In Good Hands
Having The Right Insurance Can Help You Survive More Than One ‘What If’
It’s said that when it comes to getting insurance, you’re simply betting that something bad will happen. True or not, it’s better to be safe than sorry.
Having insurance is a must in order to stay in business. In today’s society, your customers are more willing to settle their complaints with you in front of a judge than with a handshake. Tire dealers must cringe when they hear about the latest jury verdict or settlement that forces a business to compensate a victim for his or her misfortune. And as a businessperson, you are thought of as possessing the proverbial "deep pockets", which means you must be certain that you are sufficiently covered should a legal compliant be brought against your dealership.
Day After Day
Insurance is not something that is only used when something catastrophic happens. Instead, it is something that should be part of your everyday operation. Look at the unexpected things that cost you money and prevent you from turning a profit. It could be the air compressor that breaks down or the customer who decides to write a bad check. These things can cut into your bottom line pretty hard. A well-written insurance policy can help smooth out these bumps in the road.
The "what ifs" that can be covered are endless, from practical items like your signage – just in case a motorist decides to go off-roading in front of your shop – to protection in the event your new advertising campaign infringes on a copyrighted slogan or logo.
Oops, My Bad
We have all either heard of or experienced an incident where a vehicle is damaged while it is in the shop. The stories have ranged from the mundane to veritable urban legends – stories of vehicles falling off lifts, cars catching fire. But, the one part that is often left out is how the vehicle comes to be restored to its previous state.
Garage keeper’s liability or umbrella coverage can cover damage to a vehicle if it happens at your shop and you are negligent. This type of insurance can cover mishaps in the bays, on a test drive or in your lot. The scenarios are endless – from hailstorms to faulty parts.
You must also protect against the possibility that vehicle might be taken by an employee or by someone claiming to be the real owner. That means you need to consider coverage which provides for theft, tricks, schemes or false pretenses. You’ll also need primary coverage so that you are covered regardless of whether you are legally liable.
Taking a vehicle for a test drive, before and after a repair job is a necessity, but it is one of the most prevalent times for an accident. Technicians should take extra care when they are driving a customer’s vehicle. The task of driving an unfamiliar car, coupled with the fact that the tech is trying to observe a problem, can cause an accident.
Another overlooked area of coverage is mechanic errors and omissions. This type of insurance coverage helps protect you from liability for damage associated with work you are performing on a vehicle. While on a test drive or after the vehicle has left your care, custody and control, damage may occur due to the work performed or the parts you have installed. Normally, coverage is provided for the resulting damage, but you are out of pocket for the cost of the damage to the part installed or the work performed.
Tips to Keep Insurance Cost Low
- Conduct periodic meetings to address shop safety. These meetings should address potential problems and should be mandatory for all employees. Take notes because if there is an incident, they will help verify that affected employees received and understood the precautions discussed. If any safety or new equipment training takes place, obtain written certification that contains the date of training and names of employees who attended the training. Management must take the lead in promoting safety. Training and enforcing company policy will instill an attitude of making safety part of the normal work ethic.
- Protect your tools. To a thief, tools are very attractive. They have high residual value and can be fenced through a network of pawn shops, online auctions or used tools stores. It is common for a shop to be broken into and not a single vehicle will be stolen, but entire toolboxes will be missing. Let’s face it, a mechanic without tools does not have much value. Aside from turning your shop into Fort Knox, it is critical to prepare for the eventuality that you might be a target for break-ins. Photograph or video tape each drawer of each tool box. In addition, most tool vendors keep an up-to-date list of the tools that they have sold to a business. If the value of the tools exceeds the value of the shop’s insurance limits, advise the technician that his homeowner’s insurance can be amended to cover the rest of the cost.
- Be mindful of details. You can never have too much documentation when you are facing or filing a claim. For example, what if a lift topples over with a vehicle on it? Having the proper documentation of who installed the lift and even who poured the concrete can save you time when filing a claim with your insurance company. Also, having receipts and invoices can guarantee that you are compensated the full amount for your lost or damaged property.
- Make sure employees use personal protective equipment. It is the last line of defense against hazards in the workplace. The use of protective equipment, like eyewear and footwear, can reduce incidents of bodily harm.
- Make sure your shop complies with federal safety regulations. OSHA regulations may seem intrusive, but in today’s lawsuit-happy society, they can also protect an employer from frivolous lawsuits filed by an injured worker. Your insurance company can provide you with information and assist you in bringing your shop into compliance.
- Shop around for rates. Get a quote from other insurance companies periodically. Most of them will provide you with a free estimate. Industry associations like TANA or your state group may have discounts through selected providers. Look for an insurance provider that has programs specifically designed for the tire service and auto repair industry.
- Create a good working relationship with your local body shop. Causing cosmetic damage to a vehicle is not a question of "if," but "when." Developing a relationship with a reputable body shop in the area can be beneficial to both parties. Offer to perform mechanical services like alignments and air conditioning work in trade or at a reduced rate if they help speed your repairs through their shop.
- Develop a relationship with a rental car company. One of the top complaints that customers have when their vehicle is damaged is the interruption to their lives. Getting them back on the road while their vehicle is being repaired is critical. The last thing you want is to compensate a customer for lost wages because they could not make it to work. Also, if you have loaner vehicles, make sure the customer signs a lease agreement. Often, the loaner car will be covered under the person’s auto insurance as a "temporary substitute."
- Perform pre-repair inspections. It’s important to perform an inspection for vehicle damage prior to starting repairs. In addition, when the shop owner makes repair recommendations and the vehicle owner chooses not to have the repairs done, the shop owner should have the customer sign off on the recommendation stating that he is declining the repairs that the shop recommended to keep the vehicle safe.
- Keep customers out of the bays and shop. Not only is having a customer in a service bay distracting, but it is dangerous. Clearly post signs in the customer waiting area and in front of all entrances to the shop that the service bays are off-limits to all customers.
You’ve worked your whole life to own your tire dealership. Still, all your skill and dedication to serving customers and leading employees is no guarantee that your business will survive a serious unexpected problem.
Maybe the brake pads are counterfeit. Maybe the technician you just hired has a penchant for taking tools. Maybe an inquisitive "little old lady" has wandered on the floor to check out her brake service and falls into the alignment bay pit.
Having the right insurance to smooth out these problems will let you continue on with your business for generations to come.
The author of this story, Andrew Markel, is the associate editor of Brake & Front End, a sister publication of Tire Review.