The rise of price comparison and aggregator sites over the past few years has been driving a mind-set of premium over cover in the private market. This now looks to be transferring into the commercial market too, but independent garages need to understand that under insuring to obtain the desired level of premium could leave their business exposed.
The flexibility these sites give businesses to obtain and tailor-make policies to suit their needs, means that levels of cover can be reduced or entire sections of cover removed to bring the premium down to suit the company’s budget.
The problem with this approach to renewal is that garages could be compromising on their level of protection. The only time garages would realise there’s an issue is when they make a claim and find out that they're not covered, or the settlement is less than expected, which could place businesses in a difficult financial position.
Working with a broker would be the advised option to take, however businesses need to be wary of brokers that may exploit garages by finding a cheaper premium to win the business, instead providing a service with the garage’s needs in mind. To avoid these pitfalls, there are some simple rules to follow when choosing a broker and an appropriate policy:
- Deal with brokers that know the industry, as they are more likely to understand the issues affecting your business, and the level of cover you need. They can then negotiate with providers to get you a suitable deal, which still leaves your business appropriately protected.
- Take time to know where your risks lie, so you can brief your broker appropriately.
- Disclose all material facts upfront, whether they are previous claims or even CCJs. You will then ensure that when the time comes to make a claim, there will be less risk of a policy being voided or a claim refused.
- Don’t focus solely on the premium, because the most important thing is to safeguard your business and make sure you’re adequately covered.
- Question sums insured, endorsements and exclusions – essentially ask lots of questions, so you’re 100 per cent confident in the policy and provider recommended.
- Start your renewal process in good time. Investigating all the policies available takes some time, so for the broker to do the best job possible, it’s important to given them adequate time.
- Be aware of involving too many brokers in the renewal process. Whilst you may think that some healthy competition will help you get the best policy at the lowest price, some insurers could refuse to quote to avoid getting into the awkward politics between the brokers.
- Ensure that you know the provider your broker has placed you with, so that if the time comes to claim, you’re confident they will be able to fund claims in the long run.
The key priority for garages, above all else, should be protecting their business – the reason for taking out insurance in the first place. If done under the correct guidance, covering all risks, a garage can avoid finding itself at financial risk following a claim.
To learn more about the Automotive practice, and how it could help you and your business, contact the Automotive team on 01582 542 330.