CHICAGO — If 2020 has confirmed one thing, it’s that the unexpected can, and will, happen.
While no one plans on having an emergency, it makes sense to have a plan to recover costs and other expenses in just such an instance. That’s where insurance comes in.
And with all the changes that have taken place in the laundry industry (and the world), it’s a good time to evaluate and update insurance coverage.
For expert advice on laundry and linen services insurance needs, American Laundry News contacted Steven Wright and Larry Trapani.
Wright is vice president of business development for Irving Weber Associates, which provides programs for the textile and linen care industries, based in Overland Park, Kansas. Trapani is president of Brooks-Waterburn Corp., a business insurance provider based in Farmingdale, New York.
In Part 1, Wright and Trapani covered how industry changes have impacted insurance and important coverages. In the conclusion, they examine ways a laundry operation should evaluate its insurance coverage.
COVERAGE EVALUATION
So, what does an operation need to do to evaluate its current insurance to find areas where it’s lacking, or where it’s over covered?
“The exercise of comparing exposure and risk with means of protection should be an ongoing dynamic that doesn’t get rushed into the final 30 days before insurance policies expire,” Wright shares.
“Try examining the insurance plans at the six-month mark of a 12-month policy so there’s no pressure to make decisions and there’s time to make capital investments.”
Trapani says the best way to evaluate insurance protection is to review coverages periodically with an insurance professional that specializes in the industry.
“They will know the right questions to ask and properly guide you to areas where you may have too little or too much coverage,” he says. “It is important to be truthful when you review your coverage.
“I have found recently that insurance companies are denying claims if an insured misrepresents information. You may pay more for insurance, but at least you will have coverage that you can count on.”
Wright says that many laundry operators haven’t spent enough time planning for disaster recovery, which includes insurance coverage.
“Is there a communication plan with staff? With customers? How will processing be moved or outsourced? Have insurance policy coverages been assessed to provide an immediate means for recovery and cash flow?” he asks.
In addition, Wright finds that the replacement cost of equipment, contents, is often undervalued.
“It’s important to use data such as a balance sheet to keep the limits reflective of the values,” he shares.
Ideally, Trapani says a laundry should have a standard business owner insurance policy with a top-rated company.
“Have coverage that would make the customer whole after a loss,” he says. “In other words, carry high enough limits that they are fully protected. Also, have a workers’ compensation policy with payroll of all employees.”
Wright adds that any insurance plan should be continually updated in terms of value for buildings and equipment. Also, it should be a plan that incorporates safety and training as common culture. Prevention is always better than regret.
“Work with an insurance professional who knows the industry and is willing to share best practices and experience,” he concludes.
Miss Part 1 on how industry changes have impacted insurance, plus important coverages? Click HERE now to read it.
Have a question or comment? E-mail our editor Matt Poe at [email protected].