Question for all the car business owners on here. What kind of business insurance do you have? need? I ran a car business for a while and had all the insurance you could ever expect a classic car company to have. I know many of my competitors had (and have) very basic business insurance if any at all. The complete insurance package for a car shop: - General business liability - Business property insurance - Building insurance (special for a garage type business) - Life insurance on key personal - Garage holders policy (driving a customer car, basic work) - Classic car extension to garage holders policy - Design, Product and installation liability (for custom parts that may fail) - Various employee related I think that's mostly it, way overkill but in the litigious society we live in an unfortunate necessity. The problem with all this.. for a company with limited revenue and only 2 people the annual bill was over $12K with an OK revenue and 5 employees the coverage went up to almost $25k for a year. WAY TOO MUCH. So what do you carry? and why? or why not? and how much do you pay?
PM johnnykck and read this post... He got royally screwed.... http://www.jalopyjournal.com/forum/showthread.php?t=464834
The exact reason why I closed my shop. I have way too much to lose if something goes wrong, or just an idiot decided to sue me. I was an LLC, but not having insurance, is a willful act of negligence which means that you will transfer the liability to yourself. At over $1,000.00 a month for a shop with no full time employees, it was no longer worth being in business. I know many businesses in the So Cal area that do not have insurance and the owners think they will be OK if something happens, saying things like "let em take the business", what they don't realize is they will lose their house etc. as well.
Although I feel really sorry for him - He set himself up for this by not having insurance. It sucks, but it is a reality of life and business. Man you just can't leave yourself exposed like that. I hope others learn from his misfortune
that may be true, but the question is what is enough and how do you afford it? I agree with the other poster, it's not worth the risk to not have insurance but at the current cost it's almost not worth being in business. Not to mention competing against people that don't have that expense.
I was also an LLC. The biggest expence was insurance but there was no way I was going to try to cut corners there. It's not the reason I sold the place but it sure took the fun out of being in business. Liability and coverage for customers cars being worked on(fire,theft, possible road test damage,ect.) is a must
Insurance is about mitigating risk. Too much insurance is absolutely burning money for no reason. You should absolutely have long term disability not matter what. If you have kids you must have life insurance. Those are both personal policies and not related to your business. Everyone should have them with the amounts dependent on their situation. As for the business, you should consider what is reasonable risk to cover? Full liability coverage that bankrupts you or setting the business up as an corp with less insurance. Ultimately, nothing will protect you completely if you do something truly negligent or stupid so avoid doing that.
Amen to that, I completely agree on those points. I guess this is the big question what is the "optimal" business structure/insurance mix? How have you, or should you setup your business and insurance structure that it doesn't bankrupt you but covers you, your property and your customers property to a level that you can be in business?
insurance should be catered to the specific risks that the business is involved with. if you own a shop you should definately have GKL or garagekeepers liability. you want to definately be covered if you're out test driving a customer's car and crash it. you also want to make sure that you have enough property covereage to cover your tools, lifts, improvements you have done to the building etc. you also want to cover your customers cars on the property side. there will be a max limit that the insurance company will pay for any one car and alll cars total. make sure you have enough on this in case all cars are totalled in one claim. A good insurance agent will be able to write you a package policy that will cover all of these including business personal property and building coverage for a decent price. Product liability is also important if you manufacture any parts. do you put your name on these parts? then if they fail for any reason even if they arent the intended use, then it could come back to you. this is a soft market and insurance companies are competing for business. remember: most policies will not cover racing. if your shop is involved with racing, it makes it more difficult to find a company that will cover you. Also: California shops, dont store cars on lifts at night. we have earthquakes here. I've seen this claim a lot before.
You are in business as a shopowner because you are great at what you do. insurance is there to give you peace of mind, not worry if it's going to bankrupt you. find an agent that either specializes in garages, or has done a lot of them. also find an independent agent that can shop lots of companies. they will be able to get you the best product for the best rate. Buy only what you need but dont undervalue what you do and have either.
The Jalopy Journal
