Car Wash and Auto Detailing Business insurance – cost and coverage

Car wash and auto detailing is a great start-up idea because it involves minimal cash outlay to get started.

Still, you shouldn’t ignore the fact that you need insurance from the very beginning like any business, big or small, because you have taken on responsibility for other people’s assets by law.

Any unforeseen events could cost you a great deal of money.

Do you think insurance is an unnecessary cost for a new business?

If this is how you are planning to operate, let the following story illustrate just how important having the right insurance can be not just to your business plans, but to your whole life.

Eddy G. was a trained auto assembly worker who decided to take the plunge and start doing auto detailing from his home, working nights and weekends.

Figuring that insurance would be something he only needed when he registered as a full-time business, and wanting to keep his running costs to a minimum, he didn’t take out any kind of insurance.

One evening, a fresh customer drove up in his new fully electric vehicle, the kind that was igniting so much excitement and attention.

Unfortunately, excitement wasn’t the only thing the car ignited.

Overnight the batteries in the electric vehicle exploded (a known default in the earlier versions).

With all the paints, chemicals and waxes stored in the workshop, the whole building was quickly ablaze, eventually burning down half of the residence as well.

In the investigations that followed, the insurance company asked Eddy why he had parked someone else’s vehicle in his carport.

When it became clear that Eddy was running some kind of business from his home, the claims assessor drew a red line through the claim.

Now Eddy was responsible for all the costs of repairs.

Following on from that, the mortgage bank called on Eddy to either re-insure the home properly, or it would recall the loan.

What’s more, no insurance company would write a policy until the house had been properly rebuilt.

So here’s how not taking out insurance that would have cost him a few hundred dollars turned out for Eddy.

He had to find several thousand dollars to fix his home, and until that happened, he was in danger of having to repay his mortgage of several hundred thousand dollars – or else! 

The bottom line lesson to learn is that anyone running a business, big or small, should take out insurance as a first step, and not leave himself or herself vulnerable the way Eddy did.

What is the difference between car washing and auto detailing?

Broadly, the main difference between the two occupations starts to show up when your business gets big.

Both car washing and auto detailing can start up as backyard operations or home visits where you can carry everything you need in the back of your own car or a light van.

However, a full-blown car wash business needs very special equipment and a fixed location where the customers know they can find you.

Auto detailing is much more mobile, and even the most established enterprises are less capital-intensive than car washes.

However, the overlap in customer demand is substantial.

Many car wash businesses offer auto-detailing as a service either with their own equipment and personnel, or with the services of independent auto-detailing specialists.

When we talk about insurance in this article, we will try to highlight where the arrangements between two parties in such a contractual situation can impact your insurance requirements.

How do you get started in the auto detailing and light car washing business?

Professional auto detailing is a great way to start your own business, because you only have to commit a small amount of cash upfront.

With low start-up costs and overheads, you might want to look at mobile car washing as well, where simply committing your time and effort, plus a sponge, an old rag, and a bucket with some liquid soap you can start to generate some revenue.

To get any professional auto detailing businesses off the starting blocks, you should consider this list of all equipment and tools that may be required:

• cleaning products
• car detailing kit
• air compressors
• professional detailing steam cleaner 
• brushes and sponges to clean, scrub, wash, dry, and polish the interior as well as the exterior of vehicles
• quality buckets
• high-pressure water hoses
• a heavy-duty pressure washer
• wet and dry mobile vacuums
• orbital polishers
• rotary buffers

Liability insurance

What liability does a car wash or auto detailing business have?

General Liability Insurance

Like any business that is dealing with your customer’s assets, you are taking on a degree of liability for proper care and attention.

General liability insurance is a must-have type of insurance coverage for anyone involved in business operations that provide specialized labor and material services to their customers, such as:

• Handymen
• Roofing contractors
• Solar panel installers
• General contractors
• Fencing contractors
• Plumbers
• Glaziers
• Carpenters

There is a legal duty that you will conduct your work in a manner that doesn’t endanger people in the immediate work area and protect the property itself against damages resulting from your work.

There is a significant risk of liability in any business activity in case of injury or damage to third parties themselves or to their property.

Therefore businesses of all sizes need some form of general liability insurance.

In car wash and auto detailing activities, your liability for damage to customers’ property is substantial, because they are entrusting you with their vehicles worth many thousands, and maybe hundreds of thousands of dollars.

A few of the particular aspects of your business that you need to consider are:

• free car wash – even if you are offering a car wash at no cost – maybe as a marketing ploy, or in a deal with a gas station in return for future favors at that location, the fact that you aren’t receiving any payment from customers doesn’t remove your liability in case of accident or damage
• self service car wash – if you are operating a 24 hour self-service car wash facility, then people that are on your property represent a risk. Say, for example, a passenger exits the vehicle to buy something from a vending machine, and trips over one of the heavy water hoses. If they claim you didn’t have adequate lighting or warning signs, you could be sued for physical injuries, emotional damage, loss of earnings as well as all the associated legal expenses.

General liability insurance safeguards you personally and is the most fundamental and necessary type of cover for any business that deals in any way with the public.

Whether your customers are coming to you, or you are going to them, in the event of a lawsuit, general liability commercial insurance will cover most if not all costs relating to it.

Apart from legal costs, general liability insurance also covers potential medical costs in the event of physical injury to a third party.

Some policies can also cover advertising damage to third parties.

The cost of general liability insurance for an established car wash or auto detailing business is anywhere between $450 to $650 per year, depending on the level of cover you have chosen.

Professional Liability insurance

You should get protection if customers allege acts involving negligence, errors, or omissions.

If the matter turns into a lawsuit, then one of the major benefits of this insurance kicks in.

Regardless of the likely outcome, the insurance company is obliged to take over all legal aspects of the case, engaging lawyers and fighting it through to conclusion.

So you are protected if someone is suing you without merit or maliciously, in the expectation that you wouldn’t be able to defend yourself in a long court case.

You need Professional Indemnity insurance because your business offers the following:

• A professional service
• Professional advice to clients
• Contractual services.

Most small businesses take out cover of around $25,000 against a single claim, and the cost of personal indemnity insurance for you would be around $45 per month.

Commercial insurance

Commercial cover of real estate and equipment is a major, and perhaps even the most important, aspect of commercial insurance.

Basically, it pays for losses and damages incurred to your business property, whether leased or owned, and any installed equipment.

Commercial Property insurance

Established car wash businesses need insurance to cover their land, buildings, and equipment.

Commercial property insurance covers damage to the buildings from fire, storm, vandalism, and other such events.

Also, you are protected against any damage caused by natural disasters, earthquakes, floods, or accidentally because of the actions of one of your employees.

Equipment insurance

Equipment insurance provides protection for all of the tools, equipment, and devices you own for use in the business.

This includes equipment that is located onsite if you have permanent premises, even when it’s not being used, when it’s in transit between your premises or home and a customer, overnight if stored at a customer, and when it’s actually in use on a job.

Cover includes loss, theft, and vandalism, but not breakdown.

For that, you need a separate Equipment Breakdown cover.

Equipment Breakdown insurance

Equipment breakdown insurance typically covers your mechanical and electrical equipment, such as: 

• motors, compressors, generators and pumps
• computers and communication systems, phone, security and fire alarm systems
• pressure equipment.

Equipment breakdown insurance helps insure you by covering the cost to repair or replace damaged equipment.

It includes time and labor, lost revenue while the equipment is out of action or being repaired and expenses related to the repairs.

For example, suppose a fire in your work area has caused damage to the equipment or any other items.

In that case, the insurance will cover the replacement costs and reimburse you for associated costs and lost profits.

FAQ

Do you plan on offering mobile car service, or are you going to work from a fixed location?

This makes a big difference to your insurance needs.

If it’s from your driveway or backyard, remember that your homeowner’s insurance will not include cover for onsite business activity.

Any damage to your own property, like a fire or building damage, will be excluded from your home insurance if a customer comes onsite drives into a wall.

If you are going to work from your own shop front, you need to take out specific commercial property insurance.

A mobile auto detailing business insurance costs less than if you are operating from a fixed location, since you will not need commercial property insurance.

But, please read the next section about insuring your vehicle against business-related risks.

Commercial Vehicle insurance

If you are offering a mobile service, you will also probably use a vehicle to get to and from customers.

You perhaps will use your own vehicle initially, but you must beware of the possibility that your personal car insurance doesn’t cover the loss of contents and damage if the vehicle is used for business purposes.

Most policies for car insurance do not cover the theft and damage to private vehicles used for business purposes.

Also, suppose you are involved in an accident travelling to or from work.

In that case, your private insurance company may reject the claim, leaving you open to pay for your own repairs as well as for any other claims from the other party.

This is another big reason you definitely need commercial vehicle insurance for yourself.

In case of any accident, the vehicle itself, the content and any legal bills, medical expenses, and property damage is covered if the company’s vehicle is involved in an accident.

Auto Detailing insurance cost

How much is auto detailing insurance?

To find out what is the best mobile auto detailing insurance deal in your city, contact reliable insurance brokers and agents, talk to other people who are working around you in similar fields, like auto repairs, tyre replacement shops and so on.

Also, the internet is there to guide you to the insurance companies who are offering policies in your field. 

What is the average car wash insurance cost?

Some companies offer a car wash insurance program, giving both liability and commercial property cover in a single car wash insurance policy.

Often, this goes under the name Business Owner Policy (BOP).

BOP insurance costs around $100 per month if you are including commercial property worth less than $1 million.

If your property is worth more than that, you should negotiate the right package with a qualified broker or agent.

Do you need insurance to detail cars?

Anyone doing work in exchange for payment needs insurance to be protected against claims for injury or damage.

Without professional liability insurance, you are personally liable for anything that happens while the car is under your care.

As well, accidents that injure people on your premises, or even in any place where you are working, can be judged to be your fault and courts can award unlimited damages that you personally have to pay unless you have general liability cover.

Does insurance cover car wash damage?

The only insurance that would cover you for damage to a customer’s vehicle is Professional Liability insurance, which we detailed above.