Do You Understand the Components of Your Garage Insurance Policy?

Flavor: Something we crave in our daily routine.

Try this flavor-filled description: “There’s a sense of cornmeal next to sawdust, oily vanilla, and a hint of fresh honey sweetness that entices your senses. It takes on a caramel corn sweetness as the vanilla carries you towards sweeter woods and cherry fruits. The end is short and sweet with a distant wisp of orange oils next to a slight minerality.”

Recently, I found this depiction in an online article on Uproxx. Do you know what’s being described? (You’ll have to read the whole article or skip to the bottom for the answer.)

With an increase in the complexity of flavors, I would proffer that you discover more appreciation of the product through the layers of taste.

And so it is with your garage insurance policy. The more you understand it, the more you will appreciate it and have the taste for it. 

I recently studied a garage insurance policy for a client. (Try not to be jealous.) I found 107 items in the policy which were questionable and needed further investigation as they were important for the dealer. As it turned out, at least 26 were actionable. My initial review drove the premium down from $109,641 to $81,511. Based on that audit, here are eight (8) select items for you to consider:

• What is the total value of your land + building + used vehicle inventory (not floor planned) + parts + blue sky? Your liability umbrella should exceed that total number or the business is underinsured in the case of a catastrophic accident.
• Do you have enough employee crime coverage to satisfy a claim resulting from someone stealing a vehicle?
• Do you have an aggregate over your vehicle weather deductible to act as a “stop loss” in the event of a large loss? (For example, if you have a $1000 deductible and 600 vehicles are damaged, you are out of pocket $600,000. If you had a $250,000 aggregate, you would write a check for the $250,000 and not the $600,000.)
• Have you compared your vehicle physical damage coverage limits to your actual inventory to determine if you should adjust the policy up or down?
• Did you know this exclusion is in most policies? “Loss caused by an ‘employee’ if the ‘employee’ had also committed ‘theft’ or any other dishonest act prior to the effective date of this insurance and you or any of your partners, ‘members’, ‘managers’, officers, directors or trustees, not in collusion with the ‘employee’, learned of such ‘theft’ or dishonest act prior to the Policy Period shown in the Declarations.”
• How much are you paying for Med Pay coverage? Isn’t it duplicative of your basic liability coverage? If you eliminate the coverage, how much money could you save?
• Are you paying an extra premium for higher limits on your uninsured and underinsured drivers policy (than you are legally obligated by your state) to pay? How much will this save you? Also, have you considered a separate, higher limit to protect the owners?
• Are you accurately self-reporting the number of dealer tags?

Getting the flavor here?

Make it a priority to review your policy with someone knowledgeable who will go through it and explain everything to you. While it may be distasteful upfront, you’ll be glad you did while gaining an understanding of what provisions the policy contains.

And, it’s not ice cream that was being described above. 

It was bourbon!