Car Wash Insurance: Understanding Coverage Types and Requirements

If the weather is right, or a big storm just passed, you may see a line wrapping around the property of cars looking to get a car wash. Car washes offer quick solutions to one of customers' most expensive purchases. Building a great car wash business isn’t easy, and while those long lines of customers are rewarding, protecting what you have built is just as important. That is where car wash insurance comes into play; protecting owners from liabilities and allowing them to continue operations.

Do You Need Insurance for Your Car Wash?

Common Risks Faced by a Car Wash Business

There are a variety of variables at play when operating a car wash. Things like harsh chemicals, customers walking on the property, water at high pressure; these attributes of the business create risk that an owner may want to mitigate.

Other risks include the heavy machinery and damaging property. These factors create an umbrella of scenarios which may be mitigated, or protect the owner from, by insurance. A few more examples of risks include: 

• Broken equipment
• Damage to customers’ vehicles
• Injury or death of a customer or an employee caused by car wash machinery
• Damage to the business’s buildings and property
• Liability for damage to the environment from chemicals used in a car wash
• Theft of property and equipment

Who is Responsible for Car Wash Damages?

Who is responsible for car wash damages depends on the scenario. According to progressive, if a customer does not follow instruction, and machinery damages their vehicle, they would be on the hook. However if your equipment breaks and causes harm to someones property it could be you as the owner on the hook.

Given the wide breadth of scenarios and who is at fault different types of insurance exist to protect owners and mitigate as many of these risks as possible.

What Does Car Wash Insurance Cover?

Some insurance providers have products called “car wash insurance”, which cover the basics of operating a car wash. They cover a variety of car wash specific elements: 

Vehicle damage liability

If the owner is liable for vehicle damage caused by the car wash this insurance would protect the business and potentially cover the incident. 

Canopies

Covered areas for customer to vacuum and towel their cars could be covered under this insurance type, from loss of use to replacement protection

Equipment malfunction

Breakdowns and loss of continuing operation of utilizing the tunnel, or covered automated car washing system

Common Types of Insurance Used for Car Wash Businesses

• General Liability Insurance: covers your business from general financial loss due from damages caused by your business
• Commercial Property Insurance: covers your physical location and assets from loss such as a fire
• Workers’ Compensation: If you employ persons to run your car wash and these employees hurt themselves on the job, workers compensation insurance would be the policy that protects the business from any medical or legal issues.
• Business Owners Policy (BOP): As a baseline a BOP covers liability generally associated with running a car wash such as harm to customers, their property, and general liability. 
• Equipment Breakdown Coverage: Breakdowns and loss of continuing operation of utilizing the tunnel, or covered automated car washing system
• Garage keepers Liability Insurance: Insurance if your business operates in periods where they possess a customer's vehicle, like a mechanic or detailer, covering incidents that can occur in this window. 
• Business Interruption Insurance: covers peril suffered from interruptions to your business such as tornadoes or possibly pandemics
• Commercial Auto Insurance: similar to personal auto insurance, covers employee drivers and company vehicles

Does a Self-Service Car Wash Need Special Coverage?

While there are insurance offerings which are specific to car washes they are not necessarily required. Insurance can be purchased by an owner to cover only what is needed. For example if you do not operate a tunnel, or canopies, you may work with a provider to build a policy to only cover what's needed.

Unique to car washes are the aspects of customer vehicles, machinery, chemicals, and customers walking on the property potentially. These make insuring a car wash more involved for owners as the operation is more complex. On the other hand it is possible for a one person business to have less complex requirements.

What Insurance Does a Mobile Car Wash Need?

The answer is that it's up to the owner what coverage is needed, however; given that there is a period where a mobile detailer would be in possession of the customers property, a garage keeper policy should certainly be considered, among other types of insurance such as business owners policy.

Car Wash Insurance vs Car Detailing Insurance

The question depends on what needs to be covered. Typically a car wash will have things like physical property, equipment, and possibly more than one employee. This makes the owner of a car wash more of a candidate for a larger variety of insurance types.

On the other hand, a car detailer may only have one employee, a vehicle used for business, and possession of a customer's property, which would narrow the scope of insurances needed to potentially business owner policy, commercial auto insurance, and garage keeper insurance.

These are not the only risks faced by each business, only a set of examples. It is up to the owner of the business to assess risk, understand which policies adequately cover the risk, and mitigate by purchasing policies.

How Much Does a Car Wash Insurance Cost?

As we think about car washes there is a range from partial covered do it yourself washes, to full service drive throughs with premium services. The cost of insurance will vary depending on the size of the operation and the associated risk of running. A few thoughts on what to think about when considering cost follow.

Factors Determining the Cost of Your Policy

There are many factors which go into pricing a policy, the best way to determine the cost for your scenario is to speak with insurers and determine quotes across competitors It's important to note that when shopping for policies, insurance providers may offer discounts for bundling many coverage types, or even offer unique packages that fit your business.

Ways to Lower Your Insurance Premiums

Depending on the insurer there are a few ways an owner can lower their premiums. Items such as increasing your deductible, maintaining a history of sound business practices, or using the same insurer for all policies are possible ways.

The best way to lower your premium may actually end up being that an owner needs to shop around for new quotes periodically. If you know what coverage is needed, be sure to compare rates to get the best price for what your business needs.

How to Get Funding for Your Car Wash Insurance?

As a car wash business owner you may need to periodically search for financing. Owning a car wash with fixed assets may give owners the room to make such financial decisions. If you need a loan for your car wash you can certainly use the funds received to cover your insurance payments.

How to Choose the Right Car Insurance Provider

A rule of thumb when shopping for insurance has been said to be to shop for the best claims process. A claim is when you need to activate your insurance and protect yourself. The last thing you want to experience in the face of liability is an insurer who is no longer as friendly to work with.

How to Protect Your Car Wash from Losses: Practical Tips

Losses are a part of running a business. Front of mind may be to mitigate these risks, and insurance isn't everything. Owners who are proactive and conscious of risk may fare better in the long run. A few ideas to protect from losses follow:

• Stay up to date with business licensing
• Do your paperwork, be sure you are up to date with documents such as articles of incorporation
• Perform regular maintenance, be sure it's not your equipment that damages cars, or goes out of service during busy season
• Use quality supplies, the last thing you want is chemicals that take paint off a car and a customer issue
• Follow eco-friendly practices, with increasing water conscious population, are you doing what you can to minimize the car washes impact