Listen, we all make mistakes. It’s part of life. Some would even say, “We only learn from our mistakes.” But, mistakes in the insurance of a business in the auto industry can be expensive lessons. We’ve compiled a list of some of the most common and most costly commercial insurance mistakes.
- Not carrying EPLI (Employment Practices Liability Insurance) – Employment related claims are on the rise, such as allegations of wrongful termination, discrimination, workplace harassment and retaliation that can have a hugely negative impact on your business. Read our post on the facts about Employment Practices Liability Insurance.
- They think Cyber Liability Insurance is only for tech companies – Do your customers pay by credit card? Do you have a company website? Do you send and receive emails on company computers? If you answered yes to any of these questions, you need cyber liability insurance. As your business becomes more and more reliant on technology, the door is opened to increasingly advanced threats which can turn out to be costly, to say the least. Learn more about Cyber Liability Insurance: Fun Fact 1 – it’s not just for men in black suits.
- They use several different insurance agencies – Using one dynamic agency will streamline the insurance process, reducing any coverage gaps, as well as redundancies. Your insurance agency needs to have a full 360 degree view of all your insurance needs.
- Their employees drive personal cars for business purposes, but there isn’t Non-Owned Auto Coverage – If your employee gets into an accident while running errands for your company, you may find yourself in lawsuit. This coverage will handle you legal expense if a 3rd party decides to sue.
- An auto business that doesn’t have a Risk Management Protocol – Without a protocol in place your business is opening itself up unneeded exposures. Simple strategies can help save A LOT of money. Examples would be… Security Cameras – to discourage and prevent theft and vandalism. Update Older Facilities – updating to current building codes could reduce liability and property insurance premiums. Central Station Burglar Alarms – prevents theft and lowers Property insurance premiums.
- They don’t use the proper classification codes for Workers’ Compensation Insurance – It can be very confusing with over 500 hundred Workers’ Comp classification codes. But, please be aware, some of the classifications have lower premiums and some of them might carry higher premiums. You must make it priority to consistently review your Workers’ Compensation policy.
- A business might only speak to their insurance agent once a year at renewal – Your agent needs to be a trusted advisor for your growing auto business, and they need to have your best interests in mind. As your business grows your insurance needs will grow as well. So, your agent needs to partner with you to make sure you are fully covered.
- They shop for the cheapest insurance – Of course price is an important function of business, but even more important is to make sure the business if fully covered in case of a major loss. A loss without the proper insurance coverage could lead to financial ruin.
- They pay too much for insurance – Make sure you consistently partner with your agent to review your insurance needs. You might qualify for certain discounts. Your business model may change as you streamline your process, lowering overhead and equipment. These factors and more may lower your insurance premiums.
- They only get one quote – An experienced insurance broker works with several of the top insurance carriers. They can do all of the legwork to obtain multiple quotes – making sure you are getting the best coverage at the best price.
Don’t feel embarrassed if you’ve ever made any one of these mistakes. If you have, it’s time you talk to a reliable independent agent who can guide you and your business through these insurance minefields. If you’re just starting out, consider this a heads up and a cautionary tale.
Which leads me to the final insurance mistake that many auto businesses make…
(Bonus) They think they can do it alone – As you can see there are too many variables with insurance for the auto industry, and unless you have years of experience, you run the risk of making any one of these mistakes. And, be aware, this list is only the tip of the iceberg when it comes to insurance pitfalls. So, partner with a trusted advisor that wants to see you and your assets fully protected.