A few insurance questions

Bacon said:
I own a large insurance Agency....I'll check with my Commercial Agents but in general: (this is for Illinois and Indiana)

A General Liability Policy covers you for things you are legally liable for.

Garage Keepers is for cars in your care, custody and control and is for Comp & Collision Only. There are 2 different levels of this coverage; the first is when your insurance is primary, the second is when your insurance is secondary to the customers. In your example this would not apply to the damage you caused.


Damage you cause to a clients car is covered under the GL Policy and not the Garage Keepers. Nows here the important part; if a 16 year old client files a claim for his negligent work and ensuing damage, he would be canceled ASAP. Also, this claim would show up on his loss runs and be available to any Agent in the USA to view. YOU DON'T want to become uninsurable!

There are a lot of other things to consider but the above should be seriously reviewed!
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Bacon,

I retired from a 35 year career in insurance claims but I handled "first" party claims for the insured and liability claims are considered "third" party claims so I'm not an expert in liability claims.

You are correct in stating the general liability policy covers the policy holder "for things you are legally liable for". But even though you may be legally liable for the damage, that does not obligate the insurer to pay for the damage.

I think you'll find that the general liability policy has a "care, custody and control" exclusion and won't pay for damage to a vehicle while in the "care, custody and control" of the detailer. The detailer may be 'legally" liable for the damage to the customer's vehicle but since it's under his "care, custody and control" the insurer would not pay for the damage. That's why the detailer needs the garage keepers policy as that specifically covers vehicles in his "care, custody and control".

The comprehensive coverage, under comp & collision, basically covers everything but collision and overturn and it's similar to comp. coverage under your auto policy and it's very broad coverage.

If you have a policy in your office would you please check to determine if "faulty work" is an exclusion? If so, even the garage keepers policy wouldn't pay for burned paint as that would be considered "faulty work". I believe it would pay if the detailer dropped a hammer on the car as that would be an "accident" and not faulty work on the vehicle. This would really be helpful to the professional detailers if they know faulty work is excluded under the garage keepers policy.

I initially thought the garage keepers paid for all damages but apparently they may not. I went back through some old books and found the "faulty work" exclusion. As you well know, the first page of the policy may grant coverage and the second page can take it away.
 
Thanks for the clarification on the different types of insurance. I'm going to call the agency today to see what happens if my father is a silent partner. Hopefully I'll be able to work it out because I had been planning to hire a helper in a few months, something I wouldn't be comfortable with without having the company completely insured.
 
I've been going through the same stuff with my insurance here in Mass. Last year I operated with out it because they wanted $1,800 up front (couldn't pay monthly) for garage keepers and general liability. I owned a home and occasionally worked out of my garage. I couldn't afford it at the time to pay that month up front, since I had just dropped all the money I had on starting my LLC.

I just requested another quote for this year as I'm going to purchase it. Which is going to be a big waste of my money I think. I always had the money set aside for the time that I make that mistake. But as Dave mentioned your deductible is usually more than the cost to respray. Knock on wood I haven't had to dip into that piggy bank yet for a mistake. But when I do I have a feeling I'm going to pay out of pocket instead of paying my deductible.

But same reason as your looking into it, gives you the "fully insured" label which some people look for. Especially if your going to be working on high end cars or fleet accounts.
 
MaxWax said:
So I should just tell clients that I don't have GK but I would pay in the event of damage? In regards to a silent partner, I was planning to call the insurance agency tomorrow to see if having my dad as a partner would help. Also, how do I go about making a silent partner a legitimate part of the company?
Thanks for the help everybody!:dblthumb2:
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Yes, it builds trust whether you get the business or not. What type of company do you have? LLC, S-Corp, other... ??? Speaking to your agent will get you the minimum stips you need to get covered properly, then it is just a matter of integrating the partner into the business charter with the state to meet that obligation. Once you get some info from the agent, post it and we can move on from there (saves time and typing).
 
Paul Mitchell said:
Bacon,


I initially thought the garage keepers paid for all damages but apparently they may not. I went back through some old books and found the "faulty work" exclusion. As you well know, the first page of the policy may grant coverage and the second page can take it away.
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You got a lot of info and experience from your career, I hope you are enjoying retirement! In my experience I've never sold a pure GL policy for detailing and auto body. All of our policies have been Garage Keepers which include GL as part of the package. We dont have an exclusion for faulty work and the "direct primary" would pay whether or not you are legally liable. I always sell Garage Keepers with ONLY "direct primary"; its the best coverage you can have. The Garage Keepers provides a bounty of protection including loss of income and equipment protection.

For those that have a Garage Keepers Policy be sure you have "direct primary" AND NOT "legal liability" coverage.

BTW, a complete Garage Keepers Package Policy in the Chicago Area is about $700/year
 
Just got off the phone with my agent. Even if my father were appointed CEO, he would have to be with me all the time for the policy to work. He said he'll be able to get me GL and I asked him about a ton of different scenarios such as if I burned someones clear coat and he said it would most likely be covered. So looks like I'll just have to be careful and ask customers to move their cars. He did say that once I have employees, as long as their over 18 I can get a GK policy for them. Thanks for all the help AGO!
 
mwoolfso said:
Yes, it builds trust whether you get the business or not. What type of company do you have? LLC, S-Corp, other... ??? Speaking to your agent will get you the minimum stips you need to get covered properly, then it is just a matter of integrating the partner into the business charter with the state to meet that obligation. Once you get some info from the agent, post it and we can move on from there (saves time and typing).
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And the company is an LLC
 
Bacon said:
You got a lot of info and experience from your career, I hope you are enjoying retirement! In my experience I've never sold a pure GL policy for detailing and auto body. All of our policies have been Garage Keepers which include GL as part of the package. We dont have an exclusion for faulty work and the "direct primary" would pay whether or not you are legally liable. I always sell Garage Keepers with ONLY "direct primary"; its the best coverage you can have. The Garage Keepers provides a bounty of protection including loss of income and equipment protection.

For those that have a Garage Keepers Policy be sure you have "direct primary" AND NOT "legal liability" coverage.

BTW, a complete Garage Keepers Package Policy in the Chicago Area is about $700/year
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:iagree:Hi Bacon,

This is some good information that detailers need to know. Policies can differ and the detailer should look for one that pays for "faulty work".... It appears that some do and some don't. I agree completely that Direct Coverage is the way to go and the detailer should look for a policy that does not require legal liability. Here's an example of how Direct Coverage works:

Your shop burns down as a result of a lightning strike totaling a customer's car inside waiting to be detailed. You are not "legally liable" to pay for that car as you were not negligent. Under the primary policy Bacon writes you would actually have coverage for the customer's car even for an Act of God. Your garage keepers policy is primary and will take care of the loss to the customer's car. If you had the secondary coverage, which Bacon does not write, your customer would have to submit the claim first to his insurance carrier and your policy would only pay if your customer had no insurance. This is not good for two reasons:

1. the customer is upset and doesn't feel he should have to involve his insurance company as he did nothing wrong.

2. Even though the customer did nothing wrong he may be charged with an "accident" on his record. It's not right but it happens.

If you have a policy that requires "legal liability" the customer would have to file the claim with his insurance company because you, the detailer, are not "legally liable" for the damage from an Act of God.

Bacon writes the best policy available and the $700.00 premium sounds good to me.

The OP said his potential agent, when asked if burning through the paint would be covered, said "it would most likely be covered". "Most likely" doesn't cut it in the world of contracts. It either is, or is not, covered so the agent should talk to his underwriter or the claims department for clarification.

I believe Tuscarora Dave brought up the fact that most panels can be repaired for around $500.00 which may be the amount of the deductible so that may be a moot issue as the detailer would end up paying for the damage anyway.

Once again, if your primary concern is damage to the vehicle caused by your faulty workmanship be sure and find out if faulty work is covered under your policy. Often it's not.

If the OP can afford it he should buy the garage keepers policy as well as general liability. It always nice to tell your customer you are fully insured.
 
Paul Mitchell:

All excellent points!

(here is something additional I do for my Detailing Insured's)

For those Detailers that want to "kick it up a notch", ask you current agent for a COI (certificate of insurance). It is a formal document that outlines the coverage you have for your business. When meeting with potential clients you can give them a copy; it acts to enhance your professionalism and distinguish you from your competition. Plus it allows you to elevate your credibility and increase customer confidence.

My clients told me it has closed countless business deals for them!
 
A brief note of Thanks! To:

Bacon and Paul Mitchell

Thanks for your expert advice on "Insurances for Detailers".
Nice knowing there are AGO forum members that possess this knowledge, and are willing to share their expertise.

IMHO...Your posts should be made a 'Sticky' for further reference.

Thanks again. I do appreciate it. I'm sure others share that sentiment.

:)

Bob
 
FUNX725 said:
A brief note of Thanks! To:

Bacon and Paul Mitchell

Thanks for your expert advice on "Insurances for Detailers".
Nice knowing there are AGO forum members that possess this knowledge, and are willing to share their expertise.

IMHO...Your posts should be made a 'Sticky' for further reference.

Thanks again. I do appreciate it. I'm sure others share that sentiment.

:)

Bob
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I agree! Thanks!

FUNX725 said:
I agree! Thanks!

The OP said his potential agent, when asked if burning through the paint would be covered, said "it would most likely be covered". "Most likely" doesn't cut it in the world of contracts. It either is, or is not, covered so the agent should talk to his underwriter or the claims department for clarification.

I believe Tuscarora Dave brought up the fact that most panels can be repaired for around $500.00 which may be the amount of the deductible so that may be a moot issue as the detailer would end up paying for the damage anyway.

Once again, if your primary concern is damage to the vehicle caused by your faulty workmanship be sure and find out if faulty work is covered under your policy. Often it's not.

If the OP can afford it he should buy the garage keepers policy as well as general liability. It always nice to tell your customer you are fully insured.

Bob
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I say most likely because when I asked about that specific situation he said that he would check with the insurer and let me know tomorrow. As far as the GK, it's not affording it that's the issue, it's that they wouldn't even give me a quote because I'm under eighteen and even if I were to have my dad as CEO/partner it wouldn't change anything because he would have to be on site with me. If I have a general liability policy, would I be able to say that I was fully insured? Or maybe just insured?
 
MaxWax said:
I agree! Thanks!



I say most likely because when I asked about that specific situation he said that he would check with the insurer and let me know tomorrow. As far as the GK, it's not affording it that's the issue, it's that they wouldn't even give me a quote because I'm under eighteen and even if I were to have my dad as CEO/partner it wouldn't change anything because he would have to be on site with me. If I have a general liability policy, would I be able to say that I was fully insured? Or maybe just insured?
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Hi Max,

You could tell your customers that you do have a general liability policy and though it's not as complete as a garage keepers policy it's certainly better than no policy.

Let us know what your agent finds out from the insurance company.

Good luck!
 
FUNX725 said:
A brief note of Thanks! To:

Bacon and Paul Mitchell

Thanks for your expert advice on "Insurances for Detailers".
Nice knowing there are AGO forum members that possess this knowledge, and are willing to share their expertise.

IMHO...Your posts should be made a 'Sticky' for further reference.

Thanks again. I do appreciate it. I'm sure others share that sentiment.

:)

Bob
Click to expand...

I'm with you. Greatly appreciated. It's excellent information for anybody. :props:
 
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