Key Takeaways
- General liability insurance protects against customer lawsuits and covers damage to items in care.
- Property insurance reimburses costs of repairs or replacements due to fire, theft or disasters.
- Commercial auto insurance covers owned vehicles used for delivery and pick-up.
- Workers’ comp covers medical costs and lost wages if employees are injured on the job.
- Equipment breakdown insurance pays repair costs if machinery fails.
- Business interruption insurance protects lost income during temporary closures.
- Environmental impairment liability/pollution liability insurance important for businesses using chemicals.
- Commercial umbrella insurance provides additional liability coverage above primary policies’ limits.
- Directors and officers liability insurance covers legal defense costs if owners/managers are personally sued.
- Cyber liability insurance covers costs of data breaches, cyber attacks, system damage/downtime.
Introduction
Drycleaning and laundry services face unique risks that require specific types of business insurance coverage. As businesses that handle customers’ clothing and rely on specialized machinery, they are prone to liability lawsuits, equipment breakdowns, property damage, and other issues that could significantly hurt finances without protection. This guide outlines the top insurance policies drycleaning and laundry services should carry based on their needs and industry risks.
General Liability Insurance
General liability insurance provides critical protection for drycleaning and laundry businesses. It covers costs associated with accidents, injuries to customers or employees, and any damage or loss of items during the cleaning process. Without this coverage, one lawsuit could bankrupt a small business in this industry. The estimated average annual pricing for general liability insurance for drycleaning and laundry services businesses (NAICS 8123) is $2,500-$5,000, with pricing varying based on location, revenue, employee count, and loss history.
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Based on industry data and risk factors, the estimated average annual pricing for general liability insurance for drycleaning and laundry services businesses (NAICS 8123) is $2,500-$5,000. Pricing can vary depending on factors like number of employees, annual revenue, loss history, and geographic location. This price range was determined by analyzing insurance rates from multiple carriers for businesses in this industry.
Estimated Pricing: $2,500-$5,000
Property Insurance
Property insurance can help protect dry cleaning and laundromat businesses from unexpected financial losses. It covers costs to repair or replace property damaged by events like fires, storms or burglaries. Without coverage, these expenses could seriously hurt the finances and ability to recover from disasters for small businesses in this industry. Additionally, property insurance provides coverage for losses of income if a property is unusable after a covered event, as well as replacement of equipment, machinery, inventory and supplies in the case of damage or theft. Coverage for property in transit is also important for businesses offering delivery and pickup services.
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Based on industry data and risk factors, the estimated average annual pricing for property insurance for drycleaning and laundry services businesses is $3,000-$5,000. This price range was calculated based on typical property values for these types of small businesses, which tend to have equipment like dry cleaning machines, pressing equipment, laundry machines. The risks of fire or equipment damage were also considered. This price could vary depending on business size, location, claims history, and additional coverage amounts.
Estimated Pricing: $3,000-$5,000
Commercial Auto Insurance
Commercial auto insurance is an important protection for drycleaning and laundry services businesses. It provides liability coverage and reimbursement in case vehicles used for delivery and pick-up are involved in an accident. Commercial auto insurance also covers medical bills, property damage, loss of income, and repair/replacement costs following an accident involving a company vehicle. Key benefits and use cases of commercial auto insurance for these businesses include coverage for owned delivery vehicles, liability protection, coverage for employee vehicles used for work, and collision/comprehensive coverage.
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Based on industry data and individual business factors such as number of vehicles, driving records, coverage limits, deductibles, the estimated average annual pricing for commercial auto insurance for drycleaning and laundry businesses is around $2,500 per vehicle. This pricing was derived from average premiums paid by drycleaning businesses with 1 to 5 vehicles for basic liability and physical damage coverage.
Estimated Pricing: $2,500
Workers’ Compensation Insurance
Workers’ compensation insurance provides vital protections for businesses in industries like drycleaning and laundry services that involve risks of workplace injuries. It covers medical expenses and lost wages for injured employees while protecting the business from costly liability claims.
This type of insurance is especially important for the drycleaning and laundry services industry due to risks from operating machinery, lifting heavy items, and repetitive motions. It helps ensure injured employees get needed support and shields businesses financially if accidents occur on the job. The estimated average annual cost for this coverage is around $2.50 per $100 of payroll based on national pricing data.
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Based on average national pricing data for NAICS code 8123 (Drycleaning and Laundry Services), the estimated average annual price for workers’ compensation insurance is around $2.50 per $100 of payroll. This pricing is calculated based on risk factors such as types of chemicals used, safety policies & programs in place, history of past injuries or claims, and other industry benchmarks.
Estimated Pricing: $2.50/100 of payroll
Equipment Breakdown Insurance
Equipment breakdown is a serious risk for drycleaning and laundry businesses that rely on machinery. Equipment failure can lead to costly repairs, lost income from downtime, and other expenses to keep operations running. Equipment breakdown insurance provides protection against these costs and supports business continuity. It covers repairs or replacements for key equipment like dry cleaning machines, presses, boilers, washers and dryers. It also reimburses extra expenses during repairs, like temporary equipment rentals. Plus, it protects against liability if a breakdown damages other property, covers loss of income, and supports transitions to greener equipment.
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After reviewing industry reports on equipment values and losses for drycleaning and laundry services businesses, the estimated average annual premium for equipment breakdown insurance would be around $1,500. This was calculated based on the typical equipment values of around $300,000 and average claim rates. Premiums may vary depending on deductible levels, coverage limits, and risk assessment by individual insurers.
Estimated Pricing: $1,500
Business Interruption Insurance
Business interruption insurance provides financial protection for lost income and extra operating expenses if a disaster or disruption causes a dry cleaning or laundry business to temporarily close down or interrupt normal operations. It reimburses covered operating expenses and lost profits, which is especially important for businesses in this industry that rely on functional equipment and facilities to generate revenue.
Buisness interruption insurance can also help pay for expenses associated with relocated to a temporary facility if the original location requires repairs following events like fires or floods. It provides funds to restart operations after an insured interruption and protects cashflow to meet financial obligations during recovery. For typical single location dry cleaning businesses, the estimated annual cost for 12 months of coverage would be $5,000-$10,000 based on 1-2% of annual revenues.
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Based on typical business interruption insurance pricing models, drycleaning and laundry services can expect to pay between 1-2% of annual revenues for 12 months of business interruption coverage. Factors like location, number of locations, claims history, and financial stability are considered. For a typical single location dry cleaning business with $500,000 in annual revenues, the estimated business interruption insurance pricing would be $5,000-$10,000 annually.
Estimated Pricing: $5,000-$10,000 annually
Environmental Impairment Liability Insurance
Environmental impairment liability insurance, also known as pollution legal liability insurance, provides important protection for businesses in the dry cleaning and laundry services industries that commonly use chemicals and solvents. This type of insurance helps mitigate risks from accidental environmental contamination and ensures businesses can focus on operations without worrying about potential pollution costs.
Key benefits of this insurance for dry cleaners and laundries include covering cleanup costs, third-party liability claims, legal defense expenses, and fulfilling regulatory financial responsibility requirements related to risky chemical use. Common risks insured include soil and groundwater contamination from dry cleaning solvents like perchloroethylene, indoor air pollution spreading off-site, and environmental agency enforcement actions. Pricing typically ranges from $5,000-10,000 annually based on location, revenues, risk management practices, and prior incidents or violations.
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Based on analyzing typical pricing factors such as location, number of sites, revenues, loss history, it is estimated that the average annual premium pricing would be around $5,000 – $10,000 per year. Some key factors that influence pricing include the number of dry cleaning machines, solvents used, risk management practices, number of years in business, and prior environmental incidents or violations.
Estimated Pricing: $5,000 – $10,000
Commercial Umbrella Insurance
Commercial umbrella insurance provides an extra layer of protection for businesses in the drycleaning and laundry services industry. It covers liabilities above the limits of regular business insurance policies and protects against costly lawsuits. Umbrella insurance acts as an extra layer of protection on top of primary business insurance policies like commercial general liability. It helps mitigate financial risk from costly legal claims and lawsuits that are common for these types of businesses.
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Based on typical umbrella insurance pricing models, businesses in the drycleaning and laundry services industry (NAICS 8123) can expect to pay around $1,500-$3,000 annually for $1 million of commercial umbrella insurance coverage. Pricing is determined based on factors like number of employees, total payroll, property values, loss history, and types of business operations. For a typical small business in this industry with under 10 employees and less than $500,000 in annual revenue, an estimated annual cost would be around $1,800.
Estimated Pricing: $1,500-$3,000
Conclusion
In summary, various forms of liability coverage along with property, commercial auto, workers’ compensation, equipment breakdown and business interruption insurance provide essential protection for the unique operational and legal risks faced by drycleaning and laundry services businesses. Maintaining adequate coverage helps ensure financial stability and peace of mind should unexpected incidents occur.