A few years ago, a new owner of a tunnel wash operation in the Midwest had the misfortune of having a customer whose vehicle was damaged in the tunnel. At $2,200, the total claim wasn’t enormous, but it was still a large chunk of change for the new operator. This operator had contacted four agents when choosing his wash’s insurance and ultimately chose to buy his insurance from a local agent who quoted the lowest price.
About five days after the initial claim was filed, the adjuster for the carrier called and notified the operator that they would deny coverage because the vehicle was in the wash operation’s “care, custody or control” at the time of the damage (you know … take your hands off the wheel and put it in neutral), and the carwash’s general liability policy specifically excluded coverage for that.
Turns out that most general liability policies exclude that coverage. This was the only carwash this local agent had ever quoted, and the new operator was left holding the $2,200 repair bill. (The coverage needed in this instance would have been garage keeper’s coverage, which provides coverage for damage to customer vehicles in your care, custody or control.)
Related: Beyond basic insurance coverage
In this case, the wash owner’s insurance agent let him down and cost him $2,200. The insurance agent didn’t understand this man’s business and didn’t ask the right questions to ensure the wash was adequately covered, given the nature and scope of the operation.
This story illustrates how important it is to choose the right insurance agent. In fact, it is probably more important than the insurance company and the policy you choose.
Your insurance agent is key to making sure you have the right commercial insurance policy. If the agent doesn’t do his or her job, it puts your entire business at risk.
What you need to know
There are two kinds of business insurance professionals: agents and brokers.
An insurance captive agent works for one insurance company and is only able to sell that one insurance company’s products. These individuals can be very knowledgeable about their specific carrier, but they are limited in the premium prices and coverages they can offer you. It also means their loyalty lies with their insurance company and not necessarily with what might be best for you as a customer.
An insurance broker works with many different insurers and can offer policies for a wide range of purposes and businesses. Also, in some states, brokers are required by law to maintain a higher duty to their clients’ needs, which means they thoroughly analyze the businesses they serve and strive to find coverage that will help the companies succeed.
Knowing how to select a commercial broker is helpful, and we will dive into that soon. But what if you already have a broker and are less than satisfied? Here are four sure signs that it’s time to look for a new broker:
- Slow or no response to requests: If you need to contact your broker multiple times to receive answers to simple questions or certificate requests, it’s time to move on. Fast and professional service is an expectation of all insurance professionals. Wash owners shouldn’t have to chase down endorsements or certificates.
- Unclear renewal process: The renewal is critical. It’s the time when your wash operations are examined for any changes in exposures. It is also when your broker/agent should be presenting your needs to various carriers. There is never a reason for your broker/agent not to meet with you at least twice a year: once to review any changes in operations prior to your renewal and then again to present the renewal offer to you as he or she explains any changes from previous coverage.
- Too few quote options: Every year, your agent should give you several quote and coverage options. Often, the various quotes will appear very similar. Make certain that even the smallest details are fully explained to you. Many times, a single sentence can determine whether a claim is covered or not. If your broker can’t offer you quote options on limits and deductibles, it may be time to shop around.
- Lack of insurance expertise: If your agent doesn’t understand your
specific wash operations and how the coverage protects you from risks/how to manage them, it is time to move on.
Your insurance broker/agent is the key to making sure that you have the right commercial insurance policy. If the broker/agent doesn’t do his or her job, it puts your entire new carwash business at risk.
Remember, commercial insurance is more than a commodity. In many cases, your commercial insurance policy is the tool that will keep your wash running in the event of a disaster. If there is a theft, fire, water damage, storm damage, customer vehicle damage, vandalism or an accident, your insurance plan will allow you to replace the loss and continue doing business.
But, as we saw in the case scenario at the start of this article, having the wrong coverage is the same as having no coverage. Getting the right coverage comes down to having a qualified and capable insurance broker/agent that knows his or her business, understands your business and puts that knowledge to work in a way that fully protects you.
How to pick the right agent
The following are specific characteristics to look for in the agent you choose to protect your operations.
The agent/broker should be certified.
When you are selecting the right commercial agent or broker for your company, be sure to look for a broker who has the required licenses to accommodate your new company’s geographical operations. If you conduct business in more than one state, check to see that your insurance broker meets the licensure requirements to get you coverage in all states you do business in. Also, your state insurance department will be able to tell you if any complaints have been filed against the agent.
The agent/broker should know your industry.
While it is critically important that your agent or broker understand the insurance industry, it is just as important that you choose an insurance professional who understands the carwash industry. That person should have a thorough understanding of the various types of carwash operations and the exposures that are unique to each. I recommend not working with any agent/broker who insures less than 20 separate wash operations of various types.
The agent/broker should have advanced designation or training.
Your specific agent/broker will be designing the coverage that will protect your operations. Thus, it is critical he or she be qualified to do so. As previously mentioned, all insurance agents are required to be licensed by the state they reside in. However, the requirements to be licensed do not provide the advanced knowledge required to properly insure the various types and unique exposures to wash operations. Ask any broker/agent what type of advanced designation or training he or she has completed.
I suggest working with insurance professionals who have obtained their Certified Insurance Counselor (CIC) designation. There are seven CIC institutes. Each institute is two days of coursework (16 hours total), followed by a two-hour essay exam. To become a designated CIC, the candidate must complete five of the seven courses and pass the examinations within five calendar years. CIC designees must also complete 16 hours of continuing education to update their CIC designations annually.
The agent/broker should provide great customer service.
Begin looking for a broker/agent at least six months prior to needing the coverage in place. A good way to gauge if agents or brokers are a good fit for your operations and meet your expectations is by asking them for a quote before deciding to do business with them. Getting a quote can give you a real-life example of how efficient they are (by how fast they can get you a quote), how interested they are in your particular business, the kinds of companies they work with, how thorough they are when explaining the coverages in the quote and why the premium price varies if more than one quote is provided.
The agent/broker should have experience in handling claims.
Unfortunately, the whole reason we have insurance is because sometimes we need to use it. When it comes to choosing a quality insurance agent or broker for your new carwash business, claim-time is where the rubber meets the road. Your agent will be the liaison between you and your carrier. The better he or she is at settling claims, the better your experience will be as a customer.
A broker with a good track record in claims handling (specifically with wash operations) is essential. You can find out what the procedures are in the agency for servicing any claims. For example, does the agency have dedicated people handling claims? Or will your broker or account manager help you through the process?
Related: Keys to claims reporting
Your broker should know the different insurance companies he or she works with. That person will know who is quick and efficient about settling claims and which companies are harder to work with. The agent/broker can help you understand what to expect during the claims process before you even buy a policy. It’s a good idea to ask your broker about his or her personal claims experience with other wash operations and fully understand the agency’s claims processes, practices and services.
There are many qualified professional agents and brokers who are available to you. And, unfortunately, there are also plenty of folks who have passed a licensing exam that really have no business practicing insurance.
Follow these guidelines, do your homework and — most importantly — allow plenty of time (three months minimum) to get through the process of finding your perfect insurance professional. The entire process should flow smoothly without an agent pressuring you into making an instant decision.
Dan Tharp, CIC, RWCS is licensed in all states (except Alaska and Hawaii) and is the vice president of business insurance lines for Pearl Insurance. Dan has been assisting business owners in protecting their operations, customers and employees for over 30 years. For questions regarding this article or any other insurance matter, he can be reached via phone at (800) 447-4982 or email at [email protected]. You can also visit the company’s website at www.pearlinsurance.com/automotive.