BY MELISSA PIRKEY, ASSURED PARTNERS

According to IBISWorld, the global car wash service market size was estimated at $34.19 billion in 2019 and reached $35.34 billion in 2020. The global car wash service market is expected to grow at a compound annual growth rate of 3.2% from 2019 to 2025 to reach $41 billion by 2025. That being said, if you’re a car wash owner it is important you have the proper coverages in place to protect your equipment, building, employees and customers to keep you profitable and growing.

An investment in the car wash business is no small endeavor. With wash building costs of $2.5 million and up in many cases, it’s important for the car wash entrepreneur to protect that investment.

Here’s a primer on several areas you’ll want to make sure you have in place.

Builder’s Risk Coverage

Who needs it?
Any person or company with a financial interest in the construction project needs builder’s risk insurance. Some common people you may want to include on your policy as insureds include the:
- Property owner
- General contractor
- Subcontractors
- Lender

What types of property does it cover?
A basic builder’s risk insurance policy helps cover buildings and structures under construction. It also helps protect:
- Materials
- Supplies
- Equipment on site, in transit or at other locations

Property Insurance

Property insurance protects the assets your business owns, including the building and equipment, from vandalism, fire, destruction or damage.

Building/Structure

All structures should be accounted for and valued for what it would cost to replace. This would include wash buildings, vacuum bays, payment kiosks and storage buildings.
Business Personal Property

Also known as “contents insurance,” this protects your business inventory and equipment. Think of it this way: If you turned your operation upside down and shook it, most everything that fell out would be considered business personal property.

To determine how much property or contents insurance you’ll need, create an itemized list of your business’ assets and their individual dollar values. Remember, at the time of loss, you will be required to provide a detailed inventory of all items lost/damaged. The total dollar amount of insurance required will be listed as your limit of insurance.

General Liability Insurance

General liability insurance protects your business from liability lawsuits arising from negligence that may cause injury to others, such as a customer. It also protects your company if someone is injured because of using your product or service or while on your premises.

In addition to general liability coverage, if your wash takes “care, custody or control” of your customer’s vehicle, you will also need to obtain garage keepers liability coverage. This coverage provides liability protection while you have “care, custody or control” of your customer’s vehicle and provides coverage for physical damage to the vehicle. For example:
- The customer exits the vehicle and waits within a designated area until the wash is completed (your wash would be assuming temporary custody of the vehicle.) From the moment the customer exits the vehicle and until he or she gets back into the vehicle, the garage keepers liability form would be providing liability as well as physical damage protection for the customer’s vehicle.
- The customer pulls into your tunnel and is told to take his or her hands off the wheel and put the vehicle in neutral (your wash would be assuming control of the vehicle). From the moment the customer relinquishes control of the vehicle and until he or she shifts back into drive and resumes control, the garage keepers liability form would be providing liability and physical damage protection for that vehicle.

Workers’ Compensation

Workers’ compensation protects your business and employees by providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue your business for the tort of negligence.

Every state has very specific requirements regarding whether an operation is required to carry coverage. For example, in Missouri, you are required to carry workers’ compensation insurance if you have five or more employees.

Even if your state does not require that you carry coverage if an employee is injured on the job, you would most likely be held liable for their lost wages and medical benefits. For the relatively low cost of this coverage, it is recommended to obtain coverage even if not mandated by your state

Business Interruption Insurance

Business interruption insurance helps protect your wash against the income that is lost due to a covered property loss while it is shut down for repairs. Covered losses may include theft, fire, wind, ice, falling objects and lightning. Read your policy to make sure you know which types of loss your policy may cover.

For example, assume a fire damages your wash. The fire leaves the building unfit to do business in, and it destroys most of your equipment. Business interruption coverage may help reimburse you in two ways:
- For the loss of income during the period your wash is shut down for repairs. Your pre-loss earnings are the basis for reimbursement under business interruption coverage. Lost earnings are typically defined as revenues minus ongoing expenses.
- For extra expenses, if it is necessary to expedite the manufacturing of replacement equipment or special shipping arrangements must be made, this coverage may help pay any additional expenses incurred.

Melissa Pirkey is the VP Car Wash Vertical Leader for Assured Partners. Pirkey is passionate about helping clients get the best coverage for their money and changing the car wash insurance industry for the better. Pirkey comes from a family of car wash owners and understands the challenges faced on a day-to-day basis in relation to management, claims, insurance and more.