Repair shops should seek an insurance policy built exclusively for the auto repair industry when selecting a carrier, says the co-founder of SPARK Underwriters.

Shaughn Kennedy, vehicle specialty market underwriter, said businesses should seek a package that includes coverage for general/garage liability, commercial property, commercial auto and umbrella. He added that while workers compensation is also needed,  it is typically a standalone policy.

Single-location and small business owners can have a hard time finding insurance that suits all their needs and often are placed on a business owners policy that requires them to add on other elements to secure necessary coverage, he said.

He added that specialty coverage can be valuable for shops in that it offers coverage for both business- and employee-owned tools, ensuring items can be replaced in the event of a robbery.

“Say somebody breaks in and cleans their house out,” Kennedy told Repairer Driven News. “Having employee tools insured under policy would automatically [minimize] the business interruption if something happened to them, where they could go out and get tools and get back in business, but the business itself would still be at a loss if other employed tools are stolen.”

Commercial property tenants should also ensure that their policy covers improvements and betterments made to the building, he said, adding that things like paint booths, lifts and custom signs can add up quickly.

Most leases require businesses to cover such expenses on their own,  Kennedy said, adding SPARK covers it under business and personal property while other carriers include it under improvements and betterments.

“You want to make sure that those items are insured on the policy because otherwise say, by no fault of them, lightning hits the building and burns it down,” Kennedy said. “If they didn’t have their improvements insured, they’re gonna be out that money if it’s not on their insurance policy. It’s not the [building owner’s] fault that the building burnt down.”

One aspect some businesses overlook when selecting coverage is cyber liability, Kennedy said, noting that in the collision shop space most cyber activities deal with bad players trying to hold systems hostage for ransom.

He said preventing attacks from happening can come down to being proactive by protecting passwords and ensuring the right software is installed. However, if a business does find itself victimized in an attack, cyber coverage can be beneficial as  most experts don’t recommend paying ransom.

“A lot of people will go out and replace all their computers and that can get pretty costly,” Kennedy said.

He said repair shops should also note that harassment and discrimination lawsuits aren’t usually covered under a typical insurance policy, and that liability coverage can help shield businesses from costs if they find themselves in litigious situations.

When selecting a carrier, shops should look for a company rated A- or higher, which signifies their financial strength and ability to pay claims, Kennedy said. Business owners should also seek out carriers that are involved in the auto repair industry.

“You’re going to get better coverage from them because they know what’s impacting you today,” he said.

“Your small business is most likely your biggest asset and for many their retirement nest egg.   Do not neglect taking the time to know the basic coverages and ask your insurance agent or carrier questions.”

Corey Kurlander, regional vice president Arrowhead Automotive Insurance, reiterated that auto repair businesses should carry policies with coverage for comprehensive liability, garage keepers, property, employee practices liability, and cyber liability on top of umbrella coverage.

“Automotive Repair businesses must have garage keepers, a specialty coverage covering their customer’s vehicles while in possession of the garage for services, repairs, or storage,” Kurlander told RDN. “Automotive Business Owners should also consider cyber liability, which covers the damage your business suffers from a cyber security breach. As most patrons pay with credit cards, it is imperative that their records are secure and coverage is in place should a breach occur.”

Kurlander added that because the auto repair industry is unique, shop owners should ensure they work with agents who understand their business needs, and echoed Kennedy’s comments that the carrier they choose should have an A rating.

“Another consideration is that many insurance carriers offer specific programs for the Automotive Aftermarket Industry, so seeking a specialized program is important,” he said. “They should also be sure their coverage limits are adequate to meet the needs of their business should a claim come up.   Coverage limits should be reviewed annually by both the business owner and a licensed insurance agent or broker.”

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