Called For Insurance Quote - Can't Cover Me

erichaley said:
I called my insurance company the other day to get a quote for business liability and garage keepers insurance.

After contacting their underwriters to get more information, the agent called me back and said that, because I am home-based, they wouldn't cover any painting or paint-related work.
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The issue with some carriers is that they will not cover business that are home-based, mobile or are new ventures.
 
PureShine, I see you on this forum alot. You have alot of great information and I respect what you have to say. If you tell me that your policy will cover you for your negligence then i believe you. But this is not the case for the vast majority of detailers who are at this moment paying a premium for coverage, whether they know it or not.
I want people to be aware of what their risk is. When someone thinks that they are insured so there for covered for all possibilities, it can only lead to disappointment when they need it the most.
 
This thread (along with several others before it) has recently lead me on a deeply focused quest to understand WHAT IS IN FACT being covered in the various types of commercial insurance policies that are available to auto detailing businesses.

I found a very informative article on a car dealers insurance blog regarding the differences in types of coverage one may wish to maintain. The section that explains typical exclusions is of particular relevance for this discussion...

Garagekeepers coverage is subject to several exclusions.

Excluded are: contractual obligations; theft by an insured; defective parts; faulty work; loss to sound reproducing equipment (unless permanently installed); loss to tapes, records, etc.; loss to other sound receiving equipment (CB's, mobile radios, telephones or scanning monitors unless installed in the dash or console) and radar detection equipment.
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Obviously this is just a general representation of the type of coverage that is available; however, if you are considering (or are currently paying for) garage keepers insurance you might want to take a look at what is specifically excluded in your policy and then determine again if the premiums are worth it.

Here is another snippet of info from the IRMI.com database that gives an example of "faulty work" that would NOT be covered under a garage keepers liability policy:

Example Two—Cost of Replacing Property Because of Faulty Work (j. (6))
"Property damage" to:

(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.

The state hires GBGC to resurface portions of the highway. The work involves removing the existing surface and laying bituminous concrete (asphalt) over the "grooved" pavement. Unfortunately, GBGC scrapes away far too much, accidentally scraping way most of the compacted gravel that is the base of the highway. The resurfacing project quickly becomes a disaster—the new asphalt being applied by GBGC crumbles into small pieces only hours after the roller passes over it. The project is quickly halted, and the state brings a claim against GBGC for the cost of replacing the compacted gravel base.

Exclusion j. (6) expressly excludes damage to the highway base—the compacted gravel—as it is property that must be replaced or repaired because GBGC's work was incorrectly performed on it. GBGC has no CGL coverage for the claim by the state.

- See more at: Faulty Work and the CGL
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Relate this to detailing and the polishing process on paint. Even if you know what you are doing and using extreme care and the correct tools, compounds, PTG readings, etc. If you burn through to the base or primer the policy will consider it "faulty work" and not cover the instance. Unless you perhaps provide a disclaimer to your customers that burn through is a possibility when performing extensive paint correction and; therefor, you cannot be held liable.

As I have discovered from various conversations with insurance agents and telephone representatives... they may not always fully understand the policy they are trying to sell to you.

Here is a link to the full article if anyone is further interested: Differences between garage liability and garagekeepers insurance explained.
 
Nicholas@Autowerx said:
As I have discovered from various conversations with insurance agents and telephone representatives... they may not always fully understand the policy they are trying to sell to you.

Here is a link to the full article if anyone is further interested: Differences between garage liability and garagekeepers insurance explained.
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I should also add that most carriers have policies stating that their representatives should not speak to hypothetical situations. A good producer should be very careful about their coverage comments as well. But I agree that there are a lot of bad producers out there and any business should find a producer who is familiar with this type of risk.
 
Thank you Nicholas

SUMMARY
As you can see, the difference between garage liability coverage and garagekeepers coverage is the difference between liability insurance and physical damage insurance.

One covers the insured's liability for operations and autos and the other covers damage to customer's vehicles.

All garage risks need both coverages to properly insure their loss exposures.

(Me speaking)

But from my understanding, it can be done. Especially because I see other well renowned Detailer's that a lot of us watch. That get the job done, so I am assuming that they are covered. Like the sign in sheet for AG. They are signing something and on top of that, they are being recorded. I am not saying that it's wrong (good for them)

But from my understanding, they will to be covered. (And they are working on some really nice cars)

So my point is, that everything should be covered, it seems really important.

Again, thank you for the read Nicholas
 
Pureshine said:
Here is a break down of garage liability and garage keepers insurance for everyone.


• Garage liability insurance: Garage liability insurance is purchased by someone who owns a repair shop or some type of vehicle service center. Liability insurance normally covers liability for the premises, operations and products. Normally, there are two sub-policies that fall under liability insurance: completed operations coverage and product liability. Completed operations coverage comes into play when maintenance you perform on a vehicle proves to be defective and your customer is involved in an accident or is injured as the result of your work. Product liability involves bodily injury or property damage suffered by third parties as a result of defects inherent in the products you sell to a customer.
• Garage keeper’s insurance: On the flipside, garage liability insurance does not cover customer’s cars that are left in your care, but this is where garage keeper’s insurance comes in. If you cause damage to a customer’s vehicle while it is in your possession, garage keeper’s insurance is what you will need to cover these costs.
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This came off the insurance blog and yes I agree you should talk to your agent before you buy the insurance.
 
Along with your insurance policies, are most of you bonded too?

Sent from my Prism II using AG Online
 
This is a quote from me regarding a previous thread.

"I’d like to make a suggestion to those who will be discussing their policy with their agent. Try to have a claims representative on hand as well as they are the people who will ultimately handle the claim and are more familiar with the policy provisions than the agent. Give them several scenarios and ask them if you would be covered under a General Liability Policy or Garage Keepers. You may find that the agent and claims representative are on different pages when it comes to coverage.

For example, you will want to know if the policy would cover damages caused by you such as burning through the clear. Your agent (or claims rep.) may say it’s covered but your claims rep. (or agent) may says it’s not as there is usually an exclusion for “faulty workmanship” under the Garage Keepers Policy and an exclusion for property in your “care, custody and control” in the General Liability Policy."

If you can't arrange a joint meeting I would recommend speaking with the commercial claims representative in your area and ask him directly if "faulty workmanship" is excluded, and if so, where can you find it in the policy - specifically on what page and in what paragraph.

An agent's job is to sell a policy while an adjuster's job is to interpret the policy to determine if there is coverage. A commercial adjuster who handles these claims on a daily basis is more in tune with insurance coverage than an agent who sells the policy. Part of my job in my 35 year career in claims was taking calls from agents who had received calls from their policy holders regarding coverage

This is not to say that you don't have coverage for "faulty workmanship" as there may be insurance companies that will allow it but I've yet to find one. Frankly, I hope Todd from Pureshine has coverage for faulty workmanship. I tried to find the State Farm form for their Garage Keepers Liability endorsement but I was unable to find it. In fact, I’m insured by State Farm and think they’re an excellent company but I would have to read their policy before believing they have coverage for “faulty workmanship”. If he has this coverage I’d recommend it to everyone.

I believe Todd stated his agent had conferred with their corporate office regarding this issue and I believe him. However, I’m wondering if it was the claims department, underwriting, or marketing (sales) that the agent talked to. It’s possible to talk to three departments within the same company regarding a “claims” issue and receive three different answers. If it’s a claims issue talk to the claims department.

I will make an offer to anyone who thinks they have "faulty workmanship" coverage to review their policy at no charge if they want to mail me a copy. Send me a PM and I’ll send you my address.

You have to remember that if the policy paid for everything it would need only one short paragraph – “We Pay for Everything”.
 
Paul Mitchell said:
This is a quote from me regarding a previous thread.

"I’d like to make a suggestion to those who will be discussing their policy with their agent. Try to have a claims representative on hand as well as they are the people who will ultimately handle the claim and are more familiar with the policy provisions than the agent. Give them several scenarios and ask them if you would be covered under a General Liability Policy or Garage Keepers. You may find that the agent and claims representative are on different pages when it comes to coverage.

For example, you will want to know if the policy would cover damages caused by you such as burning through the clear. Your agent (or claims rep.) may say it’s covered but your claims rep. (or agent) may says it’s not as there is usually an exclusion for “faulty workmanship” under the Garage Keepers Policy and an exclusion for property in your “care, custody and control” in the General Liability Policy."

If you can't arrange a joint meeting I would recommend speaking with the commercial claims representative in your area and ask him directly if "faulty workmanship" is excluded, and if so, where can you find it in the policy - specifically on what page and in what paragraph.

An agent's job is to sell a policy while an adjuster's job is to interpret the policy to determine if there is coverage. A commercial adjuster who handles these claims on a daily basis is more in tune with insurance coverage than an agent who sells the policy. Part of my job in my 35 year career in claims was taking calls from agents who had received calls from their policy holders regarding coverage

This is not to say that you don't have coverage for "faulty workmanship" as there may be insurance companies that will allow it but I've yet to find one. Frankly, I hope Todd from Pureshine has coverage for faulty workmanship. I tried to find the State Farm form for their Garage Keepers Liability endorsement but I was unable to find it. In fact, I’m insured by State Farm and think they’re an excellent company but I would have to read their policy before believing they have coverage for “faulty workmanship”. If he has this coverage I’d recommend it to everyone.

I believe Todd stated his agent had conferred with their corporate office regarding this issue and I believe him. However, I’m wondering if it was the claims department, underwriting, or marketing (sales) that the agent talked to. It’s possible to talk to three departments within the same company regarding a “claims” issue and receive three different answers. If it’s a claims issue talk to the claims department.

I will make an offer to anyone who thinks they have "faulty workmanship" coverage to review their policy at no charge if they want to mail me a copy. Send me a PM and I’ll send you my address.

You have to remember that if the policy paid for everything it would need only one short paragraph – “We Pay for Everything”.
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So I'm confused you gave no solutions if it does not cover faulty work. If you worked in the insurance world for 35 years what insurance should all of us detailers have? Most of us have garage keepers and General Liability.
 
sweatthedetails said:
There are tons of post on this subject on here, but this quote from another thread sums it up. You may be working happily under a false umbrella. Hopefully it never starts to rain on you.

Tuscarora Dave is right again! Most, if not all, Garage Keepers Policies will have a "faulty work" exclusion. I haven't seen any policy that will pay for damage for faulty work though there may be some out there. General Liability policies have "care, custody and control" exclusions so you won't have coverage if the vehicle is in your care, custody and control. Homeowners policies won't pay for business related claims. The forum had a good discussion back in January of 2012 regarding insurance and the thread is titled "A Few Insurance Questions". Calling your agent is a good idea but a better idea is to call your agent and ask him or her who is the best commercial liability claims adjuster in the local claims office then call them for some professional advice.


Macomb Dents & Details: Car Detailing and Paintless Dent Removal
www.Facebook.com/DentsAndDetails
I may be slow, but I do poor work.
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Before you quote someone you might read what he wrote in the this post.
http://www.autogeekonline.net/forum/how-make-money-detailing-cars/45477-few-insurance-questions.html
 
Quote from Pureshine

"So I'm confused you gave no solutions if it does not cover faulty work. If you worked in the insurance world for 35 years what insurance should all of us detailers have? Most of us have garage keepers and General Liability."

Garage Keepers and General Liability are the coverages you should have. Is there a policy that covers everything that can happen in a detailer's shop? No. that's why I stated if everything is covered you can write a one paragraph policy stating "Everything is Covered".

It's the job of the adjuster to interpret the policy and it's the job of the agent and underwriter to advise the policyholder, preferably before the claim occurs, of the best coverage available for his or her particular circumstances.

If you have a policy through State Farm that pays for faulty workmanship you already have the solution to the question. Most companies have a faulty work exclusion in their garage keepers endorsement and they most likely won't have an endorsement that will pay for faulty work. If you burn through the clear then the cost to repair is on you and not the company.

I'm certainly not picking on you Todd. I commend you for getting the proper insurance and running a first rate business. I just want you, and other detailers, to review their policy to determine if there is a faulty work exclusion and, if so, where is it in the policy. It's best to find out now and not later after the damage occurs.

If you were going to compound and polish a car and the customer told you not to worry about the thickness of the clearcoat would you still use a PTG to measure thickness? I think you would just to protect yourself. The same holds true for insurance - a company representative may tell you there's no faulty work exclusion but it's up to you to ensure that there isn't one.

I'd be glad to review your policy for you. Frankly, I hope you do have coverage for faulty workmanship but I can't confirm that without a review of the actual policy.

Here's a question for everybody following this thread. Have you actually read your insurance policy? If not, please do so.
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It is my understanding that "poor workmanship" (that is what my policy calls it) is not covered. If you do a bad job, your not going to be covered. If you hire a contractor to hang kitchen cabinets and he comes out to your house and backs through your garage door then goes in the house and hangs all your cabinets crooked and lopsided then his insurance company company would pay for you to get a new garage door but would not pay to have your cabinets rehung. The contractor could agree to re hang the cabinets or you could sue him for doing a poor job. The cabinets are between you and the contractor and have nothing to do with the insurance company, they already paid for the garage door.

In the detailing world poor workmanship would be returning the car back to the customer looking worse than when you started. Swirls, sanding marks, holograms etc. If you are cleaning someones dash and you have a sharp tool in your back pocket and it rips the customers leather seat that would be covered. I think that when dealing with an insurance company it is going to battle on exactly what "poor workmanship" vs. "accidental damage" actually means.
 
If you are going to get into a lot of heavy paint polishing/sanding/correction work it would be a good idea to develope a relationship with a quality body shop

I would much rather pay out of pocket to have a panel shot than watch my premium go up



Paul Mitchell said:
I'd be glad to review your policy for you. Frankly, I hope you do have coverage for faulty workmanship but I can't confirm that without a review of the actual policy.

Here's a question for everybody following this thread. Have you actually read your insurance policy? If not, please do so.
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I've tried reading it. After 3 or 4 paragraphs I find something else I would rather be doing :nervous:

I might shoot you a copy if I can figure out how too Paul :dblthumb2:
 
So update I talked to my agent and the claims department as paul said I should. So there is a faulty work clause in every "Garage Keeps" but polishing is covered cause its not considered fault work. As they said it goes under you damaging the car in anyway. so for example lets say the polisher fell out of my hands and scratches the car its covered. Faulty work is under if you installed new brakes and they got in an accident. Then this is why you have "Garage Liability" for.
 
Todd, I’m glad you talked to your agent and claims department. It looks like we can agree that State Farm, as well as the majority of insurance companies, has faulty or poor workmanship exclusion.

If State Farm is willing to pay for a burn through on clear coat I would certainly stay with them for a long time though, in my opinion, the majority of companies would deny the claim. As I stated in an earlier post I’m also insured with State Farm and am very pleased with them. Each company has a different philosophy when it comes to policy interpretation and that’s why many insurance related claims end up in a courtroom.

Let me explain “my” claims philosophy using Todd’s example of dropping his buffer on the car and scratching the car.

Comprehensive General Liability Policy (CGL): No coverage for this accident as the CGL has a care, custody and control exclusion. Since the vehicle was in Todd’s care, custody and control the claim would be denied.

Garagekeepers Policy: The same loss, dropping the buffer on the car, would be covered as it would be an ”accident” as it meets the following criteria: It was not deliberately caused, and was not inevitable. The Garagekeepers takes care, custody and control out of the equation. It wasn’t ”faulty workmanship” that caused the damage, just an accident.

Let me give an example of what I consider faulty workmanship while polishing a vehicle.

I’ve only used a buffer a few times as I’m not a professional and detail only family vehicles. I decide on Monday to become a “professional” so I call XYZ Insurance Company and buy a policy with General Liability and Garagekeepers. Since I know I can buff out my first customer’s car faster with a rotary I buy one from Auto Geek on Tuesday and I receive it on Thursday (free shipping and 15% off).

I’m stoked now and I’ve got my rotary and I can buff anything that comes in my garage!
My neighbor stops by and I tell him I’m now a professional detailer and he says “why not detail my classic 1969 Camaro Z-28? I say “great, bring it by this afternoon! He leaves it at my garage that afternoon and I begin polishing the next day.

Unfortunately I fail to do a walk-around with my neighbor and don’t ask him any questions like has it been painted recently, are there any issues I should be aware of, have you had any problems with the paint? It’s not a problem; after all I’m a professional! I don’t have a paint thickness gauge as it’s on back order so I have no idea how thick the paint is. I go ahead and buff this bad boy out and burn right through the clear on an edge.

Here’s how faulty workmanship can differ from an accident. The burn was certainly not deliberate so we’re okay there. However, due to my lack of experience with a rotary and failure to use a paint gauge it was “foreseeable” that I most likely would damage the Camaro and that would be considered “faulty workmanship” as I was negligent in failing to use a PTG and using a rotary for which I was not qualified to use. I submit the claim and it’s denied under the “faulty workmanship” exclusion.

VT beat me to the deductible. It’s normally $500.00 per occurrence but can be more if you want a cheaper premium.
 
Here’s how faulty workmanship can differ from an accident. The burn was certainly not deliberate so we’re okay there. However, due to my lack of experience with a rotary and failure to use a paint gauge it was “foreseeable” that I most likely would damage the Camaro and that would be considered “faulty workmanship” as I was negligent in failing to use a PTG and using a rotary for which I was not qualified to use. I submit the claim and it’s denied under the “faulty workmanship” exclusion.

There not going to know how much experience you have using a rotary and what a paint gage is so your fine. Most of use DA polisher its much harder to burn clear coat. That why as a new detailer starting out I would stay away from a rotary until you have practiced with one.
 
Todd, you might be right and I (the “professional detailer cited in post #57) might be paid for this claim depending on the experience level of the adjuster assigned to the claim.

An experienced adjuster will know from looking at the claims coverage printout that the policy is only a few days old. If the adjuster is smart (not all of them are) they’ll contact the agent to determine if the insured had a prior liability or garagekeeper’s insurance policy. If no prior policy existed, and the agent told the adjuster it was a new line of work for the insured, that “should” initiate an actual visit to the scene to inspect the damage and determine how it occurred.

The adjuster should take a statement from the insured and if the insured is honest he’ll admit he’s never polished a car before and had no idea what the condition of the paint was prior to polishing. Claim denied due to poor workmanship.

That’s what should happen but realistically in today’s world the damage would most likely never be inspected due to the amount of the claim and it would be handled over the phone. One panel should cost about $600.00 to repaint (if you’re lucky) and with a $500.00 deductible the net amount is only a $100.00 payment.

That’s not to say the insured will receive $100.00. One of three things will happen.

1. He gets paid $100.00

2. The claim is denied for poor workmanship

3. He withdraws the claim after he’s told he has a $500.00 deductible

We’re certainly in agreement regarding staying away from a rotary unless you have a lot of experience!
 
Huge update everyone should know this! The underwriters called me to day to update me on my coverage we are not cover if you burn through the clear coat under the "faulty workmanship" exclusion. They are looking to find out what policy I need to cover this they think I might need a bond of some kind. I will let everyone know what I find out.
 
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