Purchasing insurance for your powersports business is one of the most important business decisions that you will make. General insurance providers may make it seem confusing, which can be frustrating, but the solution to getting the correct policy is a specialty carrier that knows every aspect of the powersports dealer’s world.
“The major advantage of a specialty carrier is that the policy will be designed for your type of business by a provider who is knowledgeable in the industry,” said Sentry Insurance East Division Manager Bo Donora.
The question then becomes, what is the correct policy?
“A garage policy provides underlying liability coverage for a dealership,” Donora said. “If a dealer sells bikes only, they would want garage policy coverage, if they service, repair or store bikes, they would want to include garagekeepers as an endorsement.”
A garage policy covers bodily injury and property damage for auto, garage and premises exposures. It also covers things that may happen at or in your facility, or as part of or related to normal business operation.
If someone is injured on your property or an employee gets in an accident while driving a company vehicle, it is covered by a garage policy. If a customer’s unit is in for an oil change and the tech forgets to add oil and ruins the engine, or physical damage to dealer inventory (such as a new bike) occurs, it is covered by a garage policy.
Garagekeepers insurance, on the other hand, provides physical coverage on units in for service, repair or storage. In comparison to a garage policy, it covers uncommon or unexpected things that happen, which are not related to normal business operation for assets that are not owned by the business.
Garagekeepers insurance is an endorsement, meaning it is an addition you can purchase on top of your garage policy and it cannot be purchased by itself.
Inevitably, unexpected things happen. A gas tank gets scratched on a bike that is in for service, your shop is broken into and a customer’s bike is stolen, a fire occurs and damages or destroys a customer’s bike. These are the types of things that are covered by garagekeepers insurance.
Garage policies and garagekeepers endorsements do have their limits, and you should not overlook additional types of coverage. Aside from the new units in your dealership, which are covered by the garage policy, you most likely have parts, accessories and apparel. These must be covered by a separate business personal property policy, which is the same one that would cover office equipment such as desks and computers.
An umbrella policy provides increased liability in the event that the underlying limits of the garage policy are not sufficient to cover a loss.
“An umbrella policy is separate from the garage policy, but a more economical way to purchase higher limits and protect the business,” Donora said.
The level and cost of coverage for your business depends on a number of different factors including volume of business, number of employees, inventory levels, service and repair receipts, geographic location and dealership risk profile.
“While cost is always a factor in business decisions, it’s never a good idea to reduce coverage for the sake of a premium,” Donora said.
When considering a garage policy and garagekeepers insurance, there are two more types of coverage that may not fall under these categories: Employment Practices Liability insurance, which covers harassment, discrimination and wrongful termination and Errors & Omissions insurance, which covers the deal jacket, warranties, odometer or hour meter errors and prior damage disclosures. Be sure and ask about all the types of coverage available to help you choose what is best for your business.
Talk to a specialty carrier about your powersports insurance. They will take the frustration out of it and find the right policy for your business.
This document is made available by Sentry Insurance a Mutual Company and its subsidiaries and affiliates (collectively “SIAMCO”) with the understanding that SIAMCO is not engaged in the practice of law, nor is it rendering legal advice. The information contained in this document is of a general nature and is not intended to address the circumstances of any particular individual or entity, nor the best practices applicable to any particular individual or entity. Legal obligations may vary by state and locality, and best practices are unique to specific items and situations. No one should act on the information contained in this document without advice from a local professional with relevant expertise.
