Understanding Carwash Property and Casualty Insurance

There are several types of property and casualty insurance coverage available to car care business owners, including property and liability insurance which may be purchased separately, in a package, or in a combination policy called a business owner’s policy. Other types include workers’ compensation, employment practices liability, commercial automobile liability (including garage keepers) and umbrella policies.

Following are several frequently asked questions (and their answers) regarding these types of coverage.

What is property insurance?

Property insurance is designed to protect your tangible assets. The form covers the building described in the policy and includes any completed additions and fixtures, permanently installed machinery and certain outdoor fixtures. Business personal property you own, inside or on the building, and within 100 feet of the premises, is covered.

This includes furniture and fixtures, stock or inventory, and all other personal property owned by the insured and used in your business. In addition, business personal property includes leased personal property which you have a contractual obligation to insure. You’ll want to check your leases to see what coverage you have agreed to provide.

You also can include personal property of others in your care, custody or control. Be sure to ask your agent if you have this exposure because most policies do not automatically provide this protection.

Several additional coverages or extensions of coverage are provided in most property forms, whether they are purchased separately, in a package or in a business owner’s policy (BOP). Some examples are:

Debris removal. The cost of debris removal is paid up to certain limits specified in the policy.

Preservation of property. If you move your property to another location for safekeeping because you are protecting it from an impending loss (e.g., a wild fire is moving toward your premises) any direct physical loss or damage to the property while being moved or stored at another location is covered. This coverage applies only if the loss or damage occurs within the specified period of time, usually 30 days after the property is first moved.

Fire department service charge, which provides a payment that can be made to the fire department (usually a maximum of $1,000) for responding to a fire at your location. No deductible applies to this coverage to encourage you to protect your property from impending danger as a result of a fire.

In addition, newly acquired or constructed property, personal effects and property of others, property off premises, outdoor property, etc., are automatically provided, subject to policy terms and conditions.

How much coverage do I need for my business property?

You should purchase replacement value coverage for your business property as this eliminates concerns over depreciation. Effectively this provides coverage to replace your property with new property of like kind and quality. Remember, most policies will pay you the depreciated value of damaged property (also known as actual cash value) and reimburse you for the difference after the damaged property is actually replaced and you provide the insurance company with a copy of the invoice for the purchase.

Do I need general liability coverage?

Yes. General liability refers to the legal liability arising out of business operations other than auto accidents or employee injuries. The major general liability loss exposures of business firms include:

Defense costs to protect you from law suits. Even if you are found not responsible for damages, there are considerable costs involved in presenting your case to the court. This is paid in addition to the limit of coverage you purchase. If the damages are equal to or greater than the limit purchased, the defense cost protection will terminate. You want to be sure you purchase limits adequate to protect your business.

Premises and operations liability arise out of the ownership and maintenance of the premises where you do business. You are legally required to maintain the premises in a safe condition and are responsible for the actions of your employees. Customers are considered to be invitees and you owe them the highest degree of care. You must warn customers of any dangerous condition on the premises and protect them against injury.

Products and completed operations liability refers to the legal liability you have for the sale of products or work you perform on your customer’s property.