Shopping for Insurance — A Practical 5-Step Guide

Jim Luff
Posted on November 10, 2009

Insurance is one of the top three expenses of operating a chauffeured transportation company. A savvy operator must master how to shop for insurance to get the best rates, coverage, and service.

“Insurance is one of those things that can and usually does cause tension and it really doesn’t have to,” says Phil T. Brun of Kiely, Hines & Associates based in Louisville, Ky.

There is clearly a process in buying insurance for a chauffeured vehicle company. Insurance can seem like a maze, with types such as general liability, auto liability, workers’ compensation, property insurance, and specialized insurance such as sexual harassment not generally covered under other policies. There is also disability insurance and health care insurance for you and your employees.

Step No. 1: Determining Your Coverage Needs

The type of insurance coverage you need is based on many parameters such as whether you have employees or not, whether you own or lease the building that houses your business, state requirements for public transportation, whether you have health care coverage from another source such as a spouse, and whether you desire to provide health care insurance for your employees.

Once you have determined what type of coverage you need, then you must decide how much you need in the form of policy limits or the maximum amount your carrier will pay on your behalf. It is important to determine your needs before shopping for an insurance agency or agent since not all agencies offer all types of insurance and you may need several agents to meet all your needs, including those who specialize in the chauffeured transportation industry.

Carol Bean of TWIW Insurance, a full-service insurance company based in Bakersfield, CA, offers an explanation of some types of insurance that may be beneficial to you (See table on next page).

Step No. 2: Finding an Agent

This is perhaps the most important part of shopping for insurance, says Mark Freeark of Transportation Insurance Brokers, the nation’s largest transportation broker in the passenger transportation industry.

Freeark represents such popular carriers as Lancer and Northland and recommends an agent that is familiar with state, airport, and municipality filings, all of which can be complicated. In some cases, an airport may want a “wet signature” as opposed to a rubber stamp signature on certificates naming the airport as “Additionally Insured.” An experienced agent can cause weeks of delays if a document is not prepared correctly the first time, Bean says.

There are two kinds of agents: 1) “Captive agents” who sell only Allstate or only State Farm, for example; and 2) Independent agents such as Bean who represent more than 200 different carriers and can handle property, workers comp, general and auto liability, and health care for employees. Bean also states that it is important to select an agent that regularly attends limousine trade shows and participates in learning about the unique needs and requirements of the industry and supports it.

Rich Rottier of Cedar Mill Limousine in Crown Point, Ind., says, “I would look at it like any other partnership. It is more than cost and coverage. Can you trust them? Do they truly understand what good service is? Come up with some questions that you know answers to and see if they are honest.”

Obviously colleagues in the industry can point you in the right direction through their experience.

“I took the advice of one of my most trusted friends and went with his broker,” says Geoff Levine of Limo Kings Limousine Service in San Diego. “Not only that, but I took his advice to go with Lancer. He told me that he had a huge claim and they were very easy to deal with and that alone was worth the higher premium than a competitor.”

Levine also said, “To sum it up, I ask my more experienced friends for their advice and I go from there.”

Step No. 3: Obtaining Quotes

Wade Randolph of Riverside Limousines in Baton Rouge. La. recommends shopping around about 60 days before your current policy expires.

“We ask agents to send us a packet asking what info they need from us,” Randolph says. “We fill out those forms and send them back with our loss runs and copies of our chauffeur and vehicle information. We then compare their rates with the coverage that they offer. What they really look for are chargeable losses on your loss runs. We also look at the rating of the actual carrier.”

Industry veteran Dean Schuler, operator of Signature Livery and Carey New Orleans, adds, “The best way to get a good price is to have a great safety record. Higher deductibles are also helpful.”

Obviously chauffeurs with clean driving records offer your best hope of a lower rate, although Bean points out a driving record doesn’t necessarily ban you from obtaining insurance. The points of a few drivers are averaged against your total number of drivers. Make sure you obtain several quotes from different carriers. 

Step No. 4: Looking for Discounts

There are many things that might make you eligible for discounts such as having Drivecam or other video monitoring systems. GPS systems that can notify management of excessive speed and can help locate a stolen fleet vehicle may qualify you for a discount. Having an alarm system on your building and surveillance cameras around your facility also can bring a discount with some carriers. Make sure you discuss these things with your agent during the application process, Bean says.

Step No. 5: Before You Sign

Make sure you clearly understand what your down payment will be and when your first payment is due. Know how many payments you will make as many insurance finance companies such as First Insurance Funding finance on a nine-month basis instead of 12.

Understand how to handle a claim and where you can call in the middle of the night. Review your limits and your deductibles and verify that everything on the policy is exactly as you discussed. Because livery operations require numerous certificates each year naming affiliate livery companies, municipalities, and lien holders as “Additionally Insured,” ask if there are fees for each certificate or if you are allowed a certain amount per year.

Types of Insurance

Business Interruption:
Insures against loss or damage to the cash flow and profit of a business caused by an interruption such as equipment damaged or destroyed by weather.

Commercial Auto Liability:
Insures against property damage to vehicles and damage caused to others by those vehicles.

General Liability:
Insures against liability legally imposed upon your business because of the negligence of the business or its employees.

Health Insurance:
Provides health care coverage for employees such as medical, dental, and vision care.

Life/Disability Insurance:
Protects the business against the death or disability of key employees or owners.

Covers property damage from fires, vehicles crashing into your building, injuries to visitors or guests on your property, etc. Casualty insurance offers coverage against loss or damage to the business. The two may be combined or sold separately in some cases.

Workers’ Compensation:
Insures your employees against on-the-job injuries. Every state is different, but most have a workers’ compensation system. Workers’ compensation is a system where employees are not allowed to sue their employer for on-the-job injuries and have their medical bills and rehabilitation paid for.

Related Topics: choosing coverage, insurance rates

Jim Luff General Manager
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