Insurance and Laundromat Fires: Including Some Little Known Facts

One of the biggest insurance exposures in a Laundromat is a fire. Most of the reasons for having a devastating fire, as seen in the photographs, can be greatly limited, or eliminated by proper care from the owner.

The majority of fires in Laundromats are caused in conjunction with the following:

1. Build up of lint inside dryers.

(Clean your lint screens)

2. Build up of lint inside the exhaust vents of the dryer.

(Check & clean you dryer vents)

3. Clogged exhaust vends caused by birds and debris.

(Checks that flaps move freely)

4. Cigarettes disposed of in non-fireproof trash cans.

(Buy and use only fire-resistant trash receptacles)

5. Vandalism related – intentional acts – or arson.

(Don’t leave the store open all night or when there are very few customers)

6. Fires in neighboring businesses that spread to the Laundromat.

(Ensure that fire walls – to ceiling - separate your business from your neighbor’s business)

7. Failure to properly maintain and repair safety heat limiting devices – switches - on dryers.

(Never bypass or fail to replace defective safety switches)

8. Owners storing combustible material too close to the back of dryers.

(Teach your cleaning attendants about the danger and don’t do it yourself)

9. Owners storing combustible material too close to the water heaters.

(Teach your cleaning attendants about the danger and don’t do it yourself)

10. Customers washing or drying materials soaked in flammable liquids – such as gasoline soaked rags - or flammable powders.

(Put up a sign of the dangers and instruct your attendants to stop people from washing this type of material)

11. Built up washing powders with oxygen agents, oxygen-based bleach or other oxygen-agents used to promote cleaning. the oxygen residue can assist in ignition of fires when exposed to the heat of a dryer if not properly washed out in the wash cycle.

(Try to stop customers from over soaping in the washers)

Coin Laundry Insurance - Quick Guide

Most people need to have Property and Liability Coverage.  Protection of your Laundromat from fire, vandalism, accidents and natural disasters is a good business practice.  There are five major insurance coverages available - and some would say necessary - for a Laundromat owner to purchase:

1.       property damage
2.       liability
3.       theft and robbery
4.       loss of income
5.       employee dishonesty

Most companies selling insurance for a Laundromat also have available a variety of additional coverages including:

1.       parking lot insurance

          (incidents outside your Laundromat)
2.       extended coverage

          (for additional coverages)
3.       water damage

          (caused by water backing up through the sewer system)
4.       bailee coverage
          (keeping property of others, such as Wash, Dry, Fold operations)
5.       glass insurance for your storefront

6.       store signs (if the wind blows plexiglass out of your sign box)

7.       business interruption insurance
8.       equipment breakdown insurance

Spotlight on Larry Trapani - a Laundromat and Coin Laundry Insurance Provider

The Laundromat Success Program™ was created by Larry Trapani, and claims to save you money, enjoy more peace of mind, protect and grow your business.

Laundromat fire in progress from the web site of Larry Trapani

"Most successful Laundromat owners have purchased insurance, but they may left themselves unprotected in many ways," says Larry Trapani. "Many are so busy running their business that they address important insurance issues in a reactive fashion. “Larry goes on to state that he believes many Laundromats do not carry adequate insurance to re-open their business in the event of a major or catastrophic loss (such as a major fire.) Larry believes that many people may fail to carry adequate: 

   1. Business Interruption Insurance

   2. Auto Non-ownership Insurance

   3. Umbrella protection

Failing to carry enough coverage can leave the Laundromat owner unable to pay for the unexpected costs after a loss and and the loss of profit.

Larry feels that policies purchased by many owners only provide enough coverage to pay off the banks and lender (secured creditors). He calls this “The Washer-and-Dryer Insurance Trap,"

Larry has created and developed an innovative program to help the Laundromat owner create a detailed plan that ensures he can protect his Laundromat business, and Larry has therefore created The Laundromat Success Program™ to assist a Laundromat owner to easily access his insurance needs.

"We developed this planning process for clients who want to fully protect themselves and their businesses," Trapani says. "We help them understand more fully their current situation and clarify their goals for the future. Then we determine the best way to fully protect their business, and review all of the necessary strategies and tools."
This is certainly a unique and interesting approach to understanding Laundromat insurance needs and a “tip of the hat” should be directed to Larry for developing this program.

The Basics Coverages Needed for Laundromats and Coin Laundries

You need to be careful when you buy insurance for your Laundromat, Card or Coin Laundry.  The high value of the equipment needs to be considered.  The cost to repair these items from fire damage and the time if will take to put your business back in working order, need to be seriously considered.

The front load washers and commercial dryers costs thousands of dollars each:  some washers can cost over $20,000.00 each.  Damage from fire, water or vandalism can put you out of business.  These items – along with your lease requirements – are why you must purchase business insurance.

The first type of insurance you need is Property Insurance (Business Property Insurance) which covers the building that you own or the equipment and inventory against physical loss or damage.  This type of insurance covers:  Washers, Dryers, Fixtures, Decorations, Folding Tables, Seating, Camera Sytems, Alarm System, Phone System and Computer Equipment. Furniture

Even if you do not own the building where your Laundromat is located, you still need to purchase insurance for the equipment you own and any business contents, fixtures, inventory and other supplies stored at your Laundromat.

As the owner, you can elect to insure your property for replacement cost or for actual cash value.  Actual Cash Value  (ACV) pays for the depreciated value of the property.  Replacement Cost Value (RCV) replaces all - or most of the lost property - with brand new equipment;

The second type of insurance you need is Loss of Business Income coverage.  This type of coverage allows you to still receive income in the event of damage closing your Laundromat .  Most often the type of damage that bring Loss of Business Income coverage into play is caused is caused by fire, water damage, roof collapse or other loss – if it is named in your policy – that forces you to close your doors.  If you depend on the income from your Laundromat to love, you need to have this type of coverage.

The third type of insurance you need is Business General Liability Insurance (Liability insurance.)  This is the type of insurance that protects you against lawsuits filed against you as the Laundromat owner.  This insurance is purchased to protect the owner against losses – including negligent acts - for damage, injury or loss to another's property, reputation, or health.

You are afforded coverage for damages, legal fees and court costs whenever someone files a lawsuit against you.  This coverage will also pay up to the policy limit for judgment – or settlement - covered in the terms of the policy.  Most leases will have a provision that requires you as a tenant to carry this insurance a settlement charges are paid by the insuring company when a claim is filed against the business:  often with a provision where you have to also name your landlord on your policy (Additional insured.)

Here are some coverages that are included with most liability policies”

1.       Included in most liability policies will be provision to provide for liability coverage for bodily injury.  This provides coverage – when you are found liable - Bodily Injury - for the health care cost, loss of services and payment to survivors for any loss of life due to a covered death or injury.

2.       Liability insurance also includes Property Damage Liability Insurance.  If a fire causes damage to your neighbors business you need to have this type of insurance to protect you when your business causes damage to the loss of use or damage to the property of another.

3.       Products and Completed Operations (not normally needed for a Laundromat) covers an injury due to the use of your products or services provided, the policy would pay for the resulting damages and any legal expenses up to the policy limits.

4.       Contractual Liability insurance (again seldom needed by Laundromat owners) relates to any liability assumed by the Laundromat owner in various contracts - including a lease between the owner and the landlord.

5.       Medical Payments are covered if a customer is hurt at your Laundromat.  This coverage will pay for medical costs, payments, and funeral expenses, if needed.

6.       Personal Injury Insurance Coverage is a little confusing in the title, but it provides coverage for the Laundromat owner if he is accused of publishing false information, slandering or committing a libel against another, or publishing information that violates a person’s right to privacy.