Insurance 101 for Tool Trucks
This article was updated 12/2/10:

Let's get right to it - 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). Anyway, you're pretty sure it's a total loss. Most body shops aren't equipped to repair a commercial truck with a custom interior. So you grab your insurance policy, and you call the number for claims.

The sad fact is, if you bought your insurance through an agent who doesn't know what a tool truck is, you are likely to experience some frustration if you have a claim. 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. Most Commercial adjustors are used to seeing dump trucks, or cargo vans, and they have books for that. They use the "Black Book Guide" and online resources to assess the fair market value. Problem is, these value guides are for the TRUCK only, not the custom interior and body. You paid $90,000 for it, it's 3 years old, you owe $65,000, and the adjustor says it's worth $22,000.

The claim process will go a lot smoother if your insurance is through a tool company approved agency. These agents study the trucks, offer complete coverage and a one stop call center for the US. Best, they promise fast settlement of claims, in exchange for the potential of a lot of business. So they have a vested interest in making sure you are fully satisified, and they know you can complain to someone with the 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 this is most likely the result of having adequate insurance coverage on your truck. Our advice to you is, based on real world situations, please carefully consider going with your tool company preferred insurance agency. Hopefully you will never have a claim, but if you do, your tool company stands behind you.

Insurance Basics

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.

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 covers you for physical damage to your truck.

* 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".

Most financial institutions want you to have at least $1 million in liability protection, and more is better in today’s lawsuit-oriented society. 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 needs to be distributed. 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!

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