This is one of the first questions you want answered, right? You have to keep your margins in check so you have to find the right coverage, but also the cheapest rates to help you churn a profit. So exactly how much does garage insurance cost?!
One area of insurance we focus specifically on is insuring garage and dealership operations. From one man shops to large franchise dealerships, we’ve built insurance programs for each level of your business.
Garage Insurance Cost Basics
Let’s start with the basics. It’s easy to ask your buddy that also owns a garage or dealership how much they’re paying for insurance, but if you find out they’re paying less you might get upset because you feel like you’re paying too much. But let’s hold on just a minute…how does the rest of your business stack up against your buddy’s business? Have you both been in business the same amount of time, do you do exactly the same work or sell exactly the same amount of cars, do you have the same number of employees, do you know if you’ve both had no claims the last few years?
The closer you look at it, your two businesses although maybe similar on a basic level are actually pretty different, right?
So let’s finish the basics and figure out how much your insurance will cost.
Garage or Dealership Building and Property Insurance
First, do you own or rent a building that requires you to insure that building. Just like with homeowners insurance, anything you’re insuring a building, the premium you pay can depending on–age of building, housekeeping—is there moss growing up the sides or gutters falling off the building or do you keep it nice and tidy, have there been any updates to it such as replacing a roof or electrical work, have you had any property claims? You also have your contents insured, if you have any lifts inside your garage they probably are as well, and there are also ways to schedule coverage for tools your employees own that they bring to work.
How Much Does Garage Liability Insurance Cost?
Next, let’s talk liability. Depending on the insurance company, if you have a body shop, mechanic garage, etc., they’re going to look at:
How Many Employees Do You Have?
How many full time vs part-time employees do you have or anticipate having and what does each one do? Are they mechanics, body shop employees, salesmen, or even clerical?
You pay them different based on their experience and the type of work they do. Insurance companies also need this distinction because they also use this same info to charge premium correctly. You’ll also need to know the breakdown as far as sales figures for the year. Going hand in hand with this you will need workers comp to cover your employees as required by state law. This is rated based on their payroll.
More employees/payroll = additional insurance premium.
How Many Drivers Do You Have?
If you have a garage or new/used dealership, insurance companies want to know how many drivers will be on your policy. The definition of “driver” from an insurance company standpoint is any employee that could potentially get behind the wheel of a vehicle you own or are in possession of. The more drivers you have equals more risk which equals more premium.
How Many Demos or Dealer Tags Do You Have?
How many demos are you going to give your employees? It could be worth it to do the math here and give your employees a stipend for a vehicle rather than giving out too many demos. Every demo has a preset cost in terms of insurance premium dollars.
Has Your Business Had Any Claims?
Another obvious factor that goes into figuring out how much your insurance is going to cost is what does your claim history look like? If you’ve been in business for 3 or more years, and can provide what we call loss runs, meaning proof from your current insurance company you’ve had no claims, then this will significantly help your cause in obtaining the best rates.
How Much Experience Do You and Your Employees Have?
Going hand in hand with claims is the amount of experience you and your business has.
If you’ve been in operation and insured for 3+ years then you’re good to go. What if you’re a new business? Nobody just wakes up one day and decides they’re going to open a garage unless it’s a business they’ve worked in for an extended amount of time and they know what they’re doing.
Insurance companies will want to know if you’re a new business or only been in business 1-2 years. What does your experience look like? What does the experience of your employees look like? The better detailed history we can provide the better case we can make for you to get the best rates.
Will Your Insurance Premiums Be the Same As Your Friends?
Can you expect these same premiums? Well, it depends right? That’s why we laid out all the factors that go in to determining your insurance premium first. Sure, every garage or dealership business has some similarities. That’s the nature of your industry, but you also have many things that make you different and set you apart. That’s one of the reasons you started your own business in the first place. You knew a better way to do it, right?
Our goal here at Reed Brothers is to always find you the best coverage and the right coverage at a fair price. Of course, we want to find you the lowest rate possible, but for that to happen we have to work together with you as a team so we can present your case to the insurance company as to why you would make a best in class insurance customer.
Next Steps
If you have a dealership or garage business in Kentucky, and have more questions about your insurance program give us a call, or email me at asheridan@rbisomerset.com. Check out our other videos for your garage or dealership business. You can find them here on our website or our YouTube channel.
