TIRE STORE INSURANCE
What you need to know about Retail Tire Shop Insurance.
Being the owner and operator of a tire store is a great business opportunity. With over 270 million vehicles on US roadways, it's pretty safe to say that starting up a tire shop can be a smart investment.
Tire shops sell new and used tires and may repair or patch old tires for customers. Some do retreading, vulcanizing, or other tire repair. Most tire operations will install or replace one or more tires of customers' vehicles while also performing other services such as rotating all the vehicle's tires, alignments, and balancing. The shop may also stock auto accessories or offer other automobile repair services such as routine maintenance, oil and filter change, lubrications, and tune-ups that are a benefit to their customers. Why is insurance so important for tire store owners? What type of policies will you need to carry?
Below are some answers to commonly asked accounting insurance questions:
How Much Does Accounting Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small tire shops ranges from $37 to $69 per month based on location, services offered, payroll, sales and experience, but of course there are many variables that go in to pricing.
Why Do Tire Stores Need Insurance?
Just like any other business owner, you, as the owner, are liable for anything that goes wrong - and in the world of business, a lot can go wrong. A display of tires could topple on top of a customer, and she could sue you for the damages. A piece of equipment could malfunction and injure an employee while he's putting tires on a vehicle. A fire could engulf your store in flames. A vandal could break into your shop and steal thousands of dollars in inventory.
These are just a few examples of the problems that could arise, and in each example, as a business owner, you would be responsible for any related expenses; medical bills, legal defense fees, damages, etc. As you can imagine, these expenses add up quickly.
In most cases, if you're properly insured, your insurance carrier would cover these for you. In other words, tire store insurance can protect you from serious financial losses and could even potentially prevent you from losing your business.
What Type Of Insurance Do Tire Stores Need?
There are several types of insurance coverage that a tire shop should have in place. The specific type of coverage varies and depends on a number of factors that are unique business; where your operation is located, the size of your shop, and what type of services you offer, for example.
Since coverage needs vary, it's important to speak with a reputable commercial agent, such as those at Arrowhead Automotive Insurance, to determine exactly what type of polices you'll need to have in place to properly protect your business.
Some key insurance coverages that all business owners should have in place are:
- Commercial General Liability - This coverage protects you from third-part bodily injury and property damage liability claims. If a display of tires were to topple over onto a customer and she were to file a lawsuit against you for damages, commercial general liability insurance would cover the cost of your legal fees and any damages you are required to pay.
- Commercial Property - If your shop were to catch on fire, commercial property insurance would help to pay for any repairs that your building requires, as well as assist with paying for any inventory or other items that were damaged in your shop and need to be replaced. This policy covers the physical structure of your business, as well as the contents within it, from acts of nature (fires, storm damage, pipe bursts, etc.), as well as acts of vandalism and theft.
- Workers' Compensation - As an employer, you are responsible for providing your employees with a safe work environment. Should a piece of equipment malfunction and injure an employee, workers' comp insurance would cover his medical care. It would also compensate him for lost wages if he is unable to work as a result of his injuries.
The above-mentioned policies are just a few examples of the type of tire store insurance coverage you should consider.
What you need to watch for with regard to risks -
Premises liability exposure is high because of the many visitors to the shop.
All stock should be easily accessible to customers. Floor coverings should be in good condition, with no frayed or worn spots on carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked until repaired. Sufficient exits must be provided and be well marked, with backup lighting systems in case of power failure. Parking lots and sidewalks need to be in good condition with snow and ice removed, and generally level and free of exposure to slip and fall. If the premises is open after dark, there must be sufficient lighting and appropriate security for the area.
Personal injury exposures include allegations of discrimination and from apprehending suspected shoplifters, which may result in claims of assault and battery, false arrest, or detention, unauthorized or intrusive searches, or wrongful ejection from the premises. The use of closed-circuit camera systems prevents such incidents from evolving into a "he said, she said" situation. Be sure that Employees are trained to deal with such delicate situations properly.
Products liability exposure is normally low unless the shop repairs vehicles or assists vehicle owners with their do-it-yourself repairs. If the shop directly imports or reconditions items for resale, the exposure will be that of a manufacturer. The completed operations exposure for patching or reconditioning tires, brake turning or other service work must be considered due to the potential for an accident in the event of product failure.
Environment impairment exposure can be very high if the operation disposes of lubricants, oils, degreasers, solvents or batteries. Spillage and leaking of pollutants into the air, ground, or water can result in high cleanup costs and fines. Adequate procedures should be in place, employees should be properly trained, and procedures must be followed to prevent any leakage or contamination. Contracts should be in place to dispose of all environmentally dangerous chemicals.
Workers compensation exposure is high due to lifting of tires and the use of a hoist for tire installation. Hoists must be well maintained and procedures in place to prevent vehicles from falling off. Brake turning, welding or other repair work must include appropriate safety equipment, especially eye protection. Workers can slip and fall, or incur back injuries, sprains, strains from lifting. If the shop sells batteries, battery acids can cause burns and respiratory problems when inhaled. Employees should be provided with safety equipment, trained on proper handling techniques, and have conveying devices available to assist with heavy lifting.
Property exposures can be high due to flammables such as lubricants, oils, degreasers, and solvents used in the repair operations. They must be properly labeled, separated, and stored away from combustibles. Tires do not catch on fire quickly; however, when they do burn, the fire is difficult to put out and an oily black smoke permeates the entire area. Aerosols and flammable additives contribute to the overall fire load. Smoking must be prohibited. All machinery and equipment must be inspected and maintained regularly to avoid wear and tear or overheating losses. To avoid theft and burglary, appropriate security controls must be taken including alarms, lighting, and physical barriers prohibiting access to the premises after hours. Premises alarms should report to a central stations or police department after hours.
Equipment breakdown exposure is high as the business is dependent on its machinery for conducting operations. Replacement parts may be difficult to obtain quickly.
Inland marine exposures are from accounts receivable if the store offers credit, computers to monitor inventory, transact sales, and provide diagnostics, goods in transit if tires or auto parts are delivered to customers, and valuable papers and records for customers' and vendors' information. Backup copies of all records, including computer records, should be made and stored off premises.
Crime exposure is high for both employee dishonesty and theft of money and securities. Background checks should be conducted on all employees. Money should be in a safe away from the front door. Irregular drops should be made to the bank to prevent a substantial accumulation of cash on the premises. All ordering, billing and disbursements must be handled as separate duties. Regular audits must be conducted.
Commercial auto exposure is generally limited to hired and non-owned for employees running errands. There may be a small fleet if there are multiple locations and the owner and managers travel between locations. All employee drivers should have an appropriate driver's license and an acceptable MVR. All vehicles must be maintained with documentation kept. There should be written procedures for personal and permissive use of vehicles furnished to employees.
Garagekeepers exposure comes from damage that can occur to customers' vehicles while in the tire shop's care, custody and control. Keys to customers' vehicles should be kept in a locked box to prevent unauthorized access. Proper identification should be required to prevent handing a customer's car to the wrong owner. Lots must be well lighted, with chains in place to prevent transport. Fences and other security also may be appropriate.
We are a leading national insurance agency providing products and services to businesses operating in the automotive industry. With our team of more than 100 sales and support professionals in nearly every state and decades of dedication and unwavering commitment to your industry, we have the unique experience and knowledge to thoroughly evaluate the needs of your business. Our influential relationships with top insurance companies and industry organizations allow our agency to provide unrivaled, personalized solutions. For more information call 888-240-8803.