Here's the thing about insuring your dry cleaning business: you can't just pick one policy and call it a day. Between customer garments, expensive equipment, and liability risks, you need multiple types of coverage. The big question is whether you should bundle everything into a Business Owner's Policy (BOP) or buy each policy separately. Let's break down which approach saves you money and actually protects your business.
Most dry cleaners start with a BOP because it's simpler and cheaper. But as your business grows—more locations, more revenue, more risks—you might outgrow that one-size-fits-all approach. Here's how to know which path makes sense for your operation right now.
What's Actually in a BOP for Dry Cleaners?
A Business Owner's Policy packages three core coverages into one policy: general liability insurance, commercial property insurance, and business interruption coverage. Think of it as the insurance industry's version of a combo meal—everything you need in one bundle, usually at a discount.
General liability covers you if a customer slips on your wet floor and breaks their ankle, or if you accidentally damage someone's property while delivering cleaned garments. Commercial property insurance protects your building, equipment (those industrial washers and pressing machines aren't cheap), and your inventory. Business interruption kicks in if a fire or other covered disaster shuts you down temporarily—it covers lost income and ongoing expenses while you rebuild or relocate.
For dry cleaners in 2025-2026, a standard BOP typically costs between $925 and $2,000 per year for a small retail location. That's significantly less than buying general liability ($500-$1,000) and property coverage (another $500-$1,000) separately. You're looking at 15-20% savings on average by bundling.
When a BOP Makes Perfect Sense
Most dry cleaners are ideal candidates for a BOP. If you operate a single storefront, have fewer than 100 employees, and bring in less than $5 million annually, you'll almost certainly qualify. Insurers see dry cleaning operations as low- to moderate-risk businesses, which is exactly what BOPs are designed for.
The beauty of a BOP for smaller operations is simplicity. One policy, one renewal date, one set of paperwork. You're not juggling multiple policies from different carriers or trying to coordinate coverage limits across separate policies. And because it's a package deal, you typically get broader coverage than you'd expect—things like outdoor signs, newly acquired property, and personal property of others (important for customer garments) are often automatically included.
Very small operations—fewer than four employees—might even qualify for a micro-BOP, which is an even more streamlined and affordable version designed specifically for the tiniest businesses. If you're a mom-and-pop shop just getting started, this could be your most cost-effective entry point.
When Standalone Policies Make More Sense
Here's where things get interesting. As your dry cleaning business grows, a BOP might start feeling like a straightjacket. Standard BOP coverage limits—typically $1 million per occurrence and $2 million aggregate for liability—might not cut it anymore. If you're operating multiple locations, handling high-end designer garments, or dealing with commercial clients (hotels, restaurants, hospitals), you probably need higher limits and more specialized coverage.
Standalone policies shine when you need customization. Maybe you need $5 million in general liability coverage because your commercial lease requires it. Or perhaps you need specialized equipment breakdown coverage for your $100,000 dry cleaning machinery that goes beyond what a standard BOP offers. Standalone policies let you dial in exactly what you need without paying for coverage you don't use.
Some risk exposures simply don't fit well into a BOP structure. If you still use perchloroethylene (PCE) solvents—and note that as of June 2025, new machines using PCE are prohibited—you absolutely need environmental liability insurance. That's specialty coverage you'll need to buy separately. Same goes if you offer pickup and delivery services; you'll need commercial auto insurance, which isn't included in a BOP.
The Coverage Gaps You Can't Ignore
Whether you choose a BOP or standalone policies, there are two critical add-ons every dry cleaner needs: Bailee's coverage and workers' compensation. These aren't included in a standard BOP, and they're non-negotiable.
Bailee's coverage protects customer property while it's in your care. If a fire destroys $50,000 worth of customer garments, or your employee accidentally ruins a $2,000 wedding dress, Bailee's coverage handles those claims. This is an add-on to your commercial property policy, whether that's part of a BOP or standalone. Don't skip it—the financial risk of damaged customer property is real and can sink your business.
Workers' compensation is legally required in most states as soon as you hire employees. For laundromat and dry cleaning businesses, expect to pay around $1,718 annually or about $143 per month. This covers medical expenses and lost wages if an employee gets injured on the job—burned by steam presses, hurt moving heavy equipment, or exposed to chemicals.
The Real Cost Comparison
Let's talk actual dollars. For a typical single-location dry cleaner with standard risks, here's roughly what you're looking at in 2025-2026:
BOP route: $925-$2,000 per year for bundled general liability, property, and business interruption. Add Bailee's coverage (varies by inventory value, but often $300-$600), workers' comp ($1,718), and possibly commercial auto ($1,200-$2,400). Total program: roughly $4,000-$6,000 annually.
Standalone route: General liability alone ($500-$1,000), commercial property ($500-$1,000), business interruption ($400-$800), Bailee's ($300-$600), workers' comp ($1,718), commercial auto ($1,200-$2,400). Total: roughly $4,600-$7,500 annually.
The BOP wins on cost for smaller operations. But remember—those standalone numbers assume basic coverage limits. If you need higher limits or specialized endorsements, standalone policies let you scale up individual coverages without overpaying for the whole package.
How to Know When to Switch
You'll know it's time to transition from a BOP to standalone policies when any of these things happen: your annual revenue crosses $5 million, you open a second or third location, your landlord requires liability limits above what a standard BOP offers, you start handling extremely high-value items regularly, or you expand into higher-risk services like leather restoration or wedding gown preservation.
Another sign: you're constantly adding endorsements to your BOP to cover specific risks. At some point, you're essentially building a custom insurance program on top of a standard package policy. That's when breaking into separate policies makes more sense—you get cleaner coverage with fewer gaps and potential overlap issues.
Getting Started: Next Steps
Start by getting quotes for both approaches from an independent insurance agent who specializes in commercial coverage. Don't just compare the bottom-line price—look at coverage limits, deductibles, and what's actually included. Make sure any quote includes Bailee's coverage, because that's essential for dry cleaners.
Ask about your specific risk factors. Are you using PCE solvents? You need environmental coverage. Doing pickup and delivery? Commercial auto is mandatory. Handling high-end designer pieces or vintage garments? You might need higher Bailee's limits. The right insurance structure depends entirely on your unique operation, not some generic formula.
Most dry cleaners find that a BOP is the smart starting point—affordable, comprehensive, and simple to manage. As you grow and your risks evolve, you can always transition to standalone policies that give you more control and higher limits. The key is reviewing your coverage annually and adjusting as your business changes. Your insurance should grow with you, not hold you back.
