IS YOUR GARAGE COVERED?
Under-insured businesses are putting customers and themselves at risk
Insurance companies are warning customers that classic garages and workshops may not be adequately covered for their cars.
This can lead to owners losing money on damaged cars – and mechanics risking their own careers and livelihoods.
Cars are at risk, should anything untoward happen during maintenance, restoration, or even out on the road after work has been undertaken. In the latter case one particular point of vulnerability is when a garage has made a bespoke part which may have failed, causing damage to persons or property.
Owners using a classic-related business for service, repair, MoT, restoration or storage need to be sure that their vehicle is covered and if, in the event that the business has not complied with the insurance policy terms and conditions, that any claim arising will be paid.
Currently, it is difficult for classic car owners to have any certainty of this.
In the event of a total loss within the garage itself, vehicle valuation may be at risk, especially for cars that are uninsured in their own right undergoing intensive restoration, having not been on the road for many years.
Owners and businesses, alike, are at risk, with MoT testing centres especially vulnerable to the perils of underinsurance, when a visiting high worth car could easily outstrip the garage’s maximum insured value.
Garage tools and equipment replacement costs are often ‘guesstimated’ rather than being correctly valued and unsecured toolboxes are often not covered for loss or theft.
Many insurance company clauses and exclusions can catch garages unaware, and there is a danger of complacency when renewing.
The industry site, www.insurancetimes.co.uk states that 82% of brokers had encountered examples of underinsured small businesses with 16% having seen the same type of company go out of business as a result of under-insurance.
Graham Meacher sales and marketing director for the insurance broker Ernest R Shaw, says: ‘We are noticing a worrying trend from the majority of the new business enquiries we are being asked to look into. The main finding from the insurance renewal review is of underinsured businesses in the classic car restoration industry.
‘In addition, there is a lack of understanding of the consequences of not having the correct level of sums insured, which in the event of a claim will leave both customers cars and businesses open to unnecessary exposures in the event of a loss.’
Your car’s in the shop, but is it adequately insured while it’s there? Many aren’t.