Writer and actor Woody Allen quipped, "There are worse things in life than death. Have you ever spent an evening with an insurance salesman?" While his comment reflects one of society's cynical perceptions of those selling insurance, the product itself gives financial security to individuals and businesses.

Considering the nature of the U.S. legal environment, complete liability security should be especially appealing to anyone with a capital investment such as an automotive service business. But insuring your business can provide more than mere protection from potential lawsuits, and finding the right insurance for your business starts with finding the right insurance provider.

Finding a provider
When considering what type of business insurance to purchase, automotive service shops have a wide range of options. Certain states require limited liability insurance. Finance companies might require shops they're doing business with to have limited liability. Therefore, a shop could choose insurance coverage based on limited liability requirements spelled out by state/local regulations or from private entities with which the shop does business. But, according to Gerald "Gerry" Cecil, CPCU, senior director of market development for the Automotive Specialty Markets (ASM) Division at Universal Underwriters Group, "A good businessperson wants to be properly covered." Shop owners have significant investments in their businesses and are risking capital every day they don't have adequate insurance coverage, he added.

Finding the right insurance provider can be difficult, but Cecil offers a few tips to shops on how to conduct their searches: Contact associations - they often promote programs to their members; contact fellow shop owners to find out who they are using; and look for companies that know and understand the business. "Shops should look for providers the same way customers look for their shops," he said, and added that shops need to do their homework - including asking the insurance companies for a list of references of shops they provide coverage to, and calling those references.

However, a shop cannot rely merely on rates quoted to shops in the area since geography alone is not the only factor in establishing rates. According to Best's Underwriting Guide, when an insurance company underwrites a "garage keeper's legal liability" policy for a shop, "Major underwriting considerations are the location of the establishment, the extent of police protection in the area, the quality of protection afforded to parked vehicles and the insured's prior loss experience."

The Automotive Service Association (ASA) sponsors insurance programs through several companies to assist its members in selecting providers. Since ASA sponsors or promotes the programs to its members, the sponsored companies provide discounts or added benefits to members. "Members sometimes look to the association for direction in making business decisions. By sponsoring programs, ASA is able to refer its members to reputable providers and members receive discounts or benefits from these providers because of their membership in ASA," said Cate Brennan Lisak, ASA's vice president of membership.

Workers' compensation insurance is offered to ASA's members through Dodson Group. Disability income insurance is offered to members by American Fidelity Insurance, and Universal Underwriters provides members with a full line of commercial insurance coverage.

ASA members get a preferred rate through Universal Underwriters. This is in addition to the fact that their rates are typically good anyway and they specialize in the automotive industry, according to Lisak.

ASA has promoted workers' compensation insurance through Dodson Group since 1960. Dodson specializes in working with associations and understands members needs, according to Lisak. In addition, she added, Dodson usually pays yearly dividends to participating members - in December 1997, there was a 15 percent dividend return on the workers' compensation benefit plan, which totaled more than $400,000 distributed to the 723 participating ASA member-businesses. During 1997, enrollment in the program grew by 25 percent.

Through American Fidelity, ASA sponsors a program for insurance coverages of life, and short- and long-term disability for shops and their employees.

Lisak cautioned that going through one of ASA's sponsored programs might not always be the cheapest option for members. Depending on what state a shop is in, it should check with its state association or use an independent agent to compare quotes from various providers. She warns shops, however, not to base decisions solely on the bottom line, and to truly compare the policies being offered. "When you get quotes, make sure you are comparing apples-to-apples coverage. Service and stability of the company and its agents are also key factors."

Evaluating policies
"A policy is no better than the company and the individual representing it," said Universal Underwriters' Cecil, who added that shops should want an agent that will sit down with the shop's owner or manager and go through the policy in easy-to-understand terms.

Cecil said one of the most common insurance needs is coverage for employee tools. Often because of theft, tools are lost and are not covered by insurance by either the technician or the shop, he contends. The employee can't work and the shop loses money.

Business income continuation insurance is also important because it covers shops that are shut down temporarily. Many shops have their buildings insured, but don't have business income continuation insurance to cover them for downtime if their facility has been damaged and work cannot be performed, according to Cecil. The building is insured and will be rebuilt or repaired, but if the shop is closed for 120 days during repair and produces no revenue, how are the shop's owner and employees going to pay their bills?

Cecil also said sexual harassment and discrimination claims are increasing and some shops that don't have discrimination coverage have incurred high legal expenses simply for defending themselves in court. He said other types of coverage shops should consider are "wrongful termination" and "pollution liability."

ASA's Lisak reminds shops to scrutinize policies carefully to determine if they are getting what they think they are getting. "Otherwise, you can end up paying for coverage you don't need; or, you could get a policy and realize later it doesn't cover something you needed."

"I have had people come to me on crutches, with tears in their eyes, to bless this beneficent institution. In all my experiences of life, I have seen nothing so seraphic as the look that comes into a freshly mutilated man's face when he feels in his vest pocket with his remaining hand and finds his accident ticket all right."
- Mark Twain, in 1874, on accident insurance.

Industry professionals can attend the "How to Purchase Business Insurance" seminar, a course approved by the Automotive Management Institute (AMI), to learn more about this topic. Call AMI's D'Anne Ellzey at (800) 272-7467, ext. 233, for information.

To obtain an insurance renewal check-list and verification form for your shop to use when evaluating the various coverages you should consider, regardless of your current insurance provider, call Marsha Thompson of Universal Underwriters at (800) 840-8842, ext. 1616.

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