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Automobile Risks can sink you fast!
You think nothing of tossing the
keys to the pickup to somebody and telling
him to go to the "HOME DEPOT". But THINK
AGAIN—You might as well load the front
end of the truck with your house, savings,
business and kid's college fund—IN CASH—and
then let Moe, Larry or Curly head out
for the open highway! Your autos are
probably the single largest exposure
to loss you have. Each time your autos
go down the street (regardless of who
is driving the vehicle) your entire
bank account rides with it!
Owned Auto Risks
- You go out and buy a truck—simple
enough—or you lease it—more and
more common—you have an exposure.
You are now responsible for anything
that happens to this auto, no matter
who drives it! Give it to your worker
to run an errand—you are responsible.
Give it to your brother to move
a refrigerator on the weekend—you
are responsible. Let your kid
take it camping—you are responsible.
- If your kid takes the truck
and lets his / her sweetheart drive
it— you are responsible.
- WARNING! When you rent a car
on your next trip—LOOK OUT! You
may be taking on more than you realize.
Read that agreement and be sure
that the "renter" is stated to your
advantage! If your auto coverage
is corporate—the agreement must
be corporate!
Other
Auto Exposures
There are three basic exposures in
addition to owned autos, which are non-owned
autos, hired autos and borrowed autos.
- Non-owned autos
are autos that you don’t
own, but for which you may be
held responsible. The most common
example is when an employee
uses his own auto for work purposes.
For instance, a guy takes his
own truck to the Home Depot
on a work errand. If he has
an accident, then you are ultimately
responsible.
Hired Autos
are autos that you rent or lease
(short term). BE CAREFUL! Car
rental companies will always
try to list YOU (the individual)
as the renter. If you allow
this then your business auto
policy may not respond to claims
filed. Business auto policies
usually list your company as
the insured. If you don’t have
that name in the "renter" spot,
then you will not be insured!
I personally DO NOT OWN any
autos—they are all business
owned. So when I rent a car,
I quietly write in the name
of my business as the renter.
I don’t ask the clerk—I just
do it!
Borrowed Autos
are autos you borrow such as
specific equipment for a job.
If the owner of the auto you
borrow has little or no insurance
then you are responsible. BE
CAREFULL! An auto you "borrow"
from your employee or family
member is usually NOT a borrowed
auto from the perspective of
your insurance company.
TIP—Be sure your personal auto policy
meshes with your business auto policy!
Consult your accountant (for taxes)
and your attorney (for legal advice)
about where and how your personal auto
should be titled (owned). There is a
wide-range of coverage options available
to tailor your policy to meet your needs.
You must be sure to disclose your whole
situation to your insurance agent in
order to receive proper coverage.
Limits,
Limits, Limits
Put the armor where the bullets are
coming from: You get certificate requests
almost every day—they always ask for
Business Liability with $1,000,000 limits
and Workers Comp. They almost NEVER
mention auto liability. THAT’S NOT BECAUSE
IT’S NOT IMPORTANT! IT’S BECAUSE ITS'
NOT IMPORTANT TO THEM! Because no one
bugs you for auto limits - you tend
to skimp on it. DON’T DO IT! It's your
neck, your assets and your future—PROTECT
YOURSELF!
TIP—Be careful of where your autos
stay at night. This is for real—You
can use you autos in downtown Los Angeles
all day long, but they will be priced
based on where they are "garaged," or
where they stay at night. If your autos
go home to a suburban county at night,
be sure your policy says so. THIS IS
NOT CHEATING—THIS IS PLAYING BY THE
RULES!
Now—you must manage your drivers.
Let it be know that you don’t tolerate
irresponsible driving of any auto AND
that you reward good drivers. Be willing
to pay a bonus for clean driving records.
It will pay off big time for you in
the long run!
Do
not lie
Insurance companies will review your
entire file—back to the original application—if
there is a serious claim. If they can
find a MATERIAL item that you lied on
they will try to deny the claim. This
begs the question, "What is a MATERIAL
item?" The answer will depend on the
company, the adjuster, case law and
THE SIZE OF THE CLAIM. In my opinion,
if you lie about things like who drives
the autos, how they are used or the
size and weight of the auto—you might
find yourself in a world of hurt.
It's almost impossible to defend
a lie.
Don't
try to fit a square peg.
If you need a personal auto policy—get
one. Don’t try to force a Business Auto
Policy to do that job. Don’t try to
hide your 17-year old daughter with
tickets and a new cherry red Corvette
on your business policy—cater your policies
according to a realistic standard.
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