Garage Liability

Are you sick of hearing me talk about garage liability yet? I am going to assume “No” since you’ve made it this far! In a given day I see a lot of garage business, I talk about it quite a bit with my coworkers, and answer a lot of questions for our agents. This product can be hard to grasp right away, I get that. That is why I want to share what information is most important when sitting down with a client needing garage liability. If you’re not sure if your customer is a good fit for garage liability, check out my first video: “What Risks Need Garage Liability“

When you first sit down with your customer, the most important piece of information to ask for is employee information. Auto service risks and auto dealers are rated based on a set number of units or payroll designated by each carrier. This is unlike the general liability form, which rates based on gross sales. Auto service risks have a given payroll for both full-time and part-time employees. For example, full-time employees are assigned $5,200 payroll and part-time are assigned $2,600. Note, this can range by carrier and generally what classifies a part-time employee varies as well.

For dealers, we are given a matrix of rating units to assign to each employee. The information needed to arrive at the correct rating unit includes job duties, full or part-time status, and if they are furnished an auto to drive for personal use. Again, this can range based on carrier, but the minimum rating units per policy is around 1.5. Generally, anyone assigned an auto for personal use will have a rating unit of 1.0 and it goes down based on exposure to driving.

I want to stress the importance of getting ALL employee information when talking to your customers. Because premises liability is included on the garage coverage form and the only way to get the full scope of operations is through the number of employees. We need to know about every employee whether they drive a vehicle every day or just sweep the floors. Often times additional employees are caught at inspection or audit and it calls for a very pricey endorsement after binding. And, most importantly, carriers do not like to see undisclosed drivers on claim reports at the time of quoting or time of hire if after binding.

The second question to ask, is a two-part question, what type of work are you doing and on what type of vehicles? It makes a huge difference if an insured is doing brake work on a personal passenger vehicle, versus a semi-truck. Along with that, we see more frequency claims on oil/lube shops and other quick-service type businesses. If they are a dealer, it makes a difference if they are selling motorcycles versus cars, trailers versus RV’s, and so on. Not all of these vehicle types require the same type of coverage with the state and it will help us properly underwrite the lot and the risk.

Many factors go into underwriting a garage liability risk but these two points make the biggest difference in price and which carrier is the best fit. A couple of other factors include territory, limits, coverage, experience, and claim history. Please check out the attached video which is a quick summary of the rating units and payroll information given above.

As always, please contact us with any questions on garage liability, were more than happy to help.

Until next time!