Dealers Insurance – Not A Place You Expect To Get A Return On Your Investment Of Over 10%

I’m willing to bet that most car dealers out there don’t think of their insurance policy as an investment.  And the few that do probably don’t think that as an investment, their garage insurance policy will generate an investment return unless they have a loss.  But because insurance companies are always looking for ways to determine which of their clients will have losses and which will not, sometimes this search generates changes that can offer the dealer some very nice choices.  Such is the case with the paid in full discount. 

Dealers insurance is really not very different from other kinds of insurance policies when it comes to risk selection by the insurance companies.  Everyone understands that if the insurance company can tell in advance which dealers will have losses and which will not, then they will make a lot more money.   The search for just the right metric to help them determine this is a bit of a Holy Grail type search.  Now insurance companies have relied heavily on many different factors to choose which auto dealers to accept as clients and which ones to walk away from.  Some of these factors seem obvious to the lay person.  Some of the more obvious ones are the driving records of the dealers, the past loss history of the dealers or the general condition of the dealership location itself.  Others factors are less clear, like running a credit check on the dealer or refusing to insure dealers who have a buy here, pay here service on site.  But if the insurance companies have one thing going for them, it is past data.  If they can come up with a way to back check a new idea against past experience, then they will often assume that they can project this behavior and risk assessment into the future.  The paid in full discount idea was probably something that simply jumped into someone’s head one day.  They then simply had to compare the loss histories for dealers who paid in full for their garage policy against those that paid monthly or on some other schedule.  They must have found that the pay in full group had fewer losses and so this new idea was born.

Auto Owners Insurance Company, an insurance carrier who insures many dealers across many states must have made this discovery recently.  Once they knew that dealers who paid in full had fewer losses than those who used payment plans, they simply needed a way to add an incentive to these pay in full accounts so that they could attract more of them over time.  What they came up with, I think, is very generous, though it may just reflect the difference in loss histories between these two groups.   Auto Owners now allows a 10% discount to all dealers who pay in full on their garage liability and dealers blanket insurance policies. 

Now if you are a dealer and you purchase your insurance from Auto Owners, consider the math on what this means.  Saving 10% on the cost of your dealer policies by simply paying in full is like receiving a 10% return on your investment money. If you had to borrow the money from the bank to pay for your garage insurance, I doubt you would have to pay anywhere near 10% interest.    But actually the math tells us that it is even better than that.  Assume for a moment that the cost of your garage insurance policy is $1000 and you only have to pay $900 for the policy if you pay in full, then that is a quick 10% return.  But if you compare this to paying 10 monthly payments of $100 each then the return is much greater than 10%.  This is because each month that you pay off the balance, you have less and less left to invest somewhere else to obtain some return.  So in the long run a 10% discount might generate as much as 12% or more return, depending on how many payments you have and how quickly you pay off your garage policy.

Over time, this generous discount will probably go away.  That’s because although it is designed to attract the better risk dealers who usually pay in full, the incentive will now attract some of the monthly pay plan dealers as well since it is so generous.  Once that starts to happen, the risk assessment piece of the puzzle becomes less clear and over time the pay in full group’s loss history will more nearly reflect that of the monthly pay plan group.  So my advice would be to take advantage of this discount while it is still around.

Clinard Insurance Group, located in lovely Winston Salem, NC actively insures more than 300 used car dealers, all across North Carolina, South Carolina, Tennessee, Virginia and Georgia.  We would love to help you save money on your dealers insurance policies, so please call us, toll free, at 877-687-7557 or visit us on the web at www.TheAutoDealersHelper.com.   

Garage Liability vs Garage Keepers Insurance – Confusing Terminology?

Most auto dealers are scrappy entrepreneurs with a lot on their plate.  These are independent business people with no real safety net beyond their own wits and cunning.   To survive and prosper, they need to understand the market value of many different types of vehicles and be able to find and deliver those cars to a fickle public who rarely trusts them.   With all of this going on, they still have to be garage insurance experts at the same time.  That’s a pretty tall order and confusing terminology doesn’t make things simpler for them.

Garage insurance is an outlier type of policy in the insurance world.  Garage insurance has such a specific function and is used for such a small percentage of businesses out there that most insurance agents just don’t understand it well.  A great example of this is the terms garage liability and garagekeepers insurance.   These terms, though they sound similar, have very different meanings and it is important for the savvy car dealer to clearly know the difference between these two terms and how these coverages may or may not be needed to properly protect his or her dealership.

 Garage liability is the term that applies to the liability exposure associated with your autos and your inventory.  For dealers who are only involved in the sale of cars, this is the protection that you must have in order to obtain your dealer tags.  This should be the cornerstone of your dealers insurance program.  The most common insurance claim falling under garage liability happens when someone test drives one of your cars and causes an accident that injures someone else, or that damages some property.  It is easy to imagine how one bad wreck that puts a few people in the hospital could bankrupt most small dealers.  So you should always purchase the highest limits that you can afford when you are considering your garage liability insurance for your dealership.

Garagekeepers insurance is quite different from garage liability insurance.  Garage keepers insurance is for those dealers and repair shops that take in cars owned by others and perform repairs on those vehicles.  While both repair shops and dealers will need garage liability, the garagekeepers insurance is only needed if for those companies who work on vehicles that are owned by others.  While these cars are in your care, custody, or control, you can be held liable for damages to these vehicles.  For instance, if you work on a vehicle, then test drive it to discover the problem or to listen to a noise, then you could be involved in an accident that damages the customer’s car.  In that case you would need garagekeepers collision insurance coverage on your policy to protect you from having to pay for these damages out of your own pocket.  Garagekeepers insurance also has another subcategory of protection, called garage keepers comprehensive coverage.  This is protection for losses to the vehicles in your care custody and control that are not caused by collisions.  There are exclusions to this coverage, so be sure that you are familiar with them but  basically this is wind, hail, fire, theft and other losses of that nature to your customer’s cars that are left  with you for repairs.

Garage insurance is complex with many options to be understood.  And the number of insurance agents out there who will pretend to understand this coverage and will be happy to try and learn about it at your risk is astounding.  It is truly a mine field out there for dealers.  You need to select and agent who understands this complicated sector of the business insurance world and who already insures lots of other dealerships like yours.  Clinard Insurance Group currently insures over 300 used car dealers across the states of North Carolina, Georgia, South Carolina, Tennessee and Virginia.  Our experience in this area, along with our volume of accounts means that we can help you get the protection you need at rates that will astound you.    If you would like help with your dealers insurance, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheAutoDealersHelper.com.

Garage Insurance – Division I or Division II?

It is often said that the garage insurance policy is one of the most misunderstood forms of insurance. The problem is that this form of insurance essentially is a hybrid of a general liability insurance policy and a business auto insurance policy. More than that though, this form is a specialized form, used only for auto body and repair shops and auto dealers. Given that, many agents, who don’t specialize in helping these specific industries with their insurance needs, don’t really understand the ins and outs of the garage insurance policy and as a result they may issue a policy to you under the wrong form. So how do you know if you have the right protection?

First of all, understand that although the garage liability policy is appropriate for both an automotive repair shop and an auto dealer, within that group, you need to have the correct classification on your garage insurance policy. There are 2 different divisions of coverage on the garage policy, Division I and Division II. These divisions not only affect the policy form itself, but they also impact on the rating structure and how your final premium is determined. For these reasons, it is important that you have your policy set up correctly in the first place whether you are buying auto dealers insurance or automotive repair insurance.

Division I is the division that should be used if your business is an auto dealership. If however, your business is automotive repair or body work, then your garage liability policy should be written as a division II garage insurance policy. If you are unsure whether or not your policy is set up correctly, you can check to see which division your policy is written on by checking the declarations page of your garage insurance policy.

What happens if you are involved in auto sales and auto repair? If that is the case, then your policy should be written on the Division I form.

As you can see, there are a lot of tripwires out there for business who repair or sale cars who are looking for a garage insurance policy. You need an insurance agent who specializes in the garage insurance policy and helping both car dealers and automotive repair shops with their insurance needs. At Clinard Insurance Group in Winston Salem, NC, we are that specialist. Our used car dealer clients and our auto and body repair shop clients are located all over NC, SC, GA, TN and Va. If we can help you with your garage insurance questions, or if you would like a quote on your current insurance program, please give us a call, toll free, at 877-687-7557 or visit us our auto repair and body shop web page or our used car dealers insurance help site.

The information used for this article can be found in its entirety at www.InsuranceAnswerGuy.com.

Auto Dealers Insurance – Are You Prepared For Hail Storms?

Used car dealers have a seasonal demon to watch out for and this is the time of year it rears its head. I’m talking about hailstorms. If one sweeps across your lot you are likely to suffer a huge amount of property damage. In fact, some of the biggest claims we see are from these Spring and Summer hailstorms. Do you know if you have the right protection?

Hailstorms are often local in their impact but if it happens over your lot, you can expect huge losses to your inventory. Most used car dealers have their inventory stored outside and are vulnerable to hail losses but this is the type of protection that many car dealers don’t think about until it is too late. So how do you know if you have coverage?

Well fortunately the garage insurance policy is a standardized form so it is easy to know if you have the coverage. Hail coverage is a part of your comprehensive coverage which is part of the dealers open lot coverage for your cars. The dealers open lot insurance coverage will have a section with a limit and deductible for both collision and comprehensive coverages.

Pull out your policy right now and check to see that you have a limit of coverage for comprehensive coverage on your dealers open lot section. Now, also check out how the deductible reads. The standard form has a per vehicle deductible and a maximum per loss deductible. The per loss limit is typically 5 times the per vehicle deductible. So, if you have a $500 deductible on your comprehensive per vehicle, then you probably also have a $2500 maximum deductible per event. There are a few companies out there that set their policies up so that the only deductible is per loss, not per vehicle. This is an important distinction. In my previous example this would increase your claim payment from the insurance company by $2000. For more information about per vehicle deductibles and what is available out there, read my earlier blog here.

If you need any help at all interpreting your deductibles or how they might pay in a claim, please feel free to give us a call, toll free, at 877-687-7557 or visit us online at www.TheAutoDealersHelper.com. We specialize in helping used car dealers with their insurance needs all across North Carolina, South Carolina, Georgia, Tennessee and Virginia

The source information for this article can be found on articles at www.InsuranceAnswerGuy.com.

Used Car Dealers – Who You Buy Your Garage Liability Insurance From Could Matter A Great Deal

Used car dealers in North Carolina certainly have many options regarding which insurance company they choose for their garage liability insurance. But very few of these dealers, no matter how insurance savvy, understand the impact of using a company with their own special garage form. This form can save the dealer thousands of dollars in premiums and claim costs as well as dozens of hours in the claims process. But you have to have the right form to benefit.

Let’s start with a scenario that is all too familiar for used car dealers in North Carolina. In order to sell the car you need to let your customer test drive it. Now we all know that dealers are busy and often the customer goes out alone in the car. The customer starts messing with the stereo and other unfamiliar items on the dashboard and suddenly they have hit another car. Now your product is damaged and there is damage to a third party and their car. When you file this claim with your garage liability insurance company you will be entangled in hours of claims processing from statements to phone calls and on and on. In addition, you will now have a claim against your record which might result in higher rates with your insurance company and higher rates from other insurance companies when you decide to shop around. Or worse yet, you may be cancelled by your insurance company for this large claim and you will find it hard to replace this coverage. Without garage liability insurance, you are out of business.

There is a way to avoid all this heartache, simply by choosing the right garage liability insurance company. There are insurance companies out there who write North Carolina Garage Liability Insurance for Used Car Dealers on their own policy form. And this form excludes protection for your customer driving your car unless your driver has no personal auto insurance, or your customer’s auto insurance limits are below the state mandated minimums. So now, in the above accident scenario, if your client has his or her own personal auto insurance policy, then that policy will have to pay this claim. This protects your policy from claims, keeps your claims record clean, and keeps you out of the awful time sucking claims process.

There are three caveats to this trick. First of all, if your garage policy limits protection for your clients you still need to do two things to make it work. First of all, verify that they have an auto insurance policy with liability insurance equal to or exceeding the minimum liability limits required by law in your state and secondly, make sure that they have collision coverage on their policy on at least one of their cars. The collision coverage will be necessary for you to be paid for the damages to your vehicle that they are test driving. The third is that you will need to have an agent who specializes in used car dealers who will understand this policy form and who can help you intervene in the claims process and get the necessary information to the customer’s insurance company so that the claim never gets filed against your garage policy.

So what must you do? Call your agent and ask them if your garage policy will pay on behalf of a customer test driving your vehicle. If they answer yes, then you may need to find another agent, one who specializes in used car dealers. If you need help with this process, please fell free to call Clinard Insurance Group, in Winston Salem, NC, toll free at 1-877-687-7557 or visit us online at www.TheAutoDealersHelper.com. We can help you find a company using their own garage liability form that can give you these advantages.

The source material for this article came from an article at www.InsuranceAnswerGuy.com.