Karen and her brother run a heating, cooling, and water heater company in Spokane Valley. They have fourteen technicians and eleven service vans, most of which go home with technicians at night so they can drive straight to the first call in the morning.
A commercial property management company offered them a service contract for thirty buildings and required $3 million of auto liability, through primary and umbrella combined. Their commercial auto policy had a $1 million limit and no umbrella.
What they asked for
An umbrella to reach $3 million.
What the review found
Garaging addresses were wrong. The policy listed every van at the shop. Most were garaged overnight at technicians' homes across Spokane County and one in north Idaho. Carriers rate vehicles partly on where they are kept overnight, and misstating it is a misrepresentation that can complicate a claim.
Personal use was undisclosed. Technicians used the vans for commuting and, occasionally, for personal stops. The company's written policy was vague. Carriers want to know, and permissive personal use changes how claims are handled.
Motor vehicle records had not been pulled in two years. One technician's license had been suspended for several months the previous year. Nobody at the company knew.
Completed operations mattered as much as the vans. An improperly installed gas furnace or water heater can cause fire or carbon monoxide injuries months later. Their general liability had adequate limits but no one had checked that completed operations coverage was not sublimited.
What we put in place
We re-rated the auto policy with correct garaging addresses and a written vehicle use policy the carrier approved: commuting allowed, personal use limited, no passengers who are not employees. We set up an annual motor vehicle record check, with a clear rule for drivers who fall outside the carrier's guidelines. The technician with the suspension moved to a shop role until his record cleared.
We confirmed the general liability's completed operations coverage carried the full aggregate and named the property management company as an additional insured.
Then we placed a commercial umbrella at $2 million over the auto, general liability, and stop-gap policies, bringing the total available for an auto accident to the $3 million the contract required. With eleven vans on the road every day, the umbrella also covers the scenario most likely to produce a very large claim.
Why it mattered
The contract started that winter. In February, a technician rear-ended a car on an icy road on his way to a job. The other driver was injured. The claim was large but stayed within the primary auto limit, and because the van's garaging, use, and driver were all accurately disclosed, the carrier handled it without a single coverage question.
If you run a service fleet
- List where each vehicle is garaged overnight, not just your shop address
- Put your vehicle use rules in writing and share them with your carrier
- Pull every driver's record at least once a year
- Use an umbrella to reach high auto limits more cheaply than raising the primary
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