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How To Avoid Increases to Limousine Commercial Insurance
Limousine insurance costs have been rising annually with less insurers providing products for this industry. The information shared below reflects cost saving methods that have worked but should be reviewed with your agent/broker.
How can a limousine company help lower their yearly insurance costs internally?
By looking at your company the way an insurance underwriter would is important to understand and see the areas of needed improvement. Maintenance, training and safety are the three major areas of focus. Making certain that your vehicles are maintained properly and service records are kept reflects a level of responsibility and diligence. Cutting back on maintenance can cost you more in insurance premiums and vehicle expenses then you can save.
Training of drivers and staff relates directly to offsetting insurance claims. Verifying driver records, performing drug tests and mandatory safety training are all valid items that reflect to an insurance company that you have a system in-place to reduce future claims. Updating records to the insurance provider is equally important, making certain that all drivers are listed correctly in order to not delay the processing of a valid claim.
How can limousine companies keep down their yearly insurance costs besides negotiating the best rates?
One of the reasons for increased rates each year is that a limited number of insurance companies provide coverage for the limousine industry. According to the National Limousine Association, since 2002, three out of ten limousine operators have had premium increases of 25 percent or more yearly. It is considered a difficult class to place and maintain coverage at an affordable level.
The companies that do underwrite limousine insurance are specialists who develop specific programs that address this industry’s operating issues. It is extremely important to have a broker that is a specialist and is capable of finding the correct markets for your specific business. Our relationships with the major insurance companies that provide limousine insurance makes certain that our clients will have access to the most comprehensive packages at the best available pricing.
Can my fleet be increasing my premium without my knowledge?
A portion of your insurance policy premium comes from the cost to provide physical damage coverage; comprehensive and collision, for your fleet of vehicles. Most insurers base the premium on the value that you put on the application. Make certain that the value of each vehicle accurately reflects the current book value of the vehicle. Insurers will only pay the Actual Cash Value of a vehicle in the event that it is stolen or totaled in an accident. The Actual Cash Value is defined as the cost to replace the vehicle minus depreciation.
There is no point in over-insuring the vehicle; you will never get more than the actual cash value. Make certain that your values are correct; otherwise you will be paying too much premium for a value you will never receive. A good agent will assist you with this process and make certain that there is an understanding of the values that are placed on each vehicle.
What types of added coverage can be overlooked without an increase to premiums?
Employment Practices Liability coverage is often overlooked as an added expense without any added benefit to an insurance package. Unfortunately companies are sued everyday for wrongful termination, sexual/racial discrimination, and sexual harassment. Everything related to employees comes down to the facts. Maintaining detailed employee records is paramount allowing you to defend yourself in court in a wrongful termination suit.
Most of the companies we utilize provide online risk management programs that allow clients the ability to generate employee manuals. Insurance companies are overjoyed when an insured risk provides a level of diligence that includes preventative practices reducing the overall level of exposure. Generating employee manuals that spell out policies regarding employee conduct and issues such as sexual harassment are extremely timely in this litigious area.
How can Workers Compensation help offset expenses?
Roughly 50% of all limousine drivers are Independent Contractors, meaning Workers Compensation is not an important issue. Including independent contractors on your company Workers Compensation plan may be cost prohibitive whereas requiring each contractor to provide an individual policy is less expensive.
Even with an individual policy provided by each contractor, it is recommended to have a Contingent Liability policy. This policy will pay disputed claims and prevent a potential Workers Compensation carrier audit. If you’re insurance company pays an independent contractors Workers Comp claim, they can decide to audit your policy by reviewing your 1099 file for the past three years. This potentially could be devastating for the company depending on what is found.
How can my policy deductible help to lower my premium?
Most limousine companies do not put in a claim for every little dent or scratch that occurs to the vehicle. Small claims may be handled internally or fix by the operator. This brings up the question; Why pay for a low deductible? Comparing the cost of a higher deductible allows you to see the difference in cost versus claim history.
If your firm has a good loss experience, and rarely files claims on your vehicles, you may want to consider increasing your deductible to $2500 or even $5000. The savings may be substantial, depending on the vehicles in your fleet. We have had several clients who came to us this year who had never looked at the option of a higher deductible. The premium savings are helping to keep their operations running.
How can West Valley Associates help my company?
In addition to advising related to the items listed above, we have access to online services that have time saving tools to help manage insurance tasks. For example, creating employee newsletters, safety programs, in-house forms are all available. Insurance reports can be time consuming and expensive which typically translates into lack of completion. The insurers we utilize provide easy-to-customize materials that are available for your usage as an insured risk client.
Our experience and understanding of the limousine industry has allowed us to find the best available carriers that are specific for those companies. Every company we work with is different and requires an overall review of their past and current situation. With this understanding we are able to find solutions that fit their needs specifically.
About the Author:
David Buckley is an independent insurance agent with West Valley Associates. This local agency provides liability coverage throughout the State of Arizona. By offering well over 90 years of combined residential/
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West Valley Associates is a family owned and operated insurance agency dedicated to providing quality insurance solutions for our clients. Working with people throughout Arizona, we are the source for competitive pricing and unparalleled customer service