AFTER A DISASTER HAPPENS
What are the first steps a dealer should take after a disaster happens?
Well, the first steps should be BEFORE the disaster happens.
This is a good time for this conversation – with all the hailstorms, tornadoes and flooding we’ve experienced recently.
However, we need to remember that all disasters are not nature –caused or even the physical damage type. I have seen all too often the BHPH dealer put his business on the line by not properly protecting it from the liability disaster. The spur of the moment decisions that become life-changing events.
Things like, he let his teenage son run down the pizza place in a dealer-owned auto; it was not five miles away and it seemed so non-consequential – until the teenager tried to avoid a puppy, hit a kid on a bicycle. That was when the dealer remembered he had signed a driver exclusion for his under-age driver; that was when the personal auto insurance agent explained the coverage restriction included in the teenager’s policy — i.e. named auto only.
That dealer is looking at some major financial losses from both the accident, as well as the time he must spend away from his business in order to take care of the situation.
Four steps to take before the clouds roll in
Okay, but I understand today that we are talking natural disasters – so, again, let me say the 1st steps to be taken should be taken before the clouds move in.
Step # 1 – Find a good insurance agent, one familiar with your industry and one you trust. If he/she is the most knowledgeable agent on the planet and you don’t truly trust them, then they are not the agent for you. There are, perhaps, 3 people in the world to whom you should always, always be completely honest – your spouse, your attorney and your insurance agent. So, if you find yourself holding back information for fear the agent may use it some way, find a new agent; this one cannot give you everything you need.
Step #2 – Satisfy all of the liability exposures. Liability losses put more dealers out of business than physical damage losses. It’s nice to be protected in the event of a natural disaster; it’s even nicer to be around when the natural disaster hits.
Step #3 – Share with your agent your insurance philosophy. Do you like large deductibles? Do you prefer to eliminate as much out-of-pocket cost as possible or do you just want to ‘save’ yourself. If your agent knows what dealer’s insurance budget allows him to invest in insurance –combined with the dealer’s philosophy toward loss, then he/she can better counsel the dealer to what insurance program is best suited to solve the problem.
Step #4 – Okay, now the insurance plan the dealer can afford and agrees with his insurance philosophy is in place, what else can he do to mitigate his losses. Some have a plan for moving cars when bad weather is coming; others roll the dice, hoping their lot is the one missed. “Moving the Cars” does not have to be a huge effort – unless, of course, we are talking a hurricane on the horizon. Rather it can be moving all cars in which the dealer has $10,000 -or some number of the dealer’s choice, to high ground.
I have one dealer who has a deal with another warehouse where he can move up to 10 cars in the event of hail storm. He moves his 10 most expensive vehicles out of harm’s way. I have other dealers who utilize hailnets. Hailnets can be expensive, but the price tag looks a lot smaller when facing a several hundred thousand dollar loss. Some dealers use canopies for all cars valued at $5,000 or more.
I have another dealer who has multiple locations, and only one of them is in a flood zone. Bad weather finds him moving his inventory to the locations less likely to suffer flood loss.
Do garage policies include weather losses?
There was a time that garage policies included weather losses with, maybe a $1,000 per car, and an aggregate of some kind. When I began my career 30 years ago, that aggregate was often $5,000, i.e. 5 cars with a deductible and then no deductible for the balance. Then those aggregates inched up to $10,000, $25,000, $50,000.
Today insurance policies in Texas with physical damage aggregates have gone the way of the dinosaur — at least in the hail prone counties. With the current weather conditions, it seems all Texas Counties are hail prone. I don’t want to say weather loss aggregates don’t exist, because there are some out there under the right circumstance and at the right price, but they are few and far between.
Disaster losses are never pleasant, but some are much more painful than others.
Need Help Improving Your Insurance Before Disaster Strikes?
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