Shielding Your Shop from Tragedy

Published in Hammer & Dolly – Thomas Greco Publishing

Catastrophes may strike without warning, but being proactive can help shop owners avoid becoming the next tragedy.

Unfortunately, a lot of collision repair facility owners do not have enough coverage through their business insurance, according to David Willett of Spark Underwriters. “From a risk management standpoint, it’s just as important to make sure your insurance policy reflects today’s needs as it is to send your technicians to training or to invest in current tools; it’s an aspect of running a fine-tuned, efficient business,” he insists, recommending an annual review of one’s policy at a bare minimum, though his company monitors their policyholders’ companies on an ongoing basis.

“We’re unique because this is our only industry,” Willett points out, acknowledging that a handful of carriers specialize in offering coverage to collision shops. “When dealing with customers’ insurance policies, shops are apt to complain about how little insurance companies know about the collision business, yet those are the same companies they insure their businesses with. It’s easy to put a picture of a car at the top of your paperwork, but that’s meaningless if you don’t know what it takes to repair today’s vehicles. This is such a unique industry; choosing a provider that understands this field goes a long way toward ensuring your shop has adequate coverage.”

It’s imperative that shops consider possible exposures that may necessitate additional coverage, such as cybersecurity risks and employment practices liability insurance (EPLI), while also identifying irrelevant and outdated coverages that should be removed from the policy. Willett also believes it’s a good idea for insurers to run building appraisals on a regular basis, rather than just increase coverage by a certain percentage, so that building costs and new zoning laws are taken into consideration.

Shop owners commonly question whether their technicians’ tools are covered under the business’ policy or if each employee is required to insure their own toolbox. “While your employees’ homeowners or renters policy can include coverage for their tools, they shouldn’t have to. It’s much cheaper for the shop to insure than for the individuals to add tools to their policies; it typically costs them as much as eight times what it would cost the shop.”

In fact, Spark Underwriters recommends it so strongly that they built it into their standard policy with far fewer restrictions than many others offering the coverage, Willett explains, advising shops to include it in their employee handbook as an employee benefit. “Encourage employees to submit pictures and/or receipts of their tools each year to capitalize on this unique offering. Think about it – technicians are not exactly in abundant supply, so covering their tools as an employee benefit is just another way to demonstrate that you’ve got their back.”