At A.P. Reid, we consider consumer education to be one of our top priorities. An informed insurance buyer will made educated decisions about their insurance - ensuring that you avoid trouble down the road in the event of a claim. A.P. Reid customers benefit from the important information contained in our series of hundreds of Customer Information Bulletins. Below you will find a selection of these bulletins related to Business Insurance. Check back often as this selection will be updated from time to time.
Many businesses' are in the business of selling and repairing new and used automobiles, trailers, motor homes, and other vehicular equipment. Often, the sales and repair aspect go hand in hand and many businesses' will do both. The insurance exposures are unique and a specially designed automobile insurance policy was created a number of years ago to handle this exposure.
The Standard Garage Automobile Policy, SPF # 4, is such a well written document that it can be used to provide coverage whether you are in the business of selling autos, trailers, and motor homes, or just repairing, or both. Coverage can be provided for just your customers automobiles or for you own as well as your customers, or just your own sale stock.
This is an essential document that must be carried by all business owners in this field of work, as no other type of insurance provides the necessary coverage's. Premiums are determined by payroll, the number of employees driving vehicles, the number of vehicles held for sale, or your anticipated value of customers autos held on the premises. In this fashion, larger companies, repair garages and dealerships pay more for the Garage Auto Policy than the smaller dealers and repair garages.
The following is a review of the coverage's available under the Standard Garage Automobile Insurance Policy, what they mean, why you need them and how the premium is determined. You are free to select all or any of the coverage's as required by your own particular business.
Third Party Liability
Whenever you own an automobile, you must provide Third Party Liability Insurance (P.L.& P.D.) If you own a number of vehicles that are held for sale, it would be very expensive to provide a typical automobile policy for each one, and it would be a cumbersome management task to add, delete, and cancel all these individual automobile policies every time you acquired or sold a vehicle. Likewise, as a garage, when you have custody of a customers automobile for repair or servicing, your own P.L.& P.D. coverage will respond first in any loss, and you are responsible for any damage that your customers automobile does while in your custody, therefore you must also carry P.L. & P.D. on these customers automobiles. The Standard Garage Automobile Policy provides one blanket limit for Third Party Liability covering all owned and/or customers automobiles. If you are in the business of repairing alone, and sell no vehicles, the policy is usually written just for customers automobiles at a reduced premium. It stands to reason that a larger dealership and repair garage would handle more vehicles (customers or owned for sale) than a smaller operation, and the premium charge is based on the size of the company which help the insurance company determine approximately how many customers vehicles and owned vehicles would flow through the operation in any given year. The premium is determined by the number of people on the payroll and what the total payroll is.
When we ask you for your payroll, we often ask that you tell us the positions being held in your organization. Some garages, such as a service station that is open 24-hours a day, may have a substantial number of employees, but many of these employees would pump gas only and not drive, deliver, pick-up or test drive a customer auto. In this event, most insurance companies allow us to exclude this payroll from the premium calculations. It is in your best interest to report your payrolls in terms of job identification so that we can get you the best possible rates.
If your policy is covering only customers automobiles, the policy will actually be endorsed to exclude "owned autos". You do get a better rate when you do not insure your own automobiles, but this is only practical if the primary operation of your business is a service station or a small repair garage where the owned automobiles might be just 1 or 2 and the separate regular automobile insurance coverage would be cheaper than the Garage Liability cover based on payroll. We usually try to determine two prices and let you choose. The endorsement used to exclude cover for vehicles you own is called a SEF 71. The term SEF 71 would appear on the face page of your policy, and attached within the policy would be the actual clause than restricts coverage to customers automobiles only.
It is important to understand, however, that the Third Party Liability Coverage that is provided for customers automobiles is restricted to the use of customers automobiles in connection with your business, or the business of servicing the customers automobile. It does not permit you or any of your staff to take a customers automobile home or to get groceries, or any form of personal usage, and any claim associated with such usage would be denied by the insurance company.
The rest of the policy coverage's available under this policy relate to providing physical damage coverage for your own automobiles and for providing legal liability physical damage to your customers automobiles.
Collision
If your Garage Auto Policy provides P.L. & P.D. coverage for your own automobiles, this section of coverage is available to provide Collision cover for those owned automobile, if you desire Collision Coverage. As with any typical automobile insurance policy, Collision is provided subject to a deductible per claim being paid by you in the event of any insured accident. If you have just one or two owned automobiles, it is usually better to provide such coverage under a typical auto policy and not under the Garage, but if you have many owned autos, such as a dealership would, it is preferable to provide Collision Coverage here. Again, the rates are determined by the gross payroll of the operation.
Comprehensive
As with Collision, Comprehensive or just Fire and Theft can be provided for owned vehicles under the Garage Auto Policy, but the same comments apply as stated above, if you own just one of two vehicles.
Legal Liability Collision Damage to Customers Automobiles
If you drive or repair or service a customers automobile in any way, you should consider this coverage as essential in your insurance portfolio. If you damage a customers automobile, you will be held responsible, and in no other method can you obtain the necessary insurance coverage. You should carry a limit per accident equal to the highest value customers auto that you are likely to have on the premises.
Legal Liability Specified Perils Damage to Customers Automobiles
As with Legal Liability Collision, this coverage should be considered essential in your insurance portfolio. It provides insurance coverage for damage caused by Fire, Lightning, Windstorm, Vandalism, Theft of the entire Customers automobile, sinking, stranding, and a host of other miscellaneous coverage's. It does not cover pilferage. Pilferage is the theft of automobile parts attached to the auto. Coverage for pilferage is available, but very expensive. Your best safeguard against the risk of pilferage is to remove any objects that are likely to be stolen from the customers vehicle.
The Standard Garage Automobile policy can also be used like a typical automobile insurance policy. You can add underage operators, you can endorse the policy to including driving by non-employees of the business. It can truly be designed to actually replace your own automobile insurance policy.
You must remember some basic rules however:
1. All owned automobiles must be registered to the business and used in connection with the actual business of selling or repairing automobiles.
2. Personal usage is allowed by employees of the business only, unless an agreement is made with the insurance company to permit non-business usage by a non-employee, such as the wife or son of the owner.
3. Vehicles cannot be used for any other business use except the business that is being insured by the insurance policy.
4. Customers vehicles cannot be used for any personal usage at all. If driven at all, they must be driven by company employees and driven only for the purpose of aiding the repairing or servicing of the customer automobile.
5. If you policy contains the SEF 76 that I described earlier, then your policy is restricted to the covering of customers automobiles only.
6. If you hold vehicles for sale, then you should have the Standard Garage Automobile Policy cover all owned and customer automobiles.
7. If you operate a repair garage and you damage a customer automobile, you will be expected to consider doing the repairs yourself at cost to keep the actual claim and payment by the insurance company to a minimum.
8. Premiums are based on the size of your organization which is determined by numbers of people and size of payroll. You will also be asked to tell the insurance company how many customers automobiles you are likely to have on the premises at any one time.
9. The term automobile when we use it is intended to include all types of vehicular equipment that falls under the general category description of automobile, including Motorcycles, Trailers, Motor homes and contracting equipment. It does not include any type of watercraft.