In insurance terms, an event that is not deliberately caused by the insured and that is not inevitable. Thus, if you deliberately cause damage or engage in an act where damage to surrounding property is inevitable, you may not be able to claim a loss.
Actual Cash Value
This coverage will pay for the depreciated value of the actual value at the time of loss. It does not require you to "replace" the items damaged. This is frequently the preferred coverage for those who do not own their building and are subject to a lease that allows cancellation upon damage to the structure.
An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured's policy provides a certain degree of protection. An endorsement is typically required to effect additional insured status. The Insured's reason is normally to comply with a contractual agreement (your lease) requirinzg the named insured to do so.
Sometimes called Special Perils, these may include losses caused by aircraft, explosion, storm, tempest, flood, riot, strike, civil commotion and malicious damage. These are extensions that widen the scope of a basic fire insurance policy.
Admitted Insurance Company
A domiciled California carrier is regulated by the Department of Insurance. It belongs to the California Insurance Guarantee Association. It assists in paying claims or protecting your assets if your insurer becomes insolvent.
Advertising Injury Insurance
In the course of advertising your Laundromat's goods, products or services, this provision will provide liability protection against advertising injuries resulting from publishing inaccurate information that slanders or libels a person or organization, publishing material that violates a person's right of privacy, copying some other company's advertising ideas or style of doing business and infringing on another company's copyright, title or slogan.
An aggregate total limit on claims during a policy period, which applies in addition to a limit per claim. This applies in most cases to liability and medical policies.
A name for an insurance policy, which provides wide coverage, but contains a number of exclusions. The term 'All Risks' should not be taken too literally and in some states the term is no longer used.
This insurance covers the bailee's (Laundromat owner's) legal liability for loss, destruction or damage to property while in the bailee's care. As an example, clothes being cleaned in a fluff and fold service where the clothes are under the temporary control of the Laundromat owner. The bailor (owner of the clothes) expects the clothes to be returned in good condition. If the clothes are stolen from the cleaners, the bailee's Liability insurance would cover the liability of the laundry for the loss.
A binder is a legal agreement that serves to effect insurance coverage for a specified period of time until the actual insurance policy can be issued. A binder can be issued by either an insurance agent or company and must provide the following information: Name of insured, Type of insurance coverage, Limits of insurance, Covered perils and Name of insurance company.
Bodily Injury - Liability Insurance Coverage
Available to pay your customer or guest for the cost of care, the loss of services and restitution for death that results from an injury in your Laundromat.
A legal term referring to theft involving forcible or violent entry to or exit from the premises. Normally this would involve a break-in at night at a Laundromat.
Bursting or Overflowing of Tanks, Apparatus and Pipes
This provision covers damage resulting from a plumbing accident but does not normally cover the cost of repairing the damaged tank or pipes.
Business Interruption Insurance
This insurance is intended to protect your revenue stream in the event of a loss or damage to your Laundromat establishment. If your Laundromat suffers from a fire, water damage, collapse or any other insurable loss and you are forced to close your doors, you may be left with out a revenue stream or income source. Business Income coverage can provide coverage for your lost revenue while your establishment is being repaired or even rebuilt. There is normally a period of time you must be out of operation before this provision can be applied.
With a few exceptions, insurers have the right to cancel a policy at any time. They must give the period of notice required stated in the policy and refund a pro-rata premium. If you cancel your policy, then insurers may charge short period rates which may cost you more money.
Certificate of Insurance
A piece of paper not to be confused with an insurance policy. It is issued mainly to comply with certain statutory requirements as evidence of coverage. A certificate is sometimes issued to a Landlord or property management company.
Co-insurance comes into play when there is a covered loss and the contents of the Laundromat is insured for less than it's value. It does not apply to the liability portion of the policy. The understating of the value by a Laundromat owner is normally done to save money on the premium. Since most losses are not 100% total losses, you are in effect "co-insuring" your Laundromat contents. In a 90% co-insurance policy, as long as you are insuring for 90% of the value, it is considered to be 100% coverage and there is no deduction. However, if you elect to cover less than 90% of the value of your Laundromat, you become a co-insurer. An example: if your policy agreement states you must carry insurance at 90% of the value of your Laundromat contents and you understate the value, you will pay a co-insurance portion at the time of a loss. The insurance company pays claims only in proportion to the amount of coverage you do carry. The following equation is used to determine what amount may be collected for partial loss:
Amount of Insurance Carried x Loss = Payment
Amount of Insurance that
Should be Carried
No Deduction Example
Laundromat owner One has an 90% co-insurance clause and the following situation: $90,000 insurance carried, a value of $100.000 and a $10,000 fire loss. By applying the equation for determining payment there is no deduction for this partial loss because the owner carried the proper amount of insurance:
$100,000 x $10,000 = $10,000
Laundromat owner Two has an 90% co-insurance clause and the following situation: $70,000 insurance carried, a value of $100.000 and a $10,000 fire loss. By applying the equation for determining payment there is a deduction for this partial loss because the owner failed to carry the proper amount of insurance and is a self-insurer for 30% of the value of the Laundromat, he must pay $3,000 of the loss:
$70,000 x $10,000 = $7,000
Liability arising out of the insured's products or business operations conducted away from the Insured's premises once those operations have been completed or abandoned.
An alternative name for Business Interruption or Loss of Profits insurance.
Constructive Total Loss
Partial loss of such significance that the cost of restoring damaged property would exceed its value after restoration. For example, a Laundromat is badly damaged by fire and it would cost more to repair than the Laundromat would be worth after completion.
Contractual Liability: Incidental
General Liability coverage extends to any liability you may assume by entering into a variety of different types of contracts such as a building lease between you and your Landlord.
This involves liability incurred by a Laundromat for acts other than those of its own employees. If an independent contractor is hired to carry out some work, then the business may be held liable for the negligent acts of the contractor if the contractor is acting under the direction or control of an employee or owner of the Laundromat.
A principal of law recognizing that an injured person may have contributed to his own injury. For example, a customer climbs into a dryer and has his friend turn it on. If he is subsequently injured he may be said to have been contributorily negligent.
Debris Removal Provision
If you policy includes this coverage, it will pay for the Insured's expenses to remove debris of covered property caused by a Covered Cause of loss. This does not include "pollutants" and must occur during the policy period and be reported within 180 days of the occurrence.
The amount of any claim which is the responsibility of the Insured and which the insurer will deduct from any claim payment.
Defense of Claim
This is the provision that requires the insurance company to provide the legal services to the Insured in the event of a lawsuit. This is subject to any Exclusions or Exceptions.
Would provide coverage in the event of damage caused by an earthquake. This insurance is seldom purchased by owners of Laundromats in California because of cost.
The date upon which coverage under an insurance policy becomes effective. Usually this will not be until an insurer has accepted the proposal and confirmed coverage in writing by issuing a confirmation.
Employee Dishonesty Coverage
Employee dishonesty coverage protects an employer from financial loss due to the fraudulent activities of one or more employees. The coverage includes protection for loss of money and other property of the Insured.
Employer's Non-ownership Liability Endorsement
This provision provides coverage to the Laundromat owner if he permits or allows an employee to use their personal vehicle to travel on a business related trip, such as picking up cleaning supplies, in the employee's personal vehicle.
An endorsement is a special amendment to a policy wording. It may be attached to the policy from inception or it may be added to the policy mid term. Mid term endorsements are often issued at the request of the Insured. For example an endorsement may be issued to note a change of address of the Insured.
Exclusions or Exceptions
All contracts contain certain conditions and it is important that you are aware how these affect your rights under a contract. An insurance policy is no different in this respect. Most Laundromat policies will exclude war risks, nuclear radiation, terrorism, deliberate acts of the Insured, violation of law by the Insured, Americans With Disabilities Act violations, mold, earth movement, stacking (having two or more policies covering the same Laundromat risk), pollution, asbestos, lead paint, use of a firearm, use of an attack dog, molestation, abuse, punitive damages and employment related acts.
A standard fire policy usually insures against fire that results from an explosion, but not the shock and concussion damage that can result.
Extra Expense Endorsement
Extra Expense insurance covers such expenditures over and above your normal monthly expenses, such as rent, installation of equipment, etc.
An all risks, theft or burglary policy will usually exclude losses due to theft by people legally on the premises. This obviously excludes losses caused by employee theft. Such losses are covered under a Fidelity Guarantee policy. Usually such policies are subject to deductibles or coinsurance by the Insured to ensure that recruiting policies are maintained and references properly followed up.
Fire Legal Liability Coverage
Coverage needed if you occupy leased or rented property for which you could be held legally liable for damage to the property due to fire or explosion.
Depending upon the individual territory, a standard Fire policy usually covers fire, lightning and explosion of gas or boilers used for domestic purposes. Fire means "actual ignition." Scorching or charring is not covered. Coverage will sometimes extend to cover fire arising from any cause, but more often it is subject to policy exclusions, for example fire damage caused by a riot may not be covered unless the policy is extended to include Riot. A fire policy can be extended to include Additional Perils.
Full Theft Coverage
Most Theft or Burglary policies cover theft only if it involves forcible or violent entry to or exit from the premises. Full theft coverage extends this cover to any dishonest appropriation.
Fire, Vandalism, Malicious Mischief, Explosion, Smoke, Wind Storm, Vehicle & Aircraft, Lightning, Civil Commotion, and Hail. This is standard coverage for Laundromat owners.
The policy covers breakage of fixed glass from any cause but normally excludes damage to frames holding the glass in place.
The sum insured under a Business Interruption insurance policy. Your accountant may regard Gross Profit as being profit before tax, but this is not the insurance definition. Gross profit is normally defined by insurers as the amount by which the sum of the turnover and the closing stock shall exceed the sum of the opening stock and the uninsured working expenses. You should check to ensure that the gross profit is properly defined to protect your business and that you have given your insurer the correct figures.
Hazard is another word for risk. Insurers often separate risk into two areas: the physical hazard and the moral hazard. Physical hazard refers to the physical aspects of the risk that could make a loss more or less likely, or affect the severity of that loss. Moral hazard on the other hand refers to the attitude and conduct of the Insured himself. While physical hazard can nearly always be addressed by insurers through recommended risk improvements, policy conditions and premium rate, moral hazard can only be addressed by declining the risk.
Your policy will lapse or expire if you fail to pay the renewal premium. There is no coverage during a lapse.
Liability policies may cover legal costs and expenses incurred by the Insured with his insurers' consent or recovered by any claimant against the Insured.
Liability at law can arise under tort (or civil actions) or under contract. While settlements are often made out of court by mutual agreement, legal liability can only be finally decided by the courts. Public, Products Professional Liability, Directors and Officers and other Third Party Liability insurance would normally cover only non-contractual obligations.
The Liability Insurance coverage for your Laundromat business is designed to protect the business against losses even if you are negligent or liable for damage, injury or loss to another's property, reputation, or health. Typically, damages, legal defense fees and settlement charges are paid by the insuring company when a claim is filed against your Laundromat. Your lease probably requires you to maintain liability insurance for your Laundromat.
A standard Fire policy will automatically cover damage to property caused by fire, lightning or certain types of explosion.
Limits of Liability
Liability policies normally contain a limit stating the maximum amount insurers will pay for any single event and perhaps for all events occurring in a single policy period.
The principle of "utmost good faith" requires anyone seeking insurance to disclose all the material facts about the risk that he knows, or should know. A material fact is "any fact which may influence the judgment of a prudent underwriter in deciding whether to accept a risk and if so at what rate of premium." It is possible for the insurer to refuse to pay any claim if there has been a breach of utmost good faith (material facts were withheld or you lied on your application.) When in doubt, disclose all the information you have on your Laundromat.
If someone is injured by you or at your business site, the policy may pay for medical and funeral expenses incurred, up to policy limits, within one year of the accident without regard to the insured's liability. For example, if a customer tripped and fell on your premises and had to be hospitalized.
Cash, bank and currency notes, checks, money orders, postal orders and current postage stamps are excluded from the coverage given by a fire insurance policy and a separate money policy is usually required. This is written on an "All Risks" basis to cover any accidental loss or damage but will exclude or limit coverage for employee dishonesty.
Moral hazard hand refers to the attitude and conduct of the Insured.
Non-Admitted or Surplus Lines Insurance Company
This type of insurer is not licensed by the State of California. A non-admitted insurer is not subject to the financial solvency regulation, enforcement and does not participate in the insurance guarantee funds of California law. Use of non-admitted carriers may conflict with the requirements of your lease.
Optional Perils Endorsement
All General Form coverages plus glass, falling objects (meteors, comets), collapse (from ice sheet, snow). This is usually sold as an option, but limited to newer buildings. This is seldom purchased by Laundromat owners in California.
Parking Lot Liability Endorsement
This is included with Crusader Insurance policies but is an option with many other companies. It affords protection against liability claims for parking lots outside the Laundromat. Carts tipping over or failing from uneven pavements are a few examples of when you could be involved in a lawsuit and need this coverage.
Personal Injury Insurance Coverage
This provision provides coverage if you are accused of publishing inaccurate information that slanders or libels a person or organization, publishing material that violates a person's right of privacy, falsely arresting, detaining or imprisoning someone, maliciously prosecuting someone or wrongfully evicting someone.
Products and Completed Operations
A policy may provide coverage for your company's completed products or services. If an injury occurs due to the use of your products or services provided, the policy would pay for the resulting damages and any legal expenses up to the policy limits.
Property Damage Liability Insurance
In the event your business causes damage to, or causes the loss of use of someone else's property, property damage coverage may pay for the value of the physical damage to the property; or the loss of use of that property.
Property Insurance: Business Property Insurance
Property insurance covers the buildings that you own and/or business property against physical loss or damage. If you don't own your building, you'll still need contents coverage. Property insurance for Laundromat contents includes washers, dryers, folding tables, seating, fixtures, phone equipment and supplies stored at your site. You may insure those items for replacement cost or for actual cash value.
Real Property Liability Insurance
See Property Damage Liability Insurance.
Replacement Cost Insurance
This coverage allows an insurance company to replace with like kind, new or make a cash payment to the insured. Generally the insurance company will condition any payment on your ability to rebuild your Laundromat in the event of a total loss. This can become a problem if you do not own the building. There are downsides to this type of policy to Laundromat owners who lease their space. This coverage also requires that the Laundromat owner carries insurance in an amount equal (or co-insurance limits) to the value of the Laundromat. You must insure for the full value of a new store to avoid co-insurance provisions of most insurance policies. Depreciation of the equipment cannot be considered in determining the proper amount of insurance required to comply with the co-insurance clause.
Special Forms Endorsement
All perils of General Form and Optional Perils plus all unnamed perils, except for these exclusions: volcano, atomic war, and earthquakes. This is seldom purchased by Laundromat owners.
Sprinkler Leakage Endorsement
Purchased by those who have a fire suppression sprinkler system in their Laundromat. Protects against claims for damage from sprinklers. Usually only the newer buildings have sprinklers.
Tenant Legal Liability
It provides coverage for damage done to a building due to your business operations, (your water heater burns wall or roof.) The money is payable to the landlord to repair damages done to their building. This coverage is only if you are the tenant (not owner) of the Laundromat.
Valuable Papers Coverage
An "all risk" insurance coverage that covers the cost of research to reconstruct damaged records, as well as the cost of new paper and transcription. The term "valuable papers" refers to written, printed, or otherwise inscribed documents and records, including books, maps, films, drawings, abstracts, deeds, mortgages, and manuscripts. Usually not needed for most Laundromat operations.