Insurance for Dry Cleaners

Dry cleaning operations use chemical applications instead of water to clean apparel for their customers. Items to be cleaned include special fabrics that may be damaged by water, leather goods and furs. Services may be provided to the general public or may be limited to commercial or institutional customers.

Depending on the type of customer and services offered, the operations may include pick-up of soiled material (either from customers’ premises or from owned drop-off stations), sorting, spot-cleaning (pretreatment for stains), laundering or dry cleaning, pressing and, finally, delivery or return of the material to the customer. Special coatings, such as stain-proofing or water-proofing, may be applied during the cleaning process. Incidental repair work, such as sewing on buttons, or other minor repair, may also be performed.

Recommended Insurance Programs for Dry Cleaning Businesses

Minimum recommended coverage:

• General Liability
• Bailees Customer Floater
• Business Personal Property
• Hired and Non-Owned Auto (full commercial auto if vehicles owned)
• Employee Dishonesty Bond
• Environmental Impairment Liability
• Workers Compensation

Other coverages to consider for Dry Cleaners:
Business Income with Extra Expense, Equipment Breakdown Coverage, Money and Securities, Accounts Receivable, Building, Computers, Employment-Related Practices Liability, Stop Gap Liability and Umbrella.

Common Risks and Needs Associated with Dry Cleaners

GL Insurance
Premises liability exposure is very limited at plants and stores due to lack of public access. Any receiving areas should be in good condition and free from any tripping hazards. High concentrations of chemicals used in the cleaning process may be corrosive and/or toxic. Fumes, spills or leaks may result in bodily injury or property damage to neighboring premises.

Off-site exposures are significant as drivers interact with customers in the pick-up and delivery of curtains and draperies. Personal injury exposures include invasion of privacy and even assault to the customers. Failure of the cleaning service to run background checks and review references on employees both increases the hazard and reduces available defenses.

Completed operations liability exposure is low to moderate. The primary concern is items being damaged during the cleaning process, with frequency being a greater concern than severity. Vapors and odors can cause skin, eye or lung irritants if chemicals are not properly removed from the item cleaned.

Environmental liability Insurance
Environmental impairment liability exposure is high from the use and application of chemicals and detergents. Vapors, fumes and air pollutants as well as waste water and disposal of dry cleaning chemicals are concerns that must be evaluated and controlled. Soil around the premises may be contaminated by disposal of chemicals used in the past. Disposal of perchloroethylene must adhere to EPA standards. This chemical is expensive, but may be reclaimed and reused.

Property Insurance
Property exposures generally include a small office, drop-off or and pick-up store front, dry cleaning facilities and perhaps a warehouse for storage. Ignition sources include electrical wiring, dry cleaning equipment and water heaters. Flammables include the textiles or other fabrics to be cleaned, scrap materials and chemicals used in dry cleaning. At one time, the chemicals used were highly flammable, but most dry cleaners now use alternative chemical applications with less exposure to fire or explosion. One chemical is generally used to clean and another to “spot.” Those spot cleaners tend to be the most flammable. Hazards increase without use of proper storage and handling methods.
Fire and explosion hazards may be severe unless there are dust collection systems and procedures for regular removal and disposal of scraps. Poor housekeeping is a serious fire hazard. Sprinkler systems are advised.

Commercial Auto
Automobile exposure may be high if a pick-up and delivery service is provided. Deadlines placed on drivers increase the hazard. Drivers’ ages, training, experience and records, as well as age, condition and maintenance of the vehicles, are all important factors to consider. MVRs should be checked regularly for all drivers.

Commercial Crime Policy
Crime exposure includes both employee dishonesty and theft of money and securities, particularly if there are numerous cash transactions, such as at drop-off points or collections by route drivers. Lack of control over pre-employment background screening, separation of duties and reviews of procedures used at customers’ premises increases the exposure. All retail operations should have in place a monitoring and verification system to reconcile bills and receipts with services rendered. Hold-up potential is high, especially in retail operations. Frequent deposits should be made, especially on high volume days.

Inland Marine Coverage (bailees coverage)
Inland marine exposure includes accounts receivable, bailees customers and valuable papers/records. The bailees customers’ exposure starts when the property is entrusted to a dry cleaner’s employee and ends when the property is returned to the customer. The primary perils are fire, theft, collision, overturn and water damage. Hazards increase in the absence of adequate procedures, such as tagging or marking, record keeping or other procedures, to account for and keep track of the goods of others.

Workers compensation
Workers compensation exposures can be high due to the dry cleaning chemicals used. These can cause skin and eye irritations, as well as serious respiratory problems. Many dry cleaning agents pose a long-term threat from cumulative exposure. Slips and falls can occur during cleaning at the dry cleaning facility, or at customers’ premises. Lifting and material handling are common hazards, especially for employees engaged in pick-up or delivery. Repetitive motion injuries can be a concern. Workstations should be ergonomically designed. Pets owned by customers may attack or bite workers.

Equipment Breakdown
Equipment breakdown exposures include breakdown losses to the dust collection and ventilation systems, laundering and dry cleaning equipment, electrical control panels and other apparatus. Breakdown and loss of use to the water heaters, dry cleaning and pressing machinery could result in significant loss, both direct and under time element.

Liability Insurance Quotes for Dry Cleaning

General Liability Shop.com offers affordable liability insurance quotes for Dry Cleaners throughout the U.S. Our Dry Cleaning programs include all lines of business insurance, as well as our Target programs for business owners policies (BOPs). Contact one of our business insurance Specialists today at 800-900-8657, or start a quote online now.

Dry Cleaners Liability Classification Codes

Commercial insurance companies use various liability classification systems in order to classify and rate coverage premiums for Dry Cleaning. Here are the most common business insurance classifications for businesses that perform dry cleaning services:

Business Liability Category: Service Business

SIC Business Insurance Codes:

• 7216: Dry Cleaning facilities—Except Rugs
• 7216: Dry Cleaning and Laundry—Coin Operated

NAICS Liability Classifications:

• 812320: Dry Cleaning and Laundry Services (not coin operated)
• 812310: Coin Operated Dry Cleaning and Laundry Store

Business ISO General Liability:

• 14732: Dry Cleaners and Laundry Stores Front (receiving station)
• 14733: Dry Cleaners and Laundry Store
• 45678: Dry Cleaning and Laundry Plants

Common Workers Compensation Class Codes:

• 2586: Dry Cleaning Plant—All Employees
• 2589: Dry Cleaning or Laundry—Retail Store and Drivers
• 2590: New York—Dry Cleaning or Laundry Store
• 8017: Retail Store (Pick-up and Drop-off only)