What Is Garage Keepers Insurance?

Posted on January 21, 2019

There is no single insurance policy that covers all types of risks, liabilities, accidents, damages, and injuries. You have to obtain a policy specific to the risks you want to cover. Do not assume that a commercial general liability insurance policy will cover all risks you might come across in the course of your business operations. For example, this type of insurance policy does not cover liability associated with a business vehicle. If a customer slips in your store and suffers injury, the general liability insurance will cover the claim but if a customer’s car is damaged while in your custody, it does not cover the claim. To get coverage for such specific claims not covered under the general liability policy, you need garage keepers insurance coverage.

What Is Garage Keepers Insurance?

To understand garage keepers insurance, first, you have to know about the garage liability insurance.

Garage Liability Insurance

This policy is designed for auto focused businesses that need general liability protection mainly for covering auto business liability. It covers claims arising out of accidents during the garage business operations. It covers both bodily injury and property damage claims. Third party injuries are covered under it. This policy will pay for the medical bills of a customer who suffered a slip and fall injury at your business place. Property damages caused by the business owner’s equipment are covered. It provides coverage when the customer’s injury is caused by the employee’s dishonesty. A customer’s vehicle damaged because of a product sold or manufactured by the shop is covered under it. This umbrella policy covers many such claims but it does not cover the property and tools of the policyholder. It is restricted to the garage area only.

It may seem that everything is already covered under the general garage liability insurance policy. However, the devil is in the detail. With any insurance policy, you have to pay attention to the claims, risks, and damages that are not covered. In this case, it excludes coverage of property in the policyholder’s custody, control or care. The customer’s vehicle stored at your place for storage or repair is not covered. If your employee takes a customer’s vehicle on a test drive and damages it, then it is not covered. It does not cover physical damage to your customer’s car while it is left for repair, storage or service with you. It is because of these exclusions that you need the garage keepers insurance coverage.

Garage Keepers Insurance

This insurance policy covers damage to the vehicle left in the custody, control or care of the shop. It is an essential coverage for small businesses operating in the auto service sector. It is suitable for auto repair shops, auto body shops, carwash hubs, auto maintenance companies, vehicle detailing, towing companies, service stations, emission testing centers, vehicle interior decoration shops, auto glass installers, vehicle painting, and other auto service businesses. You need this coverage to protect yourself for damages to your customer’s vehicle during repairing, servicing, attending or parking. It provides coverage for extreme weather, theft, vandalism, and fire while the vehicle is at your business place. This policy is generally sold along with the garage liability insurance but it is still a separate insurance coverage. There are some exclusions under it. For example, it does not cover faulty parts or workmanship. It excludes insufficient warranties and customer’s contents stored in the vehicle. You can add additional options like an endorsement with this policy to get coverage for the customer’s property. It is up to you if you are satisfied with the basic policy or would like to add additional riders to cover more risks, claims, and liabilities.

Garage Keepers Insurance Cost

It varies from one business to another. There are many factors that affect how much a policyholder has to pay for the garage keepers insurance policy. The type of your business, coverage inclusions and exclusions, additional riders added to the insurance, types of vehicles under your care, number of employees, their driving records, the location of your shop, onsite security, deductibles, payout limits, and other factors determine the amount you have to pay toward this insurance policy. If you are looking for a comprehensive and collision coverage for a small auto service business, you have to pay about $800-$2000 a year based on the risks you want to cover. You can reduce your premium amount by opting for a higher deductible and lower payout. In the same way, the premium amount will increase if you go for the higher payout and lower deductible.

Garage Keepers Insurance Symbols

Numeric symbols are used in the garage and dealers insurance policies to indicate the type of vehicles for which the coverage is provided. The garage keepers insurance is related to two symbols. The symbol 30 is the main one which covers the garage keepers insurance. It provides coverage for the customer’s vehicle left in the custody, care or control of the insurance policyholder. This policy is available to dealers and other auto service providers who take responsibility of their customer’s vehicle for the storage, repair or service. The symbol 21 designated for Any Auto covers liability and medical bills. It offers coverage for any vehicle the insurance holder comes in contact with. When it comes to specific damage coverage, it is the symbol 30 designated for the garage keepers insurance that takes precedence.

Where to Get Garage Keepers Insurance?

There are three ways to get this coverage. The first option is to contact an insurance company that provides this insurance coverage. The second option is to contact an insurance agent. The third option is to visit an online website that aggregates insurance policy offerings from different insurance companies. An agent will help you select the right garage keepers insurance policy quickly and easily. You only need to inform about your specific coverage requirements. The online insurance policy aggregating website lets you compare various offers and quotes from different insurance companies. Such a website also has informational contents related to the insurance policies and industry

There are many things that can go wrong with your customer’s vehicle while it is placed under your care for service or any other purpose. It is better to pay a small amount for the insurance coverage and protect your business from liabilities and claims. Read the fine prints when taking this insurance policy. Check what types of risks are covered and the risks that are excluded. In most cases, you have an option to add riders specific to your insurance needs and preferences.

Broker Bonds Insurance

Posted on January 13, 2019

Although many companies in the U.S have contracts with trucking companies to transport their goods, a significant proportion of freight transport is handled by brokers. Regulated by each state, freight brokers act as intermediaries between the shippers who wish to transport their goods and the trucking companies that offer freight shipping services. The brokers handle the entire shipping process, including any documentation involved, and make sure that the freight is delivered to the shipper.

Now, when a middleman is involved in the freight transportation process, there is no guarantee that they won’t act against the interest of the client. The broker can engage in fraudulent acts which would cause the shipper to lose their shipment. To avoid such cases, all freight brokers are required to carry broker bonds transportation insurance. This is a form of insurance that protects the shipper form any illegal, fraudulent, or unethical activity by the broker.

Besides obtaining a license, all freight brokers are required to carry broker bond insurance or freight broker bond. The guarantee does not cover the broker; instead, it covers the client who will seek the broker’s services when shipping their goods. This price will provide a detailed guide into broker bonds insurance, what it entails, what brokers need to apply for the bond, and other useful tips for freight brokers.

Freight Broker Bond Explained

A freight broker bond is often required of brokerage businesses that intend to offer freight transportation services. The government body that needs freight brokers to carry the surety bond is the FMCSA. The bond protects motor carriers and individuals or companies that employ the services of the broker. Freight broker bond is a form of assurance that the broker will operate according to the agreement with the motor carriers and shippers. There are three parties to freight broker bonds agreement, and these are:

• The principal who is the freight broker

• The oblige who is the party requiring the bond (the FMCSA)

• Surety which is the surety company

If a broker doesn’t adhere to the terms of the contract, the shipper or motor carrier can file a claim and pursue compensation for losses or damages incurred as a result of the broker’s fraudulent or negligent acts.

FMSCA Freight Bond Requirements

The FMCSA requires the freight broker bond (BMC-84) to be in the amount of $75,000 for the one year term. This amount was initially $10,000, but it was increased in 2012 after the FMCSA established that there were many instances when shippers and carriers were being delayed and denied payment.

It is important to note that the BMC-84 Freight Broker Surety Bond is not a form of insurance. When an individual files a claim on a surety bond, the surety company (the third party in the agreement as mentioned above) has to pay out a loss. Therefore, the freight broker is required to provide full reimbursement to the surety company as stated in the indemnity agreement signed by the broker. The surety bond does not insure the freight broker.

Cost of Freight Broker Bond

The cost of freight broker bond varies depending on the rate. Bond rates depend on the qualification of the bond applicant. These rates are determined based on a few factors such as financial standing and credit rating. Annual premiums for the $75,000 BMC-84 bond are currently between $1,300 and $9,000. For brokers with a bad credit score, the freight broker bond cost will typically be higher due to the risk attached to bad credit applicants. For example, a broker with a good credit rating may incur a cost of around $1,500 to 3750. On the other hand, a bad credit score will attract a cost of $4500 to $9000.

For one to know the cost of the bond, they have to make an application and let the underwriter review the request. After this, they will generate a quote based on the determined rate and send it to the applicant.

Freight Broker Bond Application

Since there are standard freight bond amounts and an electronic application method, there are no special requirements for applying. The surety bond agency helps with the entire process, and these are the necessary steps to make the application.

1. Fill out the form and attach the required documents. One requirement may include a financial statement. However, this isn’t always the case, and the agent can advise whether to provide it or not.

2. The application is sent to the underwriter who reviews the request and generates a quote. Usually, this can be done within 24 hours.

3. After receiving the quote, one is required to pay the premium, receive the MC number, and their FMCSA Freight Broker Surety Bond will be set up.

How to Lower Your Freight Broker Bond Cost

As aforementioned, one’s credit rating can significantly hike the bond premiums. Therefore, brokers who have a poor credit rating can take certain measures to lower the freight broker bond cost. Some of the measures include the following:

• Provide strong financial statements. Even with a bad score, proof that one is financially capable of fully reimbursing the surety company can significantly lower the bond cost.

• Improve the credit score through steps such as taking care of negative items listed on the credit history. These include civil judgments, liens, tickets, or even unpaid child support.

• Choose the right surety bond agency. A surety agency can work to give you the best rate possible. Also, a good company that only works with top surety companies can assure that one has good backing for their bond.

Working as a freight broker requires that one get a broker’s license and acquire a freight broker bond from the FMCSA. One cannot operate legally in any state without these requirements. However, while the FMCSA broker bonds amount is fixed, the premiums aren’t. One’s financial standing and credit score play a significant role in determining their annual premiums. Therefore, it is essential to not only work towards building an excellent credit rating but also to find a good surety bond agency that works tirelessly to ensure that they get the best rates for freight brokers.