It’s a typical Tuesday at your carwash when you hear a loud boom accompanied by vibration at your feet. You hurry outside to find that a customer in a rush cut a corner too early and crashed into the side of your building.
Are you covered?
Finding the right insurance coverage and understanding the insurance world can seem like insurmountable tasks. With so much fine print involved, making insurance decisions can be confusing to say the least.
What’s most common?
Every carwash should have general liability insurance, the most basic of coverages. It protects your company from legal actions against it (in the case of accidents, false advertisement claims, etc.), as well as pays the cost incurred when someone gets hurt at your business or if your property gets damaged, as in the opening example.
“I think the carwash owner has to remember that their customers are considered ‘business invitees’ onto their property … so [washes] should carry, in my opinion, a minimum of $1 million liability coverage for negligence to a third party or higher,” Scott Brothers, president of The Insurancenter, explains.
Jennifer Horne of the Franklin Insurance Agency, which specializes in carwash insurance, reports most carwash companies also have workers’ compensation, garagekeepers and commercial umbrella insurance.
Garagekeepers coverage protects you if anything happens to a customer’s car while under your responsibility.
Umbrella insurance is recommended for most washes to help when the liability limit is met, but money is still owed.
What’s right for you?
Many types of insurance exist, and not every type or level of coverage is right for every wash, but there are commonalities when choosing a plan.
Brothers explains, “The broadest policies tell you a few things that are excluded, and they cover everything else.”
Beyond the most common additional coverages — workers’ compensation, garagekeepers and umbrella —numerous additional types of insurance are available to carwashes that feel they’re needed for the companies’ continued success.
American Heritage agent Mike Dalton says, “The most important deciding factor when choosing insurance is to make sure you have all the exposures of your business covered.”
To secure their property, owners have several additional isurance options:
- Building coverage protects against damage to your building or any equipment permanently attached to it.
- Mechanical and electrical coverage protects against damage or theft of computerized machines that control aspects of the wash.
- Property coverage protects against damage or theft of chemicals, cloths, soaps, etc.
- Money and securities coverage protects against theft of money kept on the premises.
Owners might also consider employment practices liability insurance (EPLI) and employee dishonesty coverage. EPLI protects companies from claims, generally equal employment-related, by employees, while employee dishonesty protects against thefts by employees.
Two newer insurance types available to carwashes are environmental/pollution insurance and cyber insurance, which each deal with modern societal needs. In the case of environmental accidents, for instance, a problem with wastewater disposal can get your company stuck with hefty fines.
Brothers explains, “Most general liability policies do not cover any environmental impairments, such as … pollutants getting into the sewer or the ground water.” Environmental insurance covers in these instances.”
Cyber insurance is the next big thing for businesses.
“Most carwashes today accept credit cards, so they have credit card information. Most carwashes have employees, so they have employee information, including social security numbers,” Brothers points out. “That information needs to be secure. If it gets out, there’s a liability issue. As well as, if people going to their websites get infected with a virus.”
Look for this insurance to become essential in the next few years.
How can you lower costs?
The more claims a company has on record, the riskier they are to insure, which results in higher prices or an “uninsurable” status in extreme cases.
Creating a safer environment can help prevent many common claims, resulting in lower premiums.
Horne shares, “Two of the most common [claims] are customer auto damage and property damage, which come from a customer driving though an automatic door, customers hitting the building and doing damage, or slip-and-falls.” Other common claims include vandalism and damage to customers’ vehicles, which can be prevented with upgrades to your wash.
“A thoughtful layout and design created with someone who understands carwashes [will help],” says Brothers. He points to making sure grates are secure, installing heated floors where ice might form and keeping customer areas well separated from water.
“Having a camera system in place with an alarm system that does not use a phone line would help minimize risk,” Dalton asserts. Installing security cameras can help catch thieves and verify slip-and-fall claims.
Where should you start?
Shop around. Talk to different insurance agents and tell them the honest details of your company.
Brothers recommends owners choose high-quality insurers with industry knowledge and strong coverage options.
Understand your coverage thoroughly. Owners with bundled plans should know the limitations of each type of coverage within the bundle. Be sure to reevaluate your insurance needs frequently.
Cutting corners with coverage can cost you your business. Modern society is litigious. Even the most upstanding companies can be sued at some point. Make sure you’re protected.
Amanda Hosey is assistant editor of our sister publication, Cleanfax. She can be reached at [email protected]