Essential business insurance for the automotive trade
Published 28 November 2016
Insurance… It’s pretty hard to get excited about and, for many, it’s a total after thought. Don’t fall into that trap! Choosing business insurance for mechanics and automotive engineers is one of the most important decisions business owners in the industry can make.
Gallagher's Elie Youseff offers his top tips on what to consider to make sure you’re properly covered for all eventualities.
1. Know your worth!
Picture the scene: you rock up to the workshop first thing on a Monday morning and find there’s been a break-in. Your brand new tools have been stolen. You’re insured, but there’s a catch! You haven’t updated your insurance policy to include your new gear. As a result, the payout will only cover the replacement value of your old tools, meaning you have to dip into your own pocket to make up the difference.
This is known as underinsurance – and it’s common. Nearly half of all small businesses are thought to be underinsured, which simply means you haven’t insured your assets for their full replacement value. While this can mean you pay less in your premium, saving you a few bucks, it’s a false economy if you need to make a claim.
Best practice is to always inform your broker when you have new equipment, so they can adjust your sum insured. And a good habit to get into is to stage an insurance review with your broker every year before renewal to make sure you have the right level of cover.
2. Look beyond price
No one wants to pay more than they should for anything. And when it comes to insurance, the temptation to pay as little as possible can be strong – especially as we always think “it won’t happen to me.”
But, like most things in life, you get what you pay for. The cheapest hotel isn’t going to offer five-star luxury. So what do you think you’ll get from the cheapest insurance policy? Quite possibly a nasty surprise at claims time if you’re not properly covered.
Instead of focussing on price, you need to consider how the policy will respond in the event of a claim. That might cost you a little bit more upfront (although probably not a whole lot more), but is much more likely to come to the rescue when you need it to.
3. Understand your risks
Every business is unique. Different locations. Different equipment. Different population demographics. All of these affect your business’s risk profile.
If you store petrol or fuels at your premises, or if your workshop is based on a floodplain or in a high-crime suburb, you’re a higher-risk business for insurers. That can increase premiums. You can minimise some of those risks, but you still need to make sure your insurance cover is truly reflective of the risks you face.
You should also consider what would happen if unforeseen circumstances – such as extreme weather events, machinery breakdown, or a major fire – left you unable to trade for an unspecified period of time. Could your business bounce back from the loss of income? If you’re not sure, it’s worth considering business income protection insurance.
4. Ask an expert
If you need medical advice, you go to a doctor. If you need help with finance, you go to an accountant. Need legal advice? You go to a lawyer. All recognised professional experts.
Yet insurance is extremely complicated to understand – and all policies are different. Most people can’t really understand them. So why not ask an expert? Insurance brokers should be considered in the same light as doctors, lawyers and accountants – experts who provide valuable, professional advice in your best interests.
Brokers understand policy wordings and know what’s the right fit for your business. Plus they can save you loads of time. Instead of spending hours researching insurance options yourself, you could be doing fun stuff instead!
Also, because brokers have strong relationships with insurers, they’re more likely to be able to negotiate a better outcome for you at claims time. So partnering with a broker is really a no-brainer!
About the author
Elie Youssefis a Senior Account Executive at Gallagher’s Parramatta Branch, who specialises in providing insurance solutions and advice to the automotive industry. Contact Elie on02 8838 firstname.lastname@example.org