NEW YORK, July 2, 2007 - The outcome of a ruling last week that favored a dry cleaner who was sued for $54 million over a missing pair of pants reinforces the notion that no business can afford to be unprepared for a lawsuit, according to the Insurance Information Institute (I.I.I.).
"Liability insurance protects your assets when your business is sued for something the business did (or failed to do) that contributed to injury or property damage to someone else," said Loretta Worters, vice president of the I.I.I. "Liability coverage extends not only to paying damages, but also to the attorney fees and other costs involved in defending against the lawsuit, whether valid or not."
With approximately 30,000 dry cleaners in the United States, dry cleaning is one of the largest industry sectors still recognized as a "Mom and Pop" business, according to the International Fabric Care Institute (IFI), an association for professional dry cleaners. These commercial dry cleaners, which remain a single facility, family-owned operation, can be exposed to a myriad of liabilities.
The standard business owners policy provides liability coverage, as does a separate policy known as a commercial general liability (CGL) insurance policy. Generally, commercial liability insurance, whether purchased in a separate policy or as part of a standard business owners policy, will cover bodily injury, property damage, personal injury or advertising injury. The medical expenses of a person or persons (other than employees) injured at the business or as a direct result of the operations of the business are also covered.
In the case of the Chungs, who were the proprietors of the dry cleaning establishment that was sued, the enormous financial and emotional toll could have been lessened had they purchased unexplained disappearance insurance, which provides coverage for items which may be lost during business operations.
Owners of dry cleaners have special liability needs that are not met in the standard business owners policy, according to the I.I.I. Coverages available for dry cleaners can also include:
Owners of dry cleaning establishments should check with an insurance agent or company representative who specializes in this type of insurance to ensure they have the right type and amount of coverage.
For more information on business insurance, go to the I.I.I.'s Insuring Your Small Business site.
Download the associated I.I.I. audio file.
The I.I.I. is a nonprofit, communications organization supported by the insurance industry.