Ann Mullen
President at Mullen Insurance Agency, Inc. - Garland, Texas
Have you reviewed your insurance lately?
Some things lend themselves to regular check-ups and some things do not. Insurance too often falls into the latter category.
With the speed of today’s life and our day-to-day activity, it can be too easy to sign the renewal paperwork, write a check and move-on. That works very well for a lot of dealers for a lot of years. As long as your insurance needs remain unchanged, it is likely your current policy is providing the correct protection — likely, but not positively. And the scary part is that you will not realize where the coverage is lacking until you have a loss jeopardized by inadequate protection.
The best time to review your insurance is:
- NOW
- or at least thirty days prior to your current policy’s expiration
- or at any time there is a material change of circumstances
Among the key questions are:
- Are the liability limits adequate? When was the last time you reviewed that protection? Remember, your liability limits protect YOU, YOUR BUSINESS and YOUR ASSETS. Until you are comfortable with the liability protection afforded by your policy, you should continue to ask questions and make certain your agent understands your specific circumstances. A lack of enough liability insurance can put a dealer out of business – and has many times. Don’t get caught short just because you did not take the few minutes necessary to review and understand your liability protection.
- Are all of your employees listed on your policy? Some garage policies limit your liability protection to losses involving only employees actually listed on your application or added to your coverage by endorsement. All employees need to be reported – not just those who drive. Let me tell you about a claim that paid policy limits and no one even touched a car! “A young female clerk was alone at a small dealership on a Friday afternoon. An older male customer came in to make a payment – and the story gets a little fuzzy here with each party having their own version of events. However, the bottom line is the female clerk believed the customer to be aggressive, became frightened and attempted to close her office door. The customer put his hand in the door to prevent it from closing. Apparently, the young woman was either very frightened or very strong, because the force of the door broke several bones in the man’s hand, requiring a number of surgeries and, at least claimed, permanent disability. After many, many months of legal activity, the dealer’s insurance company settled the claim for $500,000 – the total liability limits on his policy.” This employee was listed on the dealer’s policy and the nominal premium involved was miniscule in comparison to the protection afforded. Some contracts would have required the company to pay the claim regardless of whether the employee was listed or not and some would not have. Would yours have defended and/or paid the claim in your behalf?
- Are you allowing any unreported employees to drive a dealer vehicle? This is another area where insurance companies are becoming more energetic in protecting themselves. Some carriers provide liability coverage only for employees that are named on the policy and approved to drive dealer-owned autos; some include coverage for contract drivers; some provide the dealer with protection regardless of driver as long as dealer permission has been granted. What is the situation with your contract?
- Are there family members who occasionally use a dealer-owned auto for any purpose – business or otherwise? Have you notified your agent of that exposure?
- Do you carry physical damage protection? If not, have you checked into the cost? It may not be as prohibitive as you imagined or it may be more so. However, until you know what the cost is, you cannot make an informed decision as to whether or not purchase of dealers open lot is good use of your insurance dollars.
- If you do have physical damage coverage, are you insured to 100% of your dealer investment in inventory? If not, any claim may be adversely affected. Most, if not all, carriers enforce a coinsurance clause in their contracts. Too many dealers believe coinsurance applies only if they have a catastrophic loss, i.e. maybe they are carrying $250,000 in coverage on a $500,000 inventory investment. They understand if a tornado hits and all inventory is destroyed, they will recoup no more than $250,000 and that works for them. What they may not be aware of is that same 50% coverage would apply if they had a $10,000 vehicle stolen. In other words, the adjuster would reduce the loss by 50% to $5,000, subtract the $1,000 deductible and they would receive $4,000 in claim reimbursement rather than the $9,000 payable had the inventory been insured to 100% of dealer investment. Be certain you understand how your policy works.
Are you an informed insurance customer?
We could continue for many pages discussing all of the ends and outs of a basic garage policy and where your operation may be the most vulnerable, from uninsured motorist through dealers’ errors and omissions, as well as a myriad of safety nets in between. Add to the basic contract, the other safeguard policies out there – excess liability, employment practices, property contracts, workers comp, to name just a few – and you can see the subject could be endless.
It is in your best interest to be certain your agent is familiar with your operation and your goals in insurance protection. Take the time to give him/her a call to review your insurance program. It is essential you both have a foundation on which to build –or remodel– the most appropriate insurance package for your unique operation. Maybe you need an in-person visit to be completely clear. If you do, ask your agent to come by your dealership or go by his/her office for a sit-down meeting of the minds. Become an informed consumer. Only you know what your insurance budget is; but you may need some help from an insurance professional to determine the best use of those insurance dollars.
As an Independent Auto Dealer, it is important to remember that “Price tags do not tell the complete story.”
We, here at Mullen Insurance Agency wish each of you a Healthy, Happy and Prosperous 2024!
If you’d like additional information on insurance for your business or you’d like to request a quote, please visit https://mulleinsurance.com/#Insurance-quote or give us a call at 972-681-6297.
Ann Mullen-Martin
President
MULLEN INSURANCE AGENCY, INC
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