How much does dry cleaner insurance typically cost?

A comprehensive insurance program for a dry cleaning business typically costs $5,000-$7,000 annually, including general liability ($500-$1,000), property insurance (roughly double the GL cost), workers' compensation ($1,700 average), and bailee's coverage. Your actual cost depends on factors like location, revenue, number of employees, equipment value, and claims history. Many dry cleaners save money by purchasing a Business Owner's Policy (BOP) that bundles multiple coverages at a discount.

What is bailee's coverage and why do dry cleaners need it?

Bailee's coverage protects customer property while it's in your possession—the clothing hanging in your shop waiting to be cleaned or picked up. If a fire, flood, or theft destroys customer garments, bailee's insurance pays to replace them. Without this coverage, you're personally liable for every item lost or damaged, which could easily reach six figures if your shop holds hundreds of garments. It's essentially the most important coverage that separates dry cleaners from other retail businesses.

Do I need workers' compensation if I only have one or two employees?

Yes, in almost every state, workers' compensation insurance is legally required as soon as you hire your first employee, regardless of whether it's one person or twenty. Operating without required workers' comp can result in massive fines, criminal penalties, and personal liability if an employee gets injured. Even if your state doesn't require it for very small businesses, it's still smart protection—a single workplace injury could cost you tens of thousands in medical bills and lost wages without coverage.

Is environmental liability coverage really necessary for my dry cleaning business?

If you use perchloroethylene (PCE) or other potentially hazardous chemicals, environmental liability coverage has become essential rather than optional. EPA regulations banned PCE in new machines as of June 2025, and cleanup costs from chemical spills or contamination can easily exceed $100,000. Even if you've switched to greener alternatives, environmental coverage protects against legacy contamination claims and accidental spills. The relatively low cost of this coverage makes it worthwhile protection against catastrophic environmental cleanup expenses.

What's the difference between a BOP and buying individual policies?

A Business Owner's Policy (BOP) bundles general liability, commercial property, and business interruption coverage into one package, typically at a 15-20% discount compared to purchasing each separately. For dry cleaners, a BOP provides the core coverages you need and simplifies management with one policy and one renewal date. You'll still need to add specialized coverages like bailee's insurance, workers' comp, and commercial auto separately, but the BOP gives you a solid foundation at a lower total cost.

How often should I review my dry cleaner insurance coverage?

Review your insurance annually, ideally 60 days before your renewal date, to ensure your coverage matches your current business situation. You should also update your coverage immediately whenever you experience major changes like hiring employees, purchasing expensive equipment, adding new services, expanding to additional locations, or changing your revenue significantly. Waiting until renewal to report these changes could leave you underinsured when you need coverage most.

Dry Cleaner Insurance Checklist: Essential Coverage Guide

Here's what most dry cleaner owners don't realize until it's too late: your business insurance needs are completely different from a typical retail shop. You're not just running a store—you're handling other people's property worth thousands of dollars, working with potentially hazardous chemicals, and operating heavy machinery that could break down at any moment. One ruined wedding dress or chemical spill could put you out of business without the right coverage.

This checklist breaks down exactly what coverage you need, what's optional but smart to have, and when to add more protection as your business grows. Think of it as your insurance shopping list—designed specifically for the unique risks dry cleaners face every single day.

Essential Coverage: The Non-Negotiables

These four coverage types are the foundation of your dry cleaning insurance program. Skip any of these, and you're exposing yourself to catastrophic financial risk.

General Liability Insurance

This is your primary protection against customer injuries and property damage claims. If someone slips on your freshly mopped floor and breaks their ankle, general liability covers their medical bills and any lawsuit that follows. In 2026, most commercial landlords require at minimum $1 million per occurrence and $2 million aggregate coverage. Expect to pay $40-$85 per month for standard coverage—a small price compared to the $50,000+ a single slip-and-fall lawsuit could cost you.

Bailee's Coverage

Here's the coverage that separates dry cleaners from other businesses: bailee's insurance protects customer property while it's in your care. A fire destroys your shop with 200 garments inside? Bailee's coverage pays to replace every single piece. Without it, you're personally liable for replacing all that clothing out of pocket. This coverage typically costs an additional 10-15% on top of your property insurance but protects against claims that could easily run into six figures.

Workers' Compensation Insurance

If you have even one employee, workers' comp is legally required in almost every state. Your presser burns their hand on a hot iron? Workers' comp covers medical treatment and lost wages while protecting you from a lawsuit. The average dry cleaner pays around $1,700 annually for workers' compensation, though your actual cost depends on your payroll and claims history. Don't try to skip this one—operating without required workers' comp can result in massive fines and even criminal penalties.

Commercial Property Insurance

Your dry cleaning equipment represents a huge investment—industrial washers, pressers, and finishing equipment can cost $100,000 or more. Commercial property insurance covers your building (if you own it), equipment, inventory, furniture, and computers against fire, theft, vandalism, and weather damage. This coverage approximately doubles your general liability cost, but it's the only thing standing between you and complete financial ruin if disaster strikes.

Smart Optional Coverages Worth Considering

These coverages aren't legally required, but they protect against scenarios that could seriously damage your business. Add them based on your specific situation and risk tolerance.

Commercial Auto Insurance

If you offer pickup and delivery services or use a vehicle for business errands, commercial auto coverage is essential. Your personal auto policy won't cover business use—meaning you could be on the hook for the full cost of an accident while making deliveries. This is particularly important if employees drive your vehicle or use their own cars for business purposes.

Business Interruption Insurance

Here's a scenario that keeps dry cleaner owners up at night: your main pressing machine breaks down and it'll take three weeks to get parts. You can't process orders, but rent, payroll, and other bills keep coming. Business interruption insurance replaces lost income and covers ongoing expenses when a covered event forces you to close temporarily. This coverage has saved countless dry cleaning businesses from bankruptcy after fires, equipment failures, or natural disasters.

Environmental Liability Coverage

If you're still using perchloroethylene (PCE) in your cleaning process, environmental liability isn't optional anymore—it's survival insurance. As of June 2025, EPA regulations banned PCE in new machines, and many jurisdictions are accelerating removal from mixed-use buildings. Environmental liability covers cleanup costs, legal fees, and third-party claims if there's a chemical spill or contamination. A single environmental incident can cost $50,000-$500,000+ to remediate, making this coverage critical for any operation using potentially hazardous chemicals.

Professional Liability Insurance

Also called errors and omissions coverage, this protects you when your service causes financial harm. A client's designer suit is ruined by improper chemical treatment? You fail to deliver a tuxedo in time for a wedding? Professional liability covers the financial losses your customer suffered, plus your legal defense costs. If you handle high-end clothing or work with demanding clientele, this coverage provides crucial protection against claims that could otherwise devastate your business.

Equipment Breakdown Coverage

Your boiler, compressor, or electrical systems can fail suddenly without warning—and standard property insurance often doesn't cover mechanical breakdown. Equipment breakdown coverage fills this gap, paying for repairs or replacement when machinery fails due to mechanical or electrical issues. Given that dry cleaning equipment can cost tens of thousands to replace, this relatively inexpensive add-on provides valuable peace of mind.

Cyber Liability Insurance

If you accept credit cards, store customer data, or use point-of-sale software, cyber liability coverage protects against data breaches and cyberattacks. Phishing accounted for 65% of all successful breaches in 2025, and small businesses are increasingly targeted because they often have weaker security. This coverage handles notification costs, credit monitoring for affected customers, and legal expenses if customer payment information is compromised.

When to Add or Increase Coverage

Your insurance needs aren't static—they grow and change with your business. Add coverage or increase limits when you:

Hire your first employee (workers' comp becomes mandatory). Add pickup and delivery services (need commercial auto). Start handling luxury or designer clothing (increase professional liability limits). Purchase expensive new equipment (update property coverage limits). Expand to multiple locations (each location needs separate coverage). Sign a new commercial lease (landlords typically require proof of specific coverage levels).

Don't wait until renewal time to add coverage if your circumstances change. Most policies allow mid-term adjustments, and the cost of being underinsured far exceeds any premium you'll save by waiting.

Annual Review Items: Your Insurance Maintenance Checklist

Set a calendar reminder to review your insurance every year—ideally 60 days before renewal. Here's what to check:

Equipment values: Did you purchase new machinery? Your property coverage limits need to reflect current replacement costs, not what you paid years ago. Employee count and payroll: Workers' comp premiums are based on payroll—make sure your estimate matches reality to avoid surprise bills. Revenue changes: Many policies use revenue to calculate premiums. Report accurately to avoid being underinsured or overpaying. Coverage limits: Are your liability limits still adequate? As your business grows, $1 million in coverage might not be enough anymore. New services or risks: Added alterations? Expanded hours? Changed cleaning chemicals? These changes affect your risk profile and coverage needs. Deductibles: Could you afford a higher deductible in exchange for lower premiums? Or do you need to lower your deductible for better cash flow protection?

Getting Started: Next Steps

The easiest way to get comprehensive dry cleaner coverage is through a Business Owner's Policy (BOP), which bundles general liability, commercial property, business interruption, and often equipment breakdown into one package at a discount compared to buying each separately. Most dry cleaners pay between $3,000-$5,000 annually for a BOP, then add specialized coverages like bailee's, workers' comp, and commercial auto as needed.

When shopping for insurance, get quotes from at least three carriers who specialize in dry cleaner coverage—they understand your unique risks and often offer better rates than general business insurers. Be completely honest about your operations, equipment, and revenue when applying. Providing inaccurate information might save you money upfront but could result in denied claims when you need coverage most.

Dry Cleaner Insurance Checklist

Key Takeaways