Three Things Commonly Overlooked when Insuring an Auto Service Garage

Three Things Commonly Overlooked When Insuring your Auto Service Garage
The auto services industry is a tough and demanding industry. In fact, there is no other industry that relies as heavily on a solid reputation and word-of-mouth for business success as the auto services industry. In the past several years I have seen operations rise to great success because they established a strong and trustworthy reputation in their community. On the other hand, I have seen several operations fail because they did not establish a strong reputation within their community.

Working with an insurance agent familiar with the demands of the auto services industry can give you an edge over your competition. A good agent will not only provide you with a price competitive policy, he or she will also assist you in managing the risk involved in owning an auto repair garage. Does your agent provide you with any risk management resources? Does your agent visit your garage on a regular basis? Are they accessible when you need them? Do they provide with materials and documents to help you train your employees? These are just some things to consider when evaluating your current agent.

What about your current policy? Does that need to be evaluated too? Here are three things commonly overlooked in most auto service operations that I meet with.

1. Employee Tool Coverage: Do your employees bring their own tools to work? Chances are they do and chances are those tools are of tremendous value. Your employees see their tools as an investment. It goes hand-and-hand with their career and good tool chest reflects well upon their professional desire to be ready and able to complete any job. There is very good chance that your existing policy does not protect employee tools. You may have mistakenly thought that these tools would be covered under the contents portion of your property policy. However, that is not the case. Employee Tool Coverage is a separate coverage that needs to be requested. Keep in mind that the number one item stolen during the theft of an auto garage is employee tools.
2. Garage Keepers limits too low: Garage Keepers Insurance is what protects other peoples vehicles while in your care, custody, and control. Many auto service operations will set their Garage Keepers limit based simply on what they can afford. Or, they will base it on some home grown formula that goes something like this: I work on three cars a day, each is worth ten thousand dollars, so I need a limit of thirty thousand dollars for my garage keepers policy. When setting a limit for Garage Keepers coverage, there is a lot more that needs to be considered. How often do you work on high value vehicles? How many vehicles are on your premise at any given time? Do you impound vehicles for a local tower? Do you park vehicles in your garage overnight? A good agent will carefully assess the answers to these and many other questions when deriving a limit for garage keepers.
3. No Umbrella Policy Provided: An Umbrella Policy is essential to all garage operations. Chances are your standard liability policy will provide coverage for a liability loss somewhere between five hundred thousand up to a million. Are you aware that your standard policy does not pay for legal defense? So, if your employee takes a test drive and injures or kills someone and a lawsuit is filed against you for let’s say several hundred thousand dollars, then you will have to pay an attorney for defense. Your underlying policy will only pay the settlement amount. It is not uncommon for the cost of defense to exceed tens of thousands of dollars. An Umbrella Policy will provide for an additional amount of coverage plus it will add legal defense to your policy. An Umbrella Policy is usually very affordable.

When was the last time you had your policy reviewed? Because of our litigious society, insurance policies should be reviewed at least every two years. When was the last time you had an outside professional that understands your market provide you with a complete and accurate assessment of your coverage?

Welcome...

I would like to welcome Giles Auto Body of Inkster, Michigan and Wacker Farm of Manchester Michigan. I appreciate your business and look forward to servicing you.

Market Updates

Recently, our agency has had several carriers approach us and request that we target specific markets that they perform well in. Our agency has had tremendous success in Municipalities and Public Entities through Trident Insurance Group. Trident has requested that our agency take the lead in generating market penetration throughout Michigan, Ohio & Indiana with their Waste Insurance Program. Our agency currently insures several Waste and Recycling operations, provides numerous pollution liability packages to a variety of markets, and is familiar with insuring large auto fleets. Trident feels this makes our agency ideal to capitalize on this market and we agree.

Our contractors market continues to perform strong and we are looking to continue growth in this sector. In particular, we are expanding our higher risk type operations related to contracting. This can include operations such as HVAC companies working on Boilers or installing solar panels, Highway construction, and contractors requiring pollution liability coverage.

How you can help...

If you know of any websites or online resources that could be of use to others, then please let me know by emailing me the link so I can add it to my site. It is my goal to create as strong a database as possible so that my clients can easily access all the safety resources they need in one place. Any help or suggestions you may have are greatly appreciated.

According to this article, a reduction in claims means economic recovery

Here is a copy of an article I recently read. In summary, Tim Barry of Specialty Risk Services feels that a reduction in claims is an indicator of economic recovery. I can see where he's coming from on this. We are taught in the insurance world that fraudulent claims increase during tough economic times. So, logic would dictate that a decrease in fraudulant claims indicates an upward trend in the economy due to less economic strain on businesses.

I don't fully agree for three reasons. One, the insurance industry has tightened its underwriting process and has been more pro-active in regards to loss control. Both reduce the likelyhood of fraudulant claims. Second, Workers Compensation claims are a major contributor towards fraudulant claims. With less workers in the work force, claims are naturally reduced. The final reason is that those that are likely to file fraudulant claims may have been exhausted from the system. File too many claims (especially one's that are suspected of fraud) and you will get cancelled and possibly become uninsurable.

None-the-Less, here is the article...

The recession ended Oct. 1, claims fraud data shows
16 days ago Tags: Workers Compensation Claims Services
The National Bureau of Economic Research hasn't announced an official end to the current recession. But the slump might have sputtered out on October 1, according to a claims investigator.


Tim Barry is assistant VP and special investigations director for Specialty Risk Services LLC, a Hartford, Conn.-based third party administrator.

His data shows an upward trend in fraud referrals from adjusters peaked on October 1, and then dropped slightly and pretty much leveled off when adjusted for claims volume.

Mr. Barry spoke on combatting fraud at the Risk and Insurance Management Society's annual conference last week in Boston.

In the process he explained the inverse relationship between the economy and fraudulent claims. As the economy plummets fraud increases and then decreases in better times.

Based on that Mr. Barry told a conference session, somewhat tongue in cheek, that the recession ended last fall.

Workers who remain unemployed would disagree that the recession is over.

But we slid into the recession long before most people realized it was underway and the same is likely to occur as we move out of it.

The National Bureau of Economic Research announces dates for business cycle peaks and troughs. It describes a recession as a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

The NBER usually doesn't peg a date for the beginning or end of a slump until more than a year after those occurrences.

For example, it announced a December 2007, peak in economic activity on Dec. 1, 2008. The November 2001, recession trough was announced on July 17, 2003.

According to a BusinessWeek story I read on my way home from RIMS' conference the NBER currently believes it is premature to declare the recession's end as unemployment and other problems persist along with signs of improvement.

But it will be fun to eventually see whether the NBER, when it finally announces the date for the recession's end, agrees with Mr. Barry's data.

Taking time to say thanks..

I would like to take some time to say thanks and welcome some of my new clients...So, welcome aboard Howard's Towmaster of Elkhart Indiana, Leonardo's Marble and Granite of Wixom, MI., Ann Arbor Door and Window of Ann Arbor, MI., and Natures Garden Center of Saline, MI. I'm glad to have you as clients and I look forward to serving you.