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Insurance
101
This
article was added 6/27/07:
What
happens if you wreck your tool truck?
Here's
the situation: you wreck your truck, or a tree falls on it, or
someone steals it and it's burnt, or a speeding train hits you
and you live to tell about it (true - we'll share the rest of
the story sometime) whatever...anyway, you're pretty sure it's
a total loss. It's pretty badly damaged, you can tell. Most body
shops aren't equipped to repair a commercial truck, a body, and
a custom interior (Rule of thumb: Double the initial estimate
and triple the time they tell you, because they really have no
idea what is under the carpeted or pegboard walls, and that's
where things get complicated). You resign yourself to the fact
that you'll have to work out of your pickup for a while until
it's all sorted out. So you grab your insurance policy, and you
call the number for claims, and...nothing happens. You get a voice
mail, or someone says they'll get back to you, and they don't.
Or they call back, but nothing is happening at the speed you need
it to. Don't they know every day off your truck is missed sales?
That you can't sell if you're not there? That your truck is your
store? Well, Insurance ID # 4563ter63, they probably DON'T know.
The
sad fact is, if you bought your insurance through your own agent,
or a commercial agent who doesn't know what a tool truck is (but
had lower rates), you are likely to experience some, and possibly
major, frustration if you have a claim. Your agent may be the
greatest guy in the world, and he may have insured your house
and your car and your boat, and you may have known him for 20
years, but that's not helpful - He isn't the one who is going
to handle your claim. He isn't the adjustor. You are probably
going to call an 800# somewhere, and will be assigned a claim
number, and an adjustor in your area will call you - maybe right
away, maybe in a few days - and set up an appointment. Unfortunately
what's fast in the consumer world is turtle slow when you're in
need of your truck. They may have a policy of responding to claims
within 72 hours - 3 days! - or even longer, even brag about it
in their sales brochures. 72 hours may be perfectly acceptable
if you wrecked your Taurus and they send you to Enterprise for
a rental car while you wait. Everyone knows what a Taurus is,
but you will be extremely lucky when they come over if they know
what a tool truck is (a tool truck? My ex-brother-in-laws cousin
used to sell tools...). So he comes to your truck. Commercial
adjustors are used to seeing dump trucks, or cargo vans, and they
have books for that. They use Black Book Guide and online resources
to assess the fair market value. Problem is, these value guides
are for the TRUCK only, not the interior, and usually not the
body. You paid $90,000 for it, it's 3 years old, you owe $65,000,
and he says it's worth $22,000. You say, "Whaaaaat?".
"That's right", he says, "$22,000. Look, here it
is in the book". That's impossible you say, a new one today
would cost me $110,000, look again. Your adjustor at this point
realizes he has to call in some help, and did he mention it will
be another week? What can you do about this? Call the truck builders,
ask them to put a value on it? Fine, good to know, but the insurance
company still has the final word. Send them to ToolTrucks.com
current ads and Sold pages, to see real world values? Yes, great,
but the adjustor still has to be willing to look at these things,
and they have procedures to follow. They may be trying to help
you in every possible way, but company rules say we do this, and
this, in this order. So you go back and forth, getting frustrated,
making calls, looking for something to drive, as your business
sags. Are you sweating yet? We know of one case where a distributor
was without his truck for 8 weeks because they wouldn't total
it even though he needed a new body and interior (Double the estimate,
triple the time...). The other case in the last month was a distributor
from Arkansas whose truck really was totalled, and he had to argue
the settlement value up from the initial $20,000 offer to cover
his $55,000 payoff, and it took a long time to do it.
Whew!
Could this have been avoided? The wrecks, no, but the claim process
would have gone a lot smoother if their insurance was through
a tool company recommended agency. These agents go to great trouble
to become a preferred vendor for a tool company. They offer special
rates, complete coverage, one stop call center for the US, and
promise fast settlement of claims, in exchange for a lot of business.
When something happens, they know if they don't jump right on
it, they could get a call from the corporate office wanting to
know what is going on. They don't want to risk all that business
over clumsy handling of your claim, so they take the time to educate
the adjustors, and they are always on the phone (or should be),
checking on the progress of the claim. They have a vested interest
in making sure you are satisified, and they know you can complain
to someone with power to do something about it, and this gives
you leverage. Sure, the annual premium may be a little higher
than your family agent, but that is probably the result of having
the right insurance coverage on your truck. You might not know
you need it, or want to pay for it, until you need it. So our
advice to you, based on real world situations, is consider carefully
your tool company preferred insurance agency, because you have
their help if something bad happens. Hopefully you will never
have a claim. But two or three weeks of downtime wipe out the
savings from a lower premium in a hurry.
So
we don't forget...our third example was insured through a familiar
insurance agency, the Crane Agency. They made a couple of calls,
the right adjustor got on it, and the claim is already settled.
You saw the truck on our website earlier - a tornado hit it. A
whole lot of things could have been a lot worse, but the truck
situation was settled quickly, as it should have been. Thanks
for reading our article!
Insurance
101 continued
The
right insurance coverage for your tool truck is very important.
We’re truck people, not insurance experts, so please check with
your insurance agent for more information. We’ll cover the basics
here, and point out a few things to consider when buying insurance.
A magazine such as Consumer Reports is an excellent resource when
selecting coverage and an insurance company, and naturally there
are differences in price, or premium, for identical coverage through
different companies. We also suggest you listen carefully to the
recommendation of your tool company for a good insurance provider.
Truck
insurance does not absolve you from legal responsibility for an
accident involving your vehicle. Its role is to relieve you of
the financial burden up to the limits of your policy. If your
vehicle is financed, your bank or leasing company has minimum
coverage requirements you must maintain as a condition of your
contract.
There are three primary components to insurance coverage: comprehensive,
collision, and liability/property damage. Comprehensive,
or “comp”, is the component that covers incidents such as glass
breakage and theft. Collision is called upon to pay for physical
damage to your truck. You can purchase comp and collision with
different deductibles, deductible meaning the portion you pay
before your coverage takes over. The higher your deductible,
the lower your premium, because you are bearing more of the cost
of a repair and therefore, the risk. Liability coverage
protects you from claims made by others for medical expenses and
property damage to their person and assets. Liability insurance
does not pay you for your damages, it's for the "other guy".
Regarding
liability, most financial institutions want you to have at least
$1 million in liability protection, and more is better in today’s
lawsuit-oriented society. As we mentioned, liability insurance
helps you pay for things that happen to the other driver. Coverage
includes medical payments per person and per accident, and property
damage to the other party’s property. Rather than spelling out
minimum coverage for each component, most banks and leasing companies
require what is called "combined single limit" liability
coverage, or "CSL". Carrying $1 million in CSL liability
coverage means that if you are involved in an accident, your insurance
will pay up to a total of $1 million toward medical payments and
property damage, however it is distributed. For example, your
truck runs a red light and crashes into a $300,000 parked Ferrari,
totally destroying it and breaking the driver’s arm. Your insurance
provides a $300,000 check for property damage to the car and $2,000
in medical payments for the hospital bill. This situation could
just as easily been reversed, but the protection would have been
identical. Running a red light later in the day, your truck
breaks off a $2,000 Rolls Royce emblem and the driver has to undergo
a series of operations on his broken arm costing a total of $250,000,
while a passenger requires $50,000 in treatment. Your insurance
still pays out a total of $302,000 but for different reasons.
If the total damage was $1.3 million, you are covered for up to
$1 million and the remaining $300,000 is out of your pocket.
Buy as much liability coverage as you can reasonably afford.
Liability is the least costly coverage component of your policy.
Increases in coverage add less proportionally to your premium
than reducing your collision deductible.
How
much does proper insurance coverage cost? Premiums are
based upon such things as your driving history, cost and make
of vehicle, and where you live. For example, insurance costs
more in NY City than it does in rural Illinois because there are
more opportunities for accidents, more traffic, and a higher crime
rate. One of the best ways to determine you are not paying too
much is simply to ask around. Ask the dealers in your field group,
ask other distributors in your region, and ask your competition.
What
about tool-company approved insurance companies? Yes, please
consider their offerings carefully. We have found these are generally
best for several reasons. First, because of the large group your
tool company represents, approved insurance vendors will more
than likely have the lowest rates for the correct coverage. Notice
we write, "correct" coverage. There are certain
things you need for a business vehicle, such as higher liability
limits, that aren't required on a personal policy. Commercial
insurance coverage is going to be written to look out for the
various pitfalls that have befallen other business people in the
past. Experienced commercial agents know what kind of ceverages
you really need, and in what amount. It may be more expensive
to purchase. It’s probably true that your personal insurance
agent can offer you a lower premium, especially if you have been
a customer for a long time, but take the time to look closely
at the coverage. Non-commercial agents may quote you as if you’re
insuring the family Suburban, not a 16,000 lb. commercial vehicle
driven all day, 5 days a week. Compare apples to apples
when looking at a difference in the premium.
Second,
the tool company recommended insurance company is going to offer
the right protection and coverage limits for your commercial
environment. When they met with your tool company, the first
criteria they looked at was proper and complete protection for
the company’s distributors. Your tool company was able to share
some of the past situations its dealers have encountered over
the years, and the insurance policy was designed to protect
its dealers in the event history repeats itself. Commercial insurance
requirements are generally more encompassing, and unfortunately
more necessary, than personal insurance coverage. Some people
who see the tool company logo on the side of your truck are going
to assume that if they sue you, with the "deep pockets"
of a major corporation as shown in the logo on the side of your
truck, the money to pay them will be there. Most people
don't realize you are an independent or franchise distributor
for the tool company.
Third,
and the main reason we give the nod to the insurance companies
your tool company recommends: they know your business.
Not only do you not have to explain what a tool truck is every
time you call, they will also be a big help to you if your truck
is wrecked, stolen, or totaled in an accident. Your insurance
agent will consider you part of a large and valuable account,
and this gives you extra clout in times of need. Because of the
high volume of tool dealer business, in the event pressure is
needed, your agent carries more weight than an agent who has only
one or two tool trucks on the books. Why is this important?
One, let’s say you are involved in an accident and call an adjustor.
Your truck is down and without a truck, you are temporarily out
of business. The tool insurance company knows this and will probably
rush the request (if not, the agent is there to push it through
the system). The “outside” insurance company handles it like
any other claim, which can mean waiting 24 – 72 hours before an
adjustor calls or shows up. That’s considered fast enough in
the consumer auto world, but not fast enough for you if you are
sitting there watching your competitors gobble up your sales that
should have been yours, IF you had been there. Second, there
is no wholesale price guide for a tool truck. Insurance adjustors
use these daily when looking at wrecked vehicles. This means
your 5-year old step van, for which you paid $65,000, is going
to be evaluated as if it were an empty truck with no interior,
which is all that shows up in the price guides. Your truck might
be worth $35,000 in the tool market but only $9,000 in the outside
world. Your tool company referred and approved insurance carrier
should know what your truck is really worth and make its offer
accordingly, and do it quickly. Sidenote: if your truck is ever
totalled, please refer your insurance company to the Sold pages
of ToolTrucks.com for real world truck values.
Here's
hoping you always have the right insurance coverage and never
have to use it!
For
more information on tool truck insurance, please visit:
www.tooltruckinsurance.com |
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