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?
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