GUEST FEATURE
An Often Overlooked Problem By Chris Woods SENIOR PARTNER, FORTRESS PARTNERS INSURANCE AGENCY
A
few months ago during a QAP committee meeting, we started a conversation
about the physical damage value of
When and how is your customer’s vehicle covered for physical damage? Often I hear from the dealership:
chose a limit of only $50,000 because he thought nothing would happen to more than one vehicle. As your customer is not receiving
your customer’s vehicles. It became
“I’m sure it is covered. The body
apparent that we should discuss this
any calls back from Friendly’s Body
shop has an insurance policy.”
Shop, it has become apparent to
“Great, how do you know?”
your customer that Friendly’s does
in more detail. NMEDA and the QAP have done a great job in helping dealerships set up adequate limits and risk management procedures to protect the dealers in the event
“Well, I don’t…but they are in business and they have coverage, I’m sure.”
of liability claims that can cripple a
Here is the scenario for today: Mr.
business, but I want to talk about
Q brings his Caravan back to you
the physical damage coverage side.
to have some updates done to his
As the typical physical damage
conversion. At that time you discuss
value of a singular vehicle usually
the minor fender damage he has
ranges anywhere from $10,000 to
agreed to have repaired. You don’t
$80,000, we realize these losses
have the capabilities to do the
are not catastrophic, but still painful
vehicle body work so you send the
no matter how large or small your
vehicle over to Friendly’s Body Shop,
business.
which you have done numerous
I could expand on many different
times before. While sitting overnight
options and claim scenarios. All very exciting stuff. But I want to make each dealer aware of a potential coverage gap that could leave a bad
at Friendly’s, lightning strikes the building causing a fire. Mr. Q’s van, along with three other vehicles belonging to customers of Friendly’s,
impression in your customer’s mind.
are all destroyed.
Do you know how and when your
You are notified the next day and you
customer’s vehicles are covered when
in turn call your customer. Not a great
being worked on at another place of
day, but you “know” that Friendly’s
business? I’m going to take the next
has insurance and this should be
few minutes to explain and provide a
covered with no problems. Well, that
little guidance on what your exposure
is where this scenario goes downhill
is and how to best protect yourself
fast. Friendly’s garage insurance
and your customer.
policy has GarageKeepers coverage for customer vehicles on his premises, but Friendly’s was saving money and
34
NMEDA Circuit Breaker
not have adequate GarageKeepers coverage to provide him money for his converted van. So Mr. Q presses on you to reimburse him for the van. You then submit the claim to your insurance carrier. Your claim adjuster notifies you that the van was not in your care, custody, or control when it was destroyed and therefore is not covered by your policy. You now must notify Mr. Q that he has to make a claim on his own auto insurance policy, which makes him very irate and you lose a customer. How quickly this easy little project and vehicle repair became a major pain and a potential financial loss. All this can and should be avoided with a few smart risk management techniques.
Two Quick Steps for Each Business Tending to Your Customer’s Vehicles Step One: Always—each year—collect a current certificate of insurance from businesses that do work for you. Ask to be listed as a certificate holder. For this scenario, the certificate of insurance shows that Friendly’s
