CHICAGO — Remember playing the game of Risk? You marched your armies into neighboring countries to achieve victory. You placed yourself in strategically sound positions to deal with any of the changing forces coming your way.
Drycleaning business owners face ever-shifting trends, too — rolling across their industry landscape. Some of those risks don’t respect borders. Wirelessly through the air they arrive. Call them cyber villains or cyber liabilities, whatever you wish, but they are here now. They can reach your business through the wired systems, devices and websites linked to sales.
Cyber threats is not the only area to be concerned with, of course, but as dry cleaners look to diversify like never before, and seek out more revenue streams, they need to be aware of rising risks and of insurance coverage choices.
LIVING IT RIGHT
Carrying the right amount of building insurance is another of today’s topics to discuss with your drycleaning insurance specialist. Dealing with leases and loans can make you aware of your insurance requirements in a hurry.
“Leases and third-party contracts are getting more and more complicated,” says Ann Hawkins, vice president, NIE Insurance, St. Louis. “Landlords want higher limits of insurance, sometimes umbrella coverage, and require equipment breakdown coverage (and) are now asking to see it on the certificates of insurance. Some of their other requests can be cost-prohibitive, especially for a new start-up.”
Hawkins indicates that on commercial accounts, the requirements can be staggering. “Sometimes,” she notes, “we need to add five or six entities as additional insured in order for our customer to bid on a contract.”
One of the big challenges, she says, is getting small dry cleaners to insure to value.
“When they are renting, they sometimes don’t realize that they need to cover improvements and betterments and they lowball the contents limit.”
She explains that they should add cost of improvements, delivery, installation and taxes into the limit, as all of those items are covered. A coinsurance penalty will apply if the customer does not insure to value.
“Customers are, for the most part, aware of their insurance needs,” Hawkins says. “But we educate them on items that are not addressed in those contracts, such as off-premises coverage for utility service outages, state requirements for workers’ compensation and boiler inspections. We also advise them if we think they are not carrying enough or are carrying too much building insurance. We can do a replacement cost survey on the building, which will give them an accurate limit.”
Dry cleaners today continue to diversify, notes Adam Weber, president, Irving Weber Associates, out of Smithtown, N.Y. With many more becoming involved in restoration work, routes, fur cleaning, storage and coin-ops, he reminds that “all of these come with their unique risks, challenges and responsibilities that go beyond the core drycleaning business. Any of these can add revenue to the business if handled properly and responsibly.”
However, they can also add exposure that the business may never have contemplated. Owners should put a lot of thought and planning into expanding their operations, what they can truly handle, and what protections they should have in place, both physically and through insurance, to be out in front of these added exposures, he says.
Schedule time annually to review your policies and make sense of what you need. Most business owners are aware of the standard coverages such as fire, equipment, inventory and liability. The challenge, according to Weber, is understanding the details of coverage.
“For example: Does your storage coverage only respond if there is a valuation on the ticket? Do you have to issue a proper storage receipt or have a specific storage enclosure for coverage to be provided?”
Some other questions to which you may need to know the answers: Have you kept up with what the actual replacement limits are on your equipment and not just the price you paid when it was purchased? Does your customer goods coverage include damage in processing and mysterious disappearance?
Vital to assessing your risk today is asking the right questions. There are lots of details that usually are not considered.
“The drycleaning industry keeps getting more complicated,” says Bob Aikin, president of NIE. “There are more solvents to choose from. Equipment keeps getting more sophisticated and expensive. Regulators keep getting more aggressive. Effective marketing practices keep changing. Dry cleaners are forced to wear many hats.”
Busy as drycleaning owners are, taking time to assess exposure to liability and getting the right coverages is key. Be sure you are playing the game to the best of your ability; don’t find out too late that the game is playing you.
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