Car wash insurance: protect your equipment, staff and profits
Car wash operators know that insurance for their operations is as critical as the equipment and staff needed to operate successfully. While owners and operators will spend a significant amount of time researching equipment, technologies and chemicals, as well as interviewing persons to fill key roles, insurance is sometimes not given the same attention.
Rob de Pruis, national director, consumer and industry relations with the Insurance Bureau of Canada (IBC), says while insurance is sometimes treated as an afterthought—not hard to understand as so much work has to be devoted to starting and then growing the business—finding out what insurance is needed is not something that should feel or is overwhelming.
He added that the first step is a simple one: conducting an in-depth risk assessment of the car wash operation.
During a recent presentation to members of the Canadian Carwash Association, Ward Henderson, a manager with the Calgary-based Wawanesa Mutual Insurance Company, said a typical risk assessment for a car wash operation will help the operator identify, evaluate and then mitigate potential hazards that can impact employees, customers and will include the car wash operation’s equipment and the physical premises and surroundings.
That can include specific risks such as slip and fall hazards both inside the car wash and outside, exposure to chemicals, soaps and other products used by the car wash, the physical equipment and the potential for injury to persons working at the car wash and even vehicle damage and collision risks.
Henderson said with today’s complex systems and wireless and Internet interconnectivity, cyber risks also need to be looked at as part of a risk assessment; and theft if the car wash is using coin collection for payment or even tap payment systems.
IBC’s de Pruis said when putting together a risk assessment, it is best to do this in partnership with an insurance provider, as many owners and operators have enough on their plates operating the business to do the risk assessment on their own and do so in a systematic way so as to capture all the risk possibilities.
“As a business owner, you are typically wearing many different hats,” he explained. “You might be the accountant one day and the next sweeping the floors and now you are asking to be the risk manager and insurance expert. But on the insurance side, that is where you need an insurance professional that understands your business and they will help you identify risk, potential losses that could threaten your business and then help you focus on the coverage needed.”
When it comes to risk, Wawanesa’s Henderson said car wash owners and operators need to first understand the difference between a risk and a hazard and the difference between risk management and risk.
In insurance, a risk is defined as a situation that has a potential for loss or damage. A hazard is a specific condition or factor that increases the likelihood of that loss occurring. At the more concrete level, a risk includes such events as an injury occurring on the property, damage to a property or even a legal liability all of which can create a potential for a monetary loss to a business. A hazard is a situation that elevates a risk occurring.
Henderson further broke down hazards likely to be in a car wash operation to include wet floors which creates slip and fall risks caused by, say, wet surfaces, poor drainage and even improper footwear used by staff; electrical equipment that has the potential for a shock risk; chemical exposure and issues around the storage and handling of car wash chemicals; mechanical components; and fire hazards that can come from electrical equipment and heating and process equipment.
“Risk management starts with looking for those hazards and risks,” Henderson said. “Risk mitigation starts by identifying risk and hazards that are inherent and exist within any business and its operations and then implementing proactive measures to reduce the likelihood or the severity of those risks. . . [and] ways to eliminate hazards or an activity that could put the operation at risk and knowing what the risks are and being prepared to manage the consequences.”
Focusing for the moment on wet floors, managing and mitigating the hazards from wet floors may include: anti-slip floor coverings and finishes; proper draining so as to lessen or even prevent pooling of water; regular daily inspections and cleaning of floors to clear out water; mandating all employees wear proper footwear to prevent or lessen the chances of slipping; and adding warning signs that are clearly visible warning of slip and fall hazards.
For electrical equipment, Henderson added mitigating hazards and risks would involve ensuring all such equipment is properly installed and regularly inspected, including all switches and fixtures, especially those in wet areas; and mechanical rooms are designed for a car wash to make sure equipment inside is secure, protected from water and other hazards and staff is protected when inside the rooms.
Storage rooms will need to be inspected to ensure proper security, that chemicals, solvents and other materials are properly stored, clearly marked and secured and nothing is obstructing doorways; and no materials are left out that could potentially cause an injury to staff, from inadvertent exposure to a chemical to anything that could potentially result in tripping or falling.
Protecting your physical premises, staff and customers
IBC’s de Pruis added once risks and hazards are noted and covered, insurance will also be needed for the physical premises of the car wash, its equipment and staff and customers. The kind of insurance needed will first depend on the kind of car wash being operated, from a tunnel wash system, in-bay automatic car wash operations, self-service car washes to full-service car wash operations.
This may include commercial property insurance that protects the physical aspects of the car wash, such as the building and equipment inside; general liability coverage, covering such things as lawsuits and claims made for injuries or damage to a vehicle; theft insurance; and insurance to cover equipment breakdowns that is separate from the car wash’s property insurance.
De Pruis said one critical piece of insurance sometimes overlooked is business interruption insurance.
“In the unfortunate event that something happens to your business and you have to shut down, you need business interruption insurance to cover your lost income and your ongoing expenses during that time,” he emphasized. “Finally, a major consideration is pollution liability or environmental cleanup coverage. A car wash involves a lot of wastewaters, a lot of chemicals, soaps and cleaners. If your business causes some type of pollution, it may have to pay for things like soil remediation or if your wastewater or contaminants seep into the ground or waterways.”
Once deciding upon the insurance coverages needed, de Pruis strongly recommended the car wash owner or operator do a yearly review of the coverage with the insurance provider: “Even if your operations haven’t changed, the insurance industry is evolving, developing new and innovative products and there are more insurance options available today than ever before. Some of those new products and coverage can be helpful for your business, so doing an annual review of your insurance will allow your insurance representative to suggest new options and new offerings and new ways to identify and then reduce or eliminate risk.”
- ASK THE EXPERT
Insurance 101 with Tony Ferro, vice-president of commercial lines at Youngs Insurance Brokers
What kind of insurance is needed by a car wash operator to cover damage to customer vehicles during the wash?
Ferro: A car wash operator needs a garage policy as part of a broader business insurance package. The garage policy is the piece that covers physical damage to a customer's vehicle while it's in the operator's care, custody and control during the wash. That principle is why this coverage matters no matter how you run the operation— automatic, full-service, tunnel or self-service.
In all of them, you're taking temporary control of a vehicle that belongs to someone else, so if it's damaged on your watch, you can be held responsible. The package also protects the operator's own property alongside that liability.
How do you help a car wash put together the proper coverage for their equipment, especially to consider situations where there may be mechanical, electrical and electronic failures? Should such coverage include business interruption coverage as well, to account for any equipment breakdowns that may temporarily shut down the car wash?
Ferro: Putting together the right coverage starts with a comprehensive insurance package because a car wash faces many different exposures at once. At Youngs Insurance Brokers, we've built a program specifically for car wash operators that covers the broad range of things that can go wrong.
It protects the operator's building, equipment and stock and it's written on a Broad Form basis with Replacement Cost on damaged property. To the heart of your question—yes, the program covers the breakdown of mechanical, electrical and electronic systems, which is exactly the kind of failure that can take a wash offline. And because that downtime costs money, it also includes Business Interruption, so the operator is indemnified for lost income while the damaged property is being repaired or replaced after an insurable incident.
Beyond equipment, the program protects against loss of money from a range of criminal acts—employee dishonesty, theft, robbery, forgery and fraud, including cyber-attacks. And last but most important, it includes Commercial General Liability to cover third-party bodily injury and property damage claims.
With changing municipal and provincial rules around protections for watersheds and wastewater, do car wash operators need to consider insurance for water reclamation and recovery, or even remediation of the property the car wash operates on?
Ferro: Yes, this is an area car wash operators should pay close attention to. Operators should always be prudent about finding ways to recycle and reuse water in line with the municipal and provincial laws protecting our watersheds. But beyond compliance, there's a real risk exposure here: if contaminants or pollutants are accidentally discharged and cause environmental damage, property loss, or third-party bodily injury, that's a serious liability. To manage that risk, we can offer a Pollution Liability policy designed to respond to exactly these situations.
How can an insurance provider help a car wash conduct a proper risk management assessment of their operations and why is it important that a car wash operator does such an assessment?
Ferro: At Youngs Insurance Brokers, we've partnered with Wawanesa Insurance, who offers professional Risk Management Services to their clients. Through that partnership, we help operators identify, assess and prioritize potential hazards before they turn into losses—and educating clients on that process is essential. The reason it matters is simple: claims aren't good for anyone. Making every effort to prevent a claim from happening in the first place protects the business from financial loss, legal issues and operational disruptions—and it protects the operator's reputation, too. A proper risk assessment is what gets you ahead of those problems instead of reacting to them after the fact.
How often should a car wash operator review their coverage and why is it important to do regular reviews?
Ferro: A car wash operator should review their coverage at least once a year, any time there's a change in their operation and any time there's a regulatory change that could affect their coverage—like the Ontario accident benefit changes taking effect July 1st. Operators must understand that any change in operation or any change to the coverages or limits on a policy needs to be reported to their broker right away. The insurance company has to be aware of every change made to the policy, because in the event of a loss, that's what ensures the proper coverages and limits are in place to indemnify the insured. Put simply, a policy only protects you accurately if it reflects what your business actually looks like today—so regular reviews keep your coverage matched to your operation.
This article was originally published in the September/October 2026 issue of CSNC