The Impact of Laundry Operations on Property Insurance

When it comes to multifamily operations, laundry rooms often fly under the radar until something goes wrong. Whether you operate in-unit or shared facilities, laundry equipment can quietly influence your property insurance premiums, risk profile, and long-term liability exposure more than you might think.

Understanding how laundry operations affect your insurance coverage, and what you can do to reduce risk, is key to protecting your property and maintaining cost efficiency.

Why Insurers Care About Laundry Rooms

Laundry rooms combine water, electricity, and heat: three major sources of insurance claims. Fires, floods, and water damage often originate in or around laundry areas, and even small incidents can lead to costly repairs or tenant displacement.

According to the National Fire Protection Association (NFPA), dryers are involved in more than 13,000 structure fires annually in the U.S., causing an estimated $238 million in property damage each year. Water leaks from washer hoses and fittings are another top cause of insurance claims, particularly in older buildings.

From an insurance standpoint, every load of laundry represents:

• Potential water loss risk (burst hoses, drain backups)
• Fire hazards (lint buildup, overheated dryers)
• Liability exposure (tenant injuries or slips in laundry areas)
• Equipment failure costs (aging machines, lack of preventive maintenance)

How Laundry Operations Influence Insurance Costs

Property insurance underwriters evaluate several aspects of your laundry setup when determining rates and coverage terms. Key factors include:

1. Age and Type of Equipment

Older, unvented, or non-commercial machines pose greater fire and water risks. Energy-efficient commercial units with built-in safety sensors can reduce exposure, and in some cases, qualify your property for lower premiums or risk-mitigation credits.

2. Maintenance and Inspection Protocols

Regular maintenance records can make or break a claim. Insurers look favorably on properties with documented inspection schedules, lint-trap cleaning logs, and certified service agreements with reputable vendors.

3. Location and Containment

Basement laundry rooms or poorly ventilated closets increase risk. Properties that include drain pans, floor drains, moisture sensors, and automatic shut-off valves tend to receive stronger underwriting terms.

4. Tenant Access and Oversight

In uncontrolled common areas, unattended machines increase liability risk. Adding security cameras, access control, and posted rules can demonstrate proactive risk management, which underwriters note when reviewing renewals.

5. Vendor and Service Partner Compliance

Your laundry service partner’s insurance certificates, indemnification clauses, and safety protocols affect your own liability profile. A partner that carries strong general liability and workers’ compensation coverage helps protect you from downstream exposure.

Steps to Reduce Insurance Risk in Laundry Operations

To strengthen your risk profile, and potentially lower premiums, consider implementing the following best practices:

1. Upgrade to high-efficiency, commercial-grade equipment.
   Newer machines often include moisture sensors, automatic shut-off features, and error diagnostics that reduce both water and fire risk.
   
   
2. Schedule preventive maintenance.
   Partner with a vendor that performs regular inspections, documents service visits, and replaces hoses and vents proactively.
   
   
3. Document everything.
   Keep records of cleanings, inspections, and repairs. Insurers are more likely to honor claims, and adjust premiums favorably, when you can prove consistent upkeep.
   
   
4. Install smart monitoring tools.
   Leak detection sensors, shut-off valves, and connected pay systems that alert you to anomalies can prevent minor issues from becoming major losses.
   
   
5. Train staff and educate tenants.
   Clear signage about dryer lint, overloading, and detergent use can reduce incidents. Encourage tenants to report leaks or heat issues immediately.
   
   
6. Verify your vendor’s coverage.
   Always keep current certificates of insurance (COIs) from your laundry partner and ensure indemnification language is included in your contract.

The ROI of Risk Management

Proactive laundry risk management doesn’t just reduce the chance of a claim, it can also lead to:

• Lower insurance premiums over time
• Fewer out-of-pocket repair costs
• Reduced tenant complaints and downtime
• Longer equipment lifespans
• A more professional and insurable property portfolio

In many cases, these measures pay for themselves in the form of risk credits or avoided losses.

Final Thoughts

Laundry operations may represent a small piece of your property’s overall footprint, but their impact on your insurance exposure and operational risk is outsized. By upgrading equipment, documenting maintenance, and partnering with an insured, professional laundry service provider, you can protect your property, and your bottom line, from avoidable losses.

A safer laundry room isn’t just about convenience. It’s about reducing claims, protecting revenue, and keeping residents happy.

Sources

• National Fire Protection Association (NFPA): Home Fires Involving Clothes Dryers and Washing Machines, 2023
• Insurance Information Institute: Facts + Statistics: Homeowners and Renters Insurance Losses, 2024
• U.S. Department of Energy: Energy Efficiency & Safety Benefits of Commercial Laundry Equipment, 2024
• Travelers Insurance: Preventing Water Damage in Multifamily Buildings
• Hartford Risk Engineering: Managing Fire and Water Risk in Commercial Laundry Facilities