Leon Bosch, Managing Director at Gallagher Automotive, considers some of the potential areas and types of insurance that garages could consider reviewing with their insurance broker, in an attempt to reduce their premium spend, assisting cash flow, whilst they return to ‘business as usual’.
Our Motor Trade clients can potentially reduce their premium spend by reviewing the following policy sections as follows:
Road Risks
- As some employees may be furloughed garage owners may not have as many drivers (and some not any) needing to be covered during this time.
- Insurers base their premiums on the number of drivers and the number of drivers requiring business and/or social use.
- We would advise that you review the current number of drivers, as a reduction in driver numbers could result in a premium saving during this time.
Property
- Some garages are still closed and the ones who are now open may have fewer visitors, so there may be fewer stock or customer vehicles on site, compared to pre-lockdown.
- We would advise you consider reviewing the current Insured’s Own/Customer Vehicles sums insured, as the reduced exposure could result in a lower premium.
Employer’s Liability
- Insurers rate this section either using the number of employees (per capita basis) or forecasted payroll for the year ahead.
- With the furlough scheme, it may be that either employee numbers and/or payroll has reduced.
- Reforecasting these figures could result in a saving under this section, if the employee numbers and/or payroll has reduced.
Public Liability
- Insurers rate this section either using the number of employees (per capita basis) of forecasted turnover for the year ahead.
- Reforecasting these figures could result in a saving under this section, assuming the employee numbers and/or turnover forecasts have reduced since the beginning of the year.
MOT Loss of Licence
- Insurers rate this section based on the forecasted MOT fee income anticipated for the year.
- Reforecasting this figure could result in a premium saving, assuming it has reduced given the current situation.
Business Interruption
- Insurers rate this section based on the forecasted gross profit for the year.
- Reforecasting this figure could result in a premium saving, assuming that it has reduced given the current situation.
You should ensure that all of the above are regularly reviewed as circumstances change, and that you have discussed any changes with your insurance broker, so that you do not leave yourself under-insured – especially as business starts picking up again.
