Auto Insurance For Contractors In Pennsylvania
Typically you will see that a contractor has limits of liability equal to his Commercial General
Liability for his commercial auto insurance. You may elect to combine your Commercial Auto Insurance
policy with your Contractors General Liability Policy as this will have the effect of creating a
package or a multi-policy discount with other companies. It is simply a matter of how the insurance
company handles the multiple policies.
Have The Same Insurance Company Write Both Policies -
Better Coverage, Lower Prices!
From an insurance coverage perspective it is best practice to have the same insurance company write
both your Commercial General Liability Policy and your Commercial Auto Insurance Policy. The two
policies dovetail and where one stops the other starts. From a claim handling standpoint, you want to
avoid having two insurance companies trying to figure who is responsible for what part of a loss.
You May Be Better Off With a Standalone Commercial Auto Policy
The reality of the Pennsylvania insurance marketplace is that you, as a prudent consumer of insurance,
may be better off from a dollars-and-cents standpoint with a standalone commercial auto policy. We
represent multiple insurance companies who will provide Commercial Auto Insurance for a contractor
without writing the Commercial General Liability.
Some Good News for Contractors in Pennsylvania
As a contractor in Pennsylvania, there is good news from a commercial auto insurance company rating
perspective. You are in the most favored category for rating - the service category. Most insurance
companies file their rates to have this be the least expensive category and generally allow for a
contractor to make 3-4 stops in a day. It makes sense and the insurance company's loss experience
proves this model out year after year - the very nature of your business is that you are not on the
road all day every day - you to a location, park your vehicle there, and conduct your business. This
type of risk qualifies for a rate reduction or credit from virtually any insurance carrier.
By way of an example, a contractor that goes to 3 appointments and has his/her truck parked for the
majority of the day at any one location qualifies for the service rate and gets a premium credit to
reflect the fact that the vehicle isn't in transit all that much.
The Thing That Nobody is Talking About
The thing that nobody is talking about - your unique business model requires a unique insurance
response. We insure a great many contractors and over the years I have become friends with a number
of them. In talking to one he offhandedly said that he had to "step into his office" to retrieve
some paperwork. His office was a Heavy Duty 2003 Ford F-250, but he was dead on accurate -
contractors have a unique need when it comes to quickly and accurately adjusting a commercial auto
insurance claim.
Let's say that the vehicle I use to commute to my insurance office and to see clients is banged to
bubkus. Presently, my greatest loss would be that would have to take my softball bat bag out and
put it into a rental or substitute vehicle - the change in or the downturn with my vehicle would not
impact my ability to make money - to earn a living as I always have. My vehicle is about amenities
and a sense of familiarity - it doesn't cost my business money if I have to use a different car.
Now, if a contractor has his truck with all his tools and equipment involved in the same accident,
the ramifications are vastly different. For many contractors, this represents in a very real sense,
the loss of their "office" and your ability to make money to earn a living as you always have is
directly impacted. There are also other parts of this claim which would be different - the loss of
tools and equipment - whether any of the tools were permanently attached to the vehicle all impact
how the claim is handled.
Contractors Concierge Service
Only by understanding the uniqueness of this niche of business were we as agents able to truly create
a difference for our clients.
Insurance for contractors is expensive and represents one of your single largest
expenses. Paramount to controlling your commercial auto insurance expense is to have a number of
carriers compete for quality business, and to be able to provide those companies with the information
that they need to properly price and credit quality clients.
As stated earlier the very nature of contractors vehicles and what you carry in them makes for a
unique insurance claims handling situation - it wasn't just a vehicle that is damaged, it is likely
your tools, your "office" and as such your ability to earn a living.
By understanding this, our agency has developed a "contractors concierge service" when dealing with
contractors commercial auto insurance claims whereby the moment that we are made aware of a claim we
call the claims adjuster to proactively move the claim file quickly.
Moments of Truth
There are "moments of truth" in the insurance process - when one company or agency is clearly
superior to the other alternatives in the marketplace. I firmly believe this is one of those
moments of truth. As such, as the agency principal - the guy whose name is on the door - each
and every contractors auto claim - I will talk to the adjuster and make sure that it is moving
as quickly as possible to get you back up and running with no downturn in your business.
This level of understanding, of intricately knowing both your and our business, makes dealing with
a contractor and commercial auto insurance expert and specialist the absolute best practice for
Pennsylvania contractors.
Avoiding a Death Knell That Could Ruin Your Contracting Business
One thing that is not advised under any circumstances is to keep the vehicles you use for your
business on your personal auto policy. This is tantamount to standing with both a lit match and
the can of gasoline. It is a sure fire recipe for disaster of epic proportion. Your insurance
could deny any and all coverage for an accident - leaving you to pay the damage and defend the
claim on your own. In essence, everything you and your family has worked and strived for could
be gone. It's a bad idea.
A Commercial Auto Claim Nightmare - Why You Absolutely Must Avoid This At All Costs
An example makes the point of why this one claim could well take down the business and also
ruin the contractor's family assets:
Nick is a contractor, who does business in his own name with a Do Business As Big Nick's Reliable
Plumbing. Nick learned the trade from his dad and uncles. He knows everything there is to know in
his field. He's never had an insurance claim. They happen to other people - he does business the
way he always has. Why should he change? Why should he pay the higher rate for commercial auto
insurance is his thinking?
He finishes his day and is driving home to pick up his son and take him to Little League. He is
excited and distracted as this is the championship game and his son is the team's star and he is
the coach.
So on the way home, Nick has his first accident in almost 30 years of driving. He rear ends a
woman and her two young children in a minivan. Nick is hurt, the woman and both children are
injured. Both vehicles are damaged badly. The woman and her husband file a lawsuit against Nick.
Nick's insurance company sends him a certified letter with a portion of the policy highlighted.
To paraphrase it say "Vans, pickups and panel trucks used for business are not eligible under the
personal auto policy". The letter goes on to say that since the company is declining coverage,
they have no duty to defend the claim and suggest that Nick secure at his own expense legal counsel.
So what is not covered:
-
The Damage to Nick's Vehicle
- he pays out of pocket
-
The Damage to Woman's Minivan
- he pays out of pocket
-
Nick's medical bills
- he doesn't believe in workers compensation. His auto carrier denies his Personal Injury Claim
-
The bodily injury lawsuit brought by the injured woman
-
The loss of services claim brought by injured woman's husband
-
All the legal defense costs to defend both lawsuits
So now instead of simply suing his contractor's commercial auto policy and cooperating with his
insurance company. Now this lawsuit is pointed right at Nick - his family, his home and all his
assets, and a possible wage garnishment for the next 20 years. This is real life, and by saving
a couple of bucks - a decent hard working contractor and his family are screwed beyond
words.
You say it can never happen - my insurance company would never do that. On a small claim, say $5000
or so - probably not. Policy limits case of $500,000 or more - without question or hesitation.
Insurance companies put exclusions in their policies because they have been dragged into court and
lost for something they never intended the policy to pay for. A personal auto policy is for driving
back and forth to work, picking up kids, errands, etc. It is not intended for contractors to carry
their tools and supplies.
Don't Ever Give Your Insurance Company The Means to Rightfully Deny Your Coverage
How Insurance Companies Come Up with Commercial Auto Insurance Rates for Contractors
Commercial Auto Insurance is rated based on an ever growing number of factors:
-
Age of drivers
-
Driving Record of all drivers
-
Year make and model of the vehicles
-
Where the vehicles are parked at night
-
Previous insurance and claim history
-
Personal and/or corporate credit
-
Radius of Operations
-
Coverage desired
The lowest price I have seen for one light pickup truck type of risk for commercial auto insurance
is $752 on an annual basis. I have also seen trucks with full coverage cost over $4,000 based on
driving record, the cost of the vehicle and other underwriting factors.
If you use $1,200 to $2,000 per vehicle this is a reasonable basis of departure and clearly each risk
is underwritten on its own unique characteristics.
The majority of vehicles that a contractor will put on his policy are light pickup trucks, vans, to a
lesser extent heavier duty pickups and box trucks.
Call us at (717) 533-0207 or
contact us for answers to your Pennsylvania Commercial Auto Insurance questions.
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