Your Basic Insurance Primer

Courtesy of the Coin Laundry News

In the history of human kind the idea of being insured is a fairly recent development. A few hundred years at most. At first it was neighbor helping neighbor after a fire occurred. A barn or house burned down and the nearby folks gathered to help build it back. If we had remained in a rural -society, that’s how it would probably still be today, but as humans gathered in cities and towns, that format didn’t work anymore.

Property owners in towns and cities organized fire fighting companies to protect a part of town that included their own property. These companies were manned, usually not by the actual owners, but rather by servants and employees. It was just their extra duty.

It is approximately here that what we now call insurance began to evolve. First they sold policies to nearby property owners. They paid so much yearly for fire fighting services. The idea has since grown to cover all parts of the world and everything from human life, health, theft, land titles, etc. In fact people buy policies on almost anything of value on earth. So in the three hundred years or so that there has been insurance, it’s kind of amazing how widespread the idea has already become.

A simple explanation of how the idea of insurance works is a pooling or sharing of risks. Say a thousand building owners want protection from the risk of fire. The average worth of the buildings is $1000. Some are worth more, some are of less value. The average number of fires that occur in similar buildings every year is ten. But to protect the pool they will charge the premium as if there would be twenty fires and they would have to pay off an average of $600 per loss. That means they will need to charge premiums to cover losses of $12,000. In this case each building owner will pay an average of $12 annually.

Let’s say that everything goes as planned and there are only ten fires. This pool has a net gain of six thousand. For the second year they charge everybody the same annual premium. Same results so they now have now doubled that surplus, and it goes on through years three, four and five. You can see how the idea of an insurance company might have gotten started.

An over simplified explanation? Perhaps, but then we who are laundry operators are not rocket scientists.

All we need are the outlines of the program to understand it enough for our purposes. It will be necessary to understand at least that much, because, among the valuable things that insurance companies cover, are coin and card operated laundries, and that’s what we are concerned about.

Here are several simple rules for knowing what the correct coverage for your coin or card -operated laundry should include. Be sure to fully discuss all of these with your insurance agent.

1. Should a major catastrophic event occur, such as a fire, totally wiping the business out, will there be enough cash paid by the coverage to rebuild the business?

2. If there should be an incident where someone is injured while in the laundry, and if you and your business are going to be sued, will there be enough liability protection to keep you and yours from going under?

3. If your place of business is vandalized, will the damaged or ruined equipment be fully covered and paid for?

4. If there is a fire or flood that shuts down a coin laundry, the owner still has to eat and pay the rent even though there is no laundry income. Will those costs be covered adequately?

The goal of everyone who buys a laundry business, or a business of any kind, is to make money. Without proper and adequate insurance, that goal could be at risk. The key is an adequate amount. We have all heard of laundry owners who have not had enough, and they are out of business.

Keeping an insurance policy in force for year after year without adjustments for inflation is a common problem. Operators should buy an adequate amount to cover their initial risk and then adjust the policy every few years. Adjusting for mortgage balance helps keep balances in line too. Having the correct amount of coverage also lets owners sleep better at night.

Date:-
By:-Laundrywizard@aol.com


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	Your Basic Insurance Primer Courtesy of the Coin Laundry News In the history of human kind the idea of being insured is a fairly recent development. A few hundred years at most. At first it was neighbor helping neighbor after a fire occurred. A barn or house burned down and the nearby folks gathered to help build it back. If we had remained in a rural -society, that’s how it would probably still be today, but as humans gathered in cities and towns, that format didn’t work anymore. Property owners in towns and cities organized fire fighting companies to protect a part of town that included their own property. These companies were manned, usually not by the actual owners, but rather by servants and employees. It was just their extra duty. It is approximately here that what we now call insurance began to evolve. First they sold policies to nearby property owners. They paid so much yearly for fire fighting services. The idea has since grown to cover all parts of the world and everything from human life, health, theft, land titles, etc. In fact people buy policies on almost anything of value on earth. So in the three hundred years or so that there has been insurance, it’s kind of amazing how widespread the idea has already become. A simple explanation of how the idea of insurance works is a pooling or sharing of risks. Say a thousand building owners want protection from the risk of fire. The average worth of the buildings is $1000. Some are worth more, some are of less value. The average number of fires that occur in similar buildings every year is ten. But to protect the pool they will charge the premium as if there would be twenty fires and they would have to pay off an average of $600 per loss. That means they will need to charge premiums to cover losses of $12,000. In this case each building owner will pay an average of $12 annually. Let’s say that everything goes as planned and there are only ten fires. This pool has a net gain of six thousand. For the second year they charge everybody the same annual premium. Same results so they now have now doubled that surplus, and it goes on through years three, four and five. You can see how the idea of an insurance company might have gotten started. An over simplified explanation? Perhaps, but then we who are laundry operators are not rocket scientists. All we need are the outlines of the program to understand it enough for our purposes. It will be necessary to understand at least that much, because, among the valuable things that insurance companies cover, are coin and card operated laundries, and that’s what we are concerned about. Here are several simple rules for knowing what the correct coverage for your coin or card -operated laundry should include. Be sure to fully discuss all of these with your insurance agent. 1. Should a major catastrophic event occur, such as a fire, totally wiping the business out, will there be enough cash paid by the coverage to rebuild the business? 2. If there should be an incident where someone is injured while in the laundry, and if you and your business are going to be sued, will there be enough liability protection to keep you and yours from going under? 3. If your place of business is vandalized, will the damaged or ruined equipment be fully covered and paid for? 4. If there is a fire or flood that shuts down a coin laundry, the owner still has to eat and pay the rent even though there is no laundry income. Will those costs be covered adequately? The goal of everyone who buys a laundry business, or a business of any kind, is to make money. Without proper and adequate insurance, that goal could be at risk. The key is an adequate amount. We have all heard of laundry owners who have not had enough, and they are out of business. Keeping an insurance policy in force for year after year without adjustments for inflation is a common problem. Operators should buy an adequate amount to cover their initial risk and then adjust the policy every few years. Adjusting for mortgage balance helps keep balances in line too. Having the correct amount of coverage also lets owners sleep better at night. Date:- By:-Laundrywizard@aol.com