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How to Fully Protect Your Laundromat-Part 1

By way of introduction, our agency, Brooks Waterburn, specializes in protecting Laundromats.  In fact, we insure over 1,000 nationwide!  I mention this not to brag, but to illustrate that our agency really knows how to protect the laundromat industry!  I've personally have been in over 500 laundromats.  I've seen great big laundromats as well as very tiny ones.  No matter the size, a laundromat is a significant investment and you need to make sure it is properly protected.  To do a complete job on protecting a laundromat would require a lot bigger report than you're willing to read.  For the sake of brevity, and not to put the reader to sleep, I'm going beak it down in at least 2 separate blogs.  

Let's start by pointing out that "Fully Protecting" your business is a bit of a misnomer.  In the insurance universe, no business can be "fully protected".  Every policy has exclusions.  Some exclusions can be eliminated (like earth-quake at an additional premium), while others cannot (like you set the fire yourself!)  The best we can do is have enough knowledge of the policy to afford you the maximum protection you can afford.   Having said all that, let's dig into how we can protect your laundromat!

While we can't go into every coverage that you should have, I'd like to point out some of the  most overlooked coverages I see when reviewing coverages with a client.

Let's start with one of the most overlooked coverages we see in the laundromat industry.  Tennant Improvement can be a major investment and if not properly insured, you can potentially loose your entire investment.  Suppose a landlord leases a storefront to a laundromat owner that makes improvements to space.  This can include heating, plumbing, walls, floors.  Basically, it includes anything that gets "permanently attached" to the premises.  Most leases requires the tenant be responsible for Tenant Improvements.  So when you decide on how much insurance you need, please take into consideration the amount of tenant improvements.  For an average 3,000 square foot laundromat, it can be around 150,000.  The tenant improvement coverage can be handled in a number of different ways.  Some insurance companies include the coverage in the Business Personal Property limit.  Some companies have a separate tenant improvements limit . Either way, you need check your lease and make sure you have the right coverage.  We published a "Laundromat Tenant Improvement White Paper".  We go into great detail on the coverage from both the Landlord & Tenant point of view.  If you would like a copy, drop me an email at [email protected]  

The next coverage to consider is Replacement Cost coverage vs Actual Cash Value.  By way of definition, Replacement Cost coverage ultimately gives you "new for old"  Let's say you have a fire and your equipment is 7 years old.  If you had ACV coverage, at the time of loss, the insurance company will deduct an amount for depreciation.  If the lifespan of your equipment is 15 years, they will deduct about 1/2 of the replacement cost.  With Replacement Cost Coverage, you ultimately get the full value, up to the policy limit.  Please note that even if you have Replacement Cost coverage, the insurance company will initially pay you the ACV amount until you actually replace the items. In almost every case, getting Replacement Cost coverage costs the same as ACV.  You might as well get replacement cost!

Next on the list concern deliveries is if your store makes deliveries with your personal vehicle or an employees vehicle, you need to have a coverage called Hired & Non Owned Auto.  Let's say you are using your personal car for deliveries.  Obviously, you have insurance on your car and that's a good thing.  In the event of an at fault accident, you personally will be protected but what about the business?  What if the lawsuit includes your name as well as the business name.  What insurance will pay for that?  Hired & Non Owned Auto will give your business coverage for this type of accident.  What if you don't make deliveries.  Do you still need the coverage?  I say yes.  While you don't use your or an employees car for deliveries, you may use it to make a deposit at the bank or run to the store to pick up supplies.  This coverage is generally an endorsement added to your Package or Business Owner policy.  It costs only around $150 per year, so it is very affordable. 

On the next blog, we'll look at Business Interruption Coverage, and Workers Compensation. 

Have questions?  Our agency has plenty of material that goes into these coverages in greater detail.  Drop me a note.  I'll be happy to send you anything or check out our website at     

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