The Insurance Guide for Car Wash Businesses in Ohio

Posted by Matt Simon on Jan 12, 2017

Operating a car wash or car detailing business in Ohio can be a challenge at times, from the drastic swings in weather, to dealing with the inevitable customer that claims her car was scratched.

Add to that the often confusing process of trying to find the right insurance protection for your business, and you might ask yourself at times 'why did I decide to become a small business owner?'

But don’t stress too much… when you work with the right Insurance Advisor, you can alleviate many of the reasons so many business owners worry about the success of their business.

But be careful.  Not all Insurance Advisors are created equal.

Just like no two car wash or car detailing businesses are the same, no two Insurance Advisors are going to provide you with the same combination of critical coverage, professional advice, superior claims handling and competitive pricing.

Take the coverage you need as an example. Most car wash businesses offer a different set of services making it difficult to determine what areas of coverage you may need. 

You may choose a more automated method, where you have very few employees but have several pieces of expensive equipment.

Or, you may take a more hands-on approach where your employees are working directly with your customers or handling their vehicles.

Perhaps you actually travel to your customers location to detail their vehicle.

Some car wash businesses will even offer additional services like oil changes, brake checks, etc.

So, how do you determine what insurance plan is right for you AND make sure it covers all your risks and unique needs?  Maybe you're considering buying an 'off-the-shelf' policy because it seems like it has all the coverage you need, it's cheap, and most of all, it's easy.

Caution...

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 - just like no two car wash businesses are the same. 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?

Whether you run a self-service car wash with no interaction between customers and employees, you run a full-service car wash where your employees are dealing with your customers entirely hands-on, you travel to your customer to detail their car, or you're somewhere in between, you face many risks. Some of these risks include:

  • Business interruption
  • Damage to a customer’s vehicle
  • Equipment or machinery that breaks down
  • Injuries to your employees or customers inside or outside your premises
  • Property damage due to heavy rain, flooding, fire, etc.
  • Security concerns like theft or vandalism

And this list only scratches the surface... most car wash and car detailing 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 car wash 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, one of your customers is cleaning his car in a wash bay. It's been a busy Saturday with lots of customers causing the floors to be extremely soapy. He slips and falls and needs to be taken to the hospital for his injuries.

Could you be responsible for his injuries?  What about the legal costs you'll incur just to settle the claim.

Without the right CGL policy, you could be facing all of these costs on your own.  However, if you had the correct coverage in place at the time this accident occurred, your insurance company would step in and handle this claim on your behalf.

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.

Garagekeepers Coverage

This coverage might seem similar to the General Liability coverage discussed above, but it's entirely different... and should be in addition to your General Liability coverage, not thought of as a substitute for Garage Liability coverage.

So what is Garagekeepers Coverage?

Because your industry is unique in the sense that you could be taking possession of your customer's property (their vehicle), even if it's for a very brief period of time, you have a unique, but very real risk:  what happens if the vehicle that belongs to your customer is damaged or stolen?

You've probably guessed by now, but this is precisely what Garagekeepers Coverage is designed to provide... coverage for your customer's vehicle that's left with you to be washed or detailed.

When reviewing this coverage with your Insurance Advisor, there are 3 options available:

  1. Legal Liability - coverage is provided for your customer's vehicle only when it's damaged or stolen as a result of your negligence... essentially, you or your employees did something that directly caused the damage or theft of your customer's vehicle
  2. Direct Excess - this option can cause friction between you and your customer because it only provides coverage IF your customer wouldn't have his own insurance coverage.  If your customer does have insurance, your coverage would respond only if the amount your customer could collect under his own insurance policy is not enough.
  3. Direct Primary - if you select this option, your customer's vehicle is covered while in your possession regardless of whether you were responsible for the damages or theft.

Why would anyone select Direct Primary?

Those businesses that want to maintain the goodwill they've spent years building with their clients often elect Garagekeepers Coverage on a Direct Primary basis.  By doing so, they know that regardless of the reason the customer's vehicle was damaged or stolen, the business's insurance policy will reimburse the customer so he doesn't need to make a claim on his own policy.

Additional insurance coverage options all car wash and car detailing 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 car wash business, especially if you're running a fully-automated car wash as you rely almost entirely on certain pieces of 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 car wash and car detailing 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 car wash 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:

  • Get you your own subscription to 'Auto Insights' to help you prevent injuries, deal with environmental exposures, avoid theft, and more
  • 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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