By way of introduction, our partners in insurance for The Laundromat Millionaire Insurance Program, Larry Trapani and Joel Blitzer, have been working in the insurance industry for 30+ years and have been specializing in protecting laundromats and laundromat owners for the past 20+ years. They currently protect over 1,000 laundromats nationwide! In this blog, Larry shares his insight into the changes they see in laundromat insurance and what we can do to keep our rates more reasonable.
Why Is Laundromat Insurance So Expensive and What Can You Do About It?
From Larry Trapani of The Laundromat Millionaire Insurance Program
In the beginning, it was easy for us and every other agent to write laundromat policies. The market was wide open, and carriers were competing for business. Over the past 10 years, however, insurance companies have been consistently raising their rateson the laundromat class of business. Not only that, but several prominent insurnace comapnies have stopped writing policies for this class altogether. Those that have remained in the marketplace have seen their rates nearly double in the past ten years.
So why this dramatic change in the industry? Why are insurance companies picking on laundromat owners? After all most of them are small businesses just trying to make a living. The answer is simple – CLAIMS! Bottom line, the insurance companies are paying far more in claims for the laundromat class than they are receiving in premiums. We have approached almost every company out there and not one of them has said that laundromats were a “targeted class of business”. They will only write the on an exception basis.
Why Do Laundromats Have So Many Claims?
In our experience, by far the most frequent type of claim we get is the so-called “Slip & Fall” liability claim. This occurs when a person slips in or in front fo the store on a wet spot or cracked sidewalk. While these are not very big claims, they are a nuisance and often take a long time to settle, adding substantial legal costs to them. The legal costs can often be just as expensive as the settlement. The average settlement is $5,000 to $10,000 and another $7,000 for legal fees. If a laundromat has one “Slip & Fall” claim every 2 years, the insurance company will never make money on the risk.
So what can you do about it? How can you reduce the amount the insurance company increases your premium? Here are a few tips:
- Prevention: If you don’t have an accident in the first place, there won’t be a claim. Keep your floors clean and free of clutter and wet spots. If there is a spill, clean it up right away, and have “Wet Floor” signs clearly visible.
- Reduce Loss Amount: I have seen hundreds of potential “slip & fall” claims disappear because the store owner had it on video. You’d be surprised how many people “take a dive” or exaggerate a claim. Having a robust camera system is the best way to clearly show what happened. If there is an accident, transfer the recording to a thumb dirve and save it forever! Lawyers know that recorded data is saved for only 30 to 60 days and is wiped clean after that. If the incident is saved to a thumb drive, you can factually demonstrate the actual loss even if the lawsuit comes in a year later.
- Fill out an Accident Report right after the incident: It’s best to do this right away while the facts are fresh in everyone’s mind. Have a supervisor or employee who witnessed the fall fill out an accident report form stating only the facts that they saw. For example, if you didn’t see the customer fall, state in the report that “the customer stated he/she fell”.
The next most frequent type of claims we get is the dreaded dryer fires. These types of claims are never small claims. The fires can start in a variety of ways. For example, I’ve had multiple claims when a customer puts oily rags or clothing in a dryer and the heat of the dryer starts a fire. The problem is often exacerbated when somebody opens the dryer that is on fire, feeding it oxygen.
Dryer fires can also be caused by poor maintenance. If there is a buildup of lint in the vent system, a flash fire can start with the tiniest of sparks.
So, how can you help prevent dryer fires? Solutions to these hazards are simple:
- Proper Maintenance: Have a program in place where your vents are cleaned on a regular basis. You can either do this inhouse or hire a reputable company that specializes in vent cleaning.
- Customer Education: Educate your customers on what to put and more importantly, not to put in dryers. Do you have proper signage for this? Some preventive measures can go a long way.
Conclusion
Customers say to me, if the rates are going up anyway, and there is little I can do, why should I invest all this time and money in these preventive measures? Fair question. Here are a few points to consider:
- Insurance is Cyclical: Rates go up, rates go down. When premium increases start to level off or dare I say, go down, it will be to those store owners that have well run stores and have the highest potential for profitability.
- Get the Best Deal: Regardless of industry, insurance companies will always give the better deals to the most profitable businesses. While it may not be optimal, a 5% increase in rates is better than a 30% increase!
Have questions or comments? Looking for free insurance quote on your business? Fill out the contact form on our page for The Laundromat Millionaire Insurance Program.
