About General Liability Insurance
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A LAUNDROMAT
Example 1: One of your dryers develops an electrical issue without your knowledge. When a customer uses the dryer, he is shocked by the malfunctioning dryer and sustains injuries that require medical care. Your general liability insurance policy would cover the cost of the customer’s medical treatment.
Example 2: A customer slips on the wet floor of your bathroom and falls, causing injuries and leading them to file a lawsuit against your company. The general liability insurance you carry will pay for your legal costs, including a settlement, up to the limits of your policy.
Example 3: An employee accidentally spills cleaning chemicals on a rack of recently cleaned clothing. Many of the pieces were designer apparel from a frequent customer. Instead of needing to pay for replacing the clothing out of pocket, you can most likely get help covering replacement costs from your general liability policy.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
COST OF GENERAL LIABILITY INSURANCE
The average laundromat in America spends between $350-$750 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
OTHER TYPES OF COVERAGE LAUNDROMATS NEED
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all laundromats should obtain:
Commercial Property Insurance
Your laundromat is filled with expensive equipment, all of which is required for you to do business. In the event of a disaster, such as a fire, your equipment, as well as the building, could be damaged partially or completely. A commercial property insurance policy would provide financial assistance to help you replace your equipment, up to your policy limits. Having the money on-hand to get back up and running will ensure that you suffer minimal downtime.
Workers’ Compensation Insurance
Keeping up with customer demand requires having employees, and having employees requires carrying workers’ compensation insurance. Not only is workers’ compensation required by law, but it also ensures that you can take care of your employees if they are injured doing work-related tasks. Your workers’ compensation policy will cover the costs of treating work injuries and the cost of helping to pay lost wages while the employee recovers.
TYPES OF COVERAGE SOME LAUNDROMATS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your laundromat may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Commercial Auto Insurance
If you have one or more vehicles you use primarily for business, you need commercial auto insurance. Your commercial auto policy works much like your personal auto policy by helping to cover costs related to accidents in company vehicles. Coverage will help pay for medical bills for any injured parties as well as the repair or replacement of company vehicles.
Commercial Umbrella Insurance
When the policy limits of your general liability policy are exceeded, a commercial umbrella insurance policy will take over. Most businesses do not have the cash on hand to cover extra liability costs—like those stemming from a lawsuit—which is why commercial umbrella insurance can prove so beneficial.
ADDITIONAL STEPS TO PROTECT YOUR BUSINESS
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
FREQUENTLY ASKED QUESTIONS
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.