How is the premium calculated for dealer and non-dealer garage risks?
These are the guidelines used by underwriters to determine a garage risk’s premium.
Rating basis for dealers
The premium for dealer’s coverage is based on two classes of employees. Rate units are expressed as 1.00, .70, .50, or .20 for each owner/employee. These are added up by the underwriter to determine the insured’s total exposure.
Class 1 – Regular employees which include part-time as well as full-time. This class includes owners, active and inactive officers, salespersons, general managers, service managers, clerical, mechanics, porters etc. Any other employee whose principal duty involves the operation of autos or to whom a garage auto has been furnished.
Class 2 – Non-employees, may include contract drivers.
Rating basis for non-dealers
Non-Dealer coverage premiums (for repair shops) are based on the payroll of each owner/employee with most carriers. Regardless of employees’ actual pay, payroll is based on $5,200 for each full time and $2,600 for each part time employee. Some non-dealer risks can be based on sales and/or receipts, such as tire sales without installation or a gas/service station where the gallons of gas sold maybe required. The carrier will likely have a rate for each class code.
It is imperative to include all owners and employees so the proper pricing of the risk is secured, as most garage policies are subject to audit. Clerical and non-driving employees must be included as their premises exposure is picked up under the garage liability. Advise your insured that carriers are likely to audit.
Got more questions about these and other transportation coverages? Give us a call. A Myron Steves Transportation Underwriter will review your risk and explain which coverages and limits are appropriate for your risk so you can advise your client on their options. Learn moreabout garage insurance with Myron Steves.