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Beyond the rather obvious possibility that you may suffer financially from a fire, a theft, a liability claim, etc., the current political climate and realities regarding the availability and cost of insurance make it imperative that you take a look at your insurance program as a part of your business financial plan. An annual check-up of your insurance program is just as important for your financial health and peace of mind as the annual check-up with your medical practitioner is for your physical health and well-being.
You may not be aware of all the exposures to accidental loss and the types of insurance coverage needed to protect you and your business. This is understandable. Your business is not medicine or insurance. Your business does include making sure the insurance program you have in place is proper and meets the protection needs of your operation.
Putting the plan together
Assembling an insurance program for your business is like putting together the pieces of a puzzle. The pieces are the many coverage options that must be picked out and examined to see whether they fit. Every piece is important. If just one is left out, there will be a hole in the “big picture” of protection.
In developing a program of insurance for your business, you must consider that if you own a building, you will want insurance protection for it. Also, most businesses have their own personal property and you’ll want to include protection for those assets. In addition, your business program should include protection for liability, automobiles and worker’s compensation (if you have any employees). And at least some consideration should be given to business interruption (i.e. loss of income and extra expense), crime and health insurance policies.
In addition to these “general coverages” there are several “other” coverages that have particular significance to your business. Not all businesses — even those involved in the same general field of endeavor — have the same exposures because they operate in different ways. Not all businesses, therefore, fit into the same insurance mold. Some of you do not have all of these exposures; while, others may have additional ones that will need to be protected.
Car care businesses have liability insurance needs that don’t fit neatly into the box that works for other businesses. If you own vehicles you will need to schedule them for auto liability and physical damage coverages. This is basically the same as would be done for the vehicles owned by other businesses.
However, you may also have exposures that arise from the fact you have customers’ cars coming to your place of business for service. These auto exposures are divided into two categories, each of which is insured differently.
1. Non-Owned Auto Liability.
Even though there may be some typical exposure of employees driving their own car on errands or some other business activity for your specific operation, the greater hazard arises from your employees driving customers’ cars. They may be driving the customer’s car to pick it up, deliver it, or move it from one spot to another at your location or to another location. This special form can also be extended to include “hired” auto liability along with the non-owned auto exposure.
(Remember, the non-owned or hired liability coverage refers only to persons injured or property damaged by the car being driven. It does not insure the car itself. You will still have the problem of protecting yourself for liability you incur because of damage to customer’s cars.)
2. Car Care Keepers Coverage. (Sometimes called Garage Keepers Coverage.)
This relates to customers’ cars that are left in your “care, custody or control”. If these autos are stolen or damaged in an accident while you are responsible for them, who will pay for the loss? Car Care Keepers coverage is written to insure customer’s cars for “other than collision” losses (sometimes called Comprehensive losses) or Collision losses. There are several ways of providing this coverage. If there is a claim, the loss will be paid based on the option you choose. These options include:
- Direct primary – this means if there is an event the policy will pay regardless of whether you can be held “legally liable” or not and regardless of whether the owner has physical damage coverage on the damaged vehicle. (Usually this is the most expensive option as it effectively includes good will coverage)
- Direct excess — this means if there is an event the policy will pay regardless of whether you can be held “legally liable” or not but only after the owner’s coverage (if any) has paid their policy limits for the damages.
- Legal liability — this means the policy will pay only for damages which result from an event for which your can be held “legally liability”. (Usually this is the least expensive option.)
Too much insurance?
What would be worse? Not to have enough insurance to repair or replace your damaged property or not to have enough cash flow to afford to reopen when the property has been repaired or replaced?
In your business, your clients rely on you to keep their vehicles in the best condition possible. In the same manner, you need to rely on your insurance professional to keep your business insurance in the best condition possible. For that reason, you need to be very careful in selecting your insurance agent. You rely heavily upon the knowledge of your agent regarding insurance and his ability to translate that knowledge into an appropriate insurance program for your business. In other words, you need to be certain you are working with a professional who knows your business and its special needs.
Your agent needs the expertise to secure the appropriate coverage and benefits your business requires. In addition, you want to be sure the agent can provide coverage today and still be a stable force in the marketplace so they can continue to do so in the future. Your agent needs to be committed to serving the needs of the car care industry today and tomorrow.
Scott Brothers is the president and CEO of the Joplin, Missouri-based The Insurancenter.