all times. The goal is to keep the wash looking like it did the first day it opened.
The next step is training and staff development with the goal of getting employees to think “like an owner” at all times. Snyder recommends teaching managers and employees what claims can cost the operation and the wash’s bottom line if they do not take ownership of daily actions. Everyone working at the wash should constantly use his or her senses to look for, listen for and identify problems or potential problems and then swiftly act upon them. Engaging staff to identify issues and investing in ongoing training will have a cost-saving effect on an operation by reducing the number of claims.
Finally, carwash owners need to invest in the proper tools to protect their operations. Some of the most important examples for any wash are video cameras and security/fire alarm systems, Snyder states. Cameras should be commercial quality, made for carwash environments and have high resolution, so that preexisting damage to vehicles can be clearly seen. Cameras should not only be at the tunnel entrance and exit but inside as well to capture what is happening in case a customer brakes or turns the wheel to jump the track. Also, be sure to cover other areas of the property, such as vacuums, walkways, driveways and parking areas.
“Covering the property will help take the guesswork out of most incidents,” Snyder concludes. “Look at installing anti-collision devices at the exit and additional collision avoidance systems within the tunnel. All of these tools are an additional investment, but together they will help you keep your insurance rates in check.”
Eugene Allen is a freelance contributor.
