Dry Cleaning Business Insurance: the basics

Posted by Matt Simon on Dec 22, 2016

The decision to open your own dry cleaning business was a risky and bold one.  The process likely took a great deal of time, energy and money.

And if the thought of losing everything you've worked so hard to create is devastating to you, maybe we should talk.

Working with the right Insurance Advisor to put the proper insurance policies in place will not only protect your business should the unthinkable happen, but you’ll have the peace of mind knowing that you’ll be able to recover when facing a tragedy.

But be careful.

A one-size fits all insurance plan could end up costing thousands, or even millions of dollars, at a time when you need your insurance protection the most.

Even with careful planning and the best intentions, many small business owners make the mistake of choosing a “one size fits all” insurance plan because they assume it’s a great way to save money.

The fact is, every business is unique and its insurance coverage should reflect your uniqueness. That’s why it’s important to work with your Insurance Advisor to determine your risks of loss, what types of coverages fit your specific business needs, and what’s within your budget.

What are your business risks?

Risks are everywhere for dry cleaners.  You face risks that go beyond expensive equipment, and they could put you out of business. Some of these risks include:

  • Equipment downtime due to breakdowns and power outages
  • Fires due to excess chemicals on any clothes, or and other flammable items
  • Lawsuits
  • Property damage due to heavy rain or flooding
  • Security concerns like theft or vandalism
  • Injuries inside or outside your premises from slips and falls, uneven floors or children running around and playing

And this list only scratches the surface... most dry cleaning businesses face additional risks or threats to their business that need to be thoroughly considered and addressed before a loss ever occurs.

What types of insurance do you need?

Commercial Property Insurance

Weather is hugely unpredictable in Ohio; we’ve had our share of catastrophes from hail events to the aftermath of hurricanes that made their way through The Buckeye State leaving a path of wreckage. 

When fire, theft, wind, hail, lightning or other disasters strike your business, you need to be prepared for what you can control (essentially, how can you respond to help mitigate further damage), and have a plan in place to recover financially from those risks that you can’t control.

A Commercial Property Insurance policy will cover the building you're located in, as well as the contents of your building, including light fixtures, office equipment, furniture, computers and more.

For example, a circuit breaker malfunctions and starts an electrical fire. The fire spreads through the entire building, burning your possessions and the building.

A Commercial Property policy would cover the damages to the building, as well as the replacement cost of the damaged contents.

Commercial General Liability Insurance

Every dry cleaning business in Ohio must have a Commercial General Liability (CGL) insurance policy.  This coverage would protect you when lawsuits or financial losses occur.

A typical CGL policy provides coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations.

For example, it’s a February Monday in Ohio and it rained the day before because that's what happens in Ohio.  Everything froze overnight making your sidewalks and parking lot a sheet of ice. Although you spent hours trying to salt everything and clear the ice, you miss a spot. One of your customers slips and falls on her way in the building and needs to be hospitalized. A CGL policy would cover the costs of her medical expenses.

As a safeguard against liability, CGL enables you to continue your normal operations while dealing with real or fraudulent claims of negligence or wrongdoing. CGL policies also provide coverage for the cost to defend and settle claims.

Bailee Coverage

As a dry cleaning business, one of your greatest risks of loss is actually not something you own, but rather what your customers own.

Have you ever walked into your small business one morning, looked at all of the clothes and other items that belong to your customers, and thought to yourself 'what would happen if this place completely burned to the ground?'

Unfortunately, the standard insurance policy is not designed for a dry cleaning business.  When insurance companies provide coverage to businesses, they're generally providing protection to property that the business actually owns.

But since you don't own your customer's property, this could leave you with a fairly significant gap in your insurance coverage.

Not to worry.

If you're working with the right Insurance Advisor, you'll certainly discuss the unique needs of your business when it comes to covering the property that belongs to your customers, but has been left in your care for a period of time.

For additional information on what a bailee is, what insurance implications exist, and the liability exposures, view this article:  Are you a bailee?

Additional insurance coverage options all dry cleaning businesses should consider

Business Income Insurance (also known as Business Interruption Insurance) is an option that you may want to consider, as it’s designed to cover the loss of income you would suffer after a disaster. 

Business income coverage protects against the loss of income a business suffers when a covered loss causes damage to the insured premises.  The loss doesn't have to cause the business to shutdown entirely.  Even a covered loss that causes the business to slow down can be covered with business income coverage.

Equipment Breakdown Insurance is another important policy for your dry cleaning business, as you rely almost entirely on specific dry cleaning equipment to operate your business. And without functioning equipment, you're probably losing income.

Privacy Liability & Data Breach Insurance has gone from a little known option in the insurance world to an absolute must-have given the number of data breaches, and the costs associated with even a small breach.

Consider the amount of personal information you collect, store and use in your business - think credit card transactions.  This information could be in digital format, hard-copy, or both.  Now imagine opening your doors to many of the most unscrupulous individuals for the next six months, and allowing them to access and use any information they want.

Sounds crazy, right?

But this is exactly what’s happening in our digital world.  Breaches occur to the largest, and smallest businesses… no one is immune.

A data breach often goes unnoticed for months, and by the time it’s discovered, the personal information stolen has already been used to wreak havoc on the victim’s identity and finances.

It’s really not a matter if your business will suffer a breach, only a matter of when.  Without Privacy Liability & Data Breach Insurance, you’re on your own to navigate the increasing number of local, state and federal regulations you must comply with, in addition to the legal costs and damages you’ll suffer.

Conclusion

This is only the beginning to the insurance coverages that Ohio dry cleaning businesses need to consider. However, if you have these policies in place, you can form a solid foundation of protection for your business.

Finding the best insurance policy for dry cleaning businesses in Ohio, and figuring out the types of coverage needed to protect your business, can be confusing, time consuming and difficult.

However, the right insurance protection is still critical to the success of your business.  Without it, you're one claim away from being out of business.

And remember, not all policies are created equal.

You probably wouldn’t go to your eye doctor instead of your dentist if you were having a toothache, right?  Just because they’re both doctors doesn’t mean they have the same skillset.

Just the same, you need an Insurance Advisor that understands your industry, your risks of loss, and how best to protect you and your business.

We can help.

We know the industry, we understand your needs, and we work with multiple insurance companies so we can deliver the insurance solution that’s perfect for your business, and your budget.

In addition, we can also provide you several services that will help position your business for the best insurance premiums offered by the nation’s strongest insurance carriers.  Specifically, we can:

  • Provide you with data security resources designed to help keep your data, and your network, safe
  • Perform a data breach risk assessment of your business to help identify areas of weakness, and offer solutions to mitigate the exposures
  • Offer safety manual material so you can mitigate your risks of a claim occurring, reduce the number of employees being injured on the job, and comply with OSHA requirements
  • Review our 86-point 'Property Inspection Checklist' to help you prevent claims to your building that you're capable of controlling

The bottom line is, when you have confidence in your business insurance, you have greater peace of mind knowing that you can keep working to generate revenue, even when disaster strikes. 

To get started on your customized solution, contact one of our Licensed Advisors, or Request a Proposal and we’ll get to work right away.

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Category: Business Insurance (3), General Liability Insurance (3), Commercial Property Insurance (3)