Benjamin Franklin once wrote “An ounce of prevention is worth a pound of cure,” and while many people apply this maxim to health matters, it also applies to garage liability and workers comp insurance.
“Insurance is intended to be there for the unexpected, but understanding how you can prevent a hazardous event or behavior is what it’s all about,” says Bob Tschippert, senior business analytics officer for Zurich North America Commercial’s Programs and Direct Markets unit.
“Being able to control your exposure gives you control of your insurance premium. Your loss ratio is going to be reflected in your pricing.”
How can you —- an independent tire dealer, possibly with multiple locations and a myriad of other concerns —- limit your exposure? What are the best ways to keep your costs down? And how do you protect yourself when an incident occurs?
It starts with the hiring process, says Gary Kohlstaedt, senior program manager, underwriting department, Meadowbrook Insurance Group Inc., which provides workers comp insurance for Tire Industry Association (TIA) members. (Zurich provides garage liability coverage for TIA members.)
“In the tire and auto industry, it takes some physical activity to perform most jobs. A good idea is to do some physical exams after you have a good candidate for the job.”
Physicals accomplish two things, according to Kohlstaedt: they make sure candidates have the physical capacity to do the job and they screen candidates for previous medical problems that may hinder future job performance.
Screening for safety
As a whole, workers comp insurance premiums for independent tire dealers are decreasing, according to Meadowbrook. For instance, in Michigan, premiums have fallen 2.25% each year over the last four years. Some states have reported even larger decreases: Missouri workers comp premiums have dropped 6% year-over-year since 2003. These numbers are indicative of what’s happening throughout the country, says Kohlstaedt. Why? For one, more tire dealers are “thinking preventive maintenance.”
Jason Schoen, senior loss control consultant for Meadowbrook, recommends focusing on the following preventive maintenance practices:
1. Written job descriptions, which “can be as detailed as need be,” he says. “Insurance companies offer safety experts and vast amounts of information, one item being how to write a job description.”
2. Training. “The owner must have a clue about how they want to train and a way to make sure they get it done.” Use a formal checklist to document training. “I find a lot of businesses that have claims issues are very informal. Not only does this set them up for problems when dealing with entities like the Occupational Safety and Health Administration... if they have no record of training and who did it and what they talked about, it’s hard to convince others they’ve done the training.”
3. Safety equipment, which should be used at all times in all scenarios. “I don’t know how many times I’ll bring up the issue of safety glasses and the owner will say, ‘I just can’t get my employees to wear them.’ My thought is, ‘This is your business. I would think you could control your employees.’”
Lead by example, he says. “If the owner himself isn’t wearing safety glasses, I don’t think his orders are going to carry near the weight... in other words, be involved.”
4. Thorough documentation, which can help if fraudulent claims are ever brought against your dealership. “That’s one of the most difficult situations we see.”
Keeping workers compensation claims down is a mind-set, says Schoen. Most safety problems at tire dealerships stem from the fact that owners and managers “have created a culture that doesn’t incorporate safety practices.
“Safety is just not one element; it’s several elements that a company must incorporate like line items in a budget.”
“The tools are usually there,” adds Kohlstaedt, “the conditions are at least average and sometimes the housekeeping is very good, but it’s the lack of enforcement.
“We recently had an expensive case where a truck tire exploded and it wasn’t in a safety cage. That’s a preventive measure that could have been taken but wasn’t and as a result, an employee was severely injured.
“In a case like that, I can almost guarantee you that the shop owner or manager walked by that employee (before the incident) and never said a word about it.”
Like workers comp claims, controlling garage liability costs starts at the hiring level, according to Zurich’s Tschippert.
“You should have a formal application and you want to make sure it’s been reviewed by your insurance specialist and your attorney.
“You also want the application to be specific to the position; this will prevent problems later on.”
He recommends checking applicants’ driving histories by asking them to fill out a motor vehicle record request, even if the job doesn’t entail driving. “It’s a snapshot. It’s not just (the applicant’s) driving exposure; it’s an indication of behavior and the person’s background.”
While you’re checking out prospective employees, don’t forget about your current ones who could be working with outdated or inadequate equipment. “Proper maintenance and replacement of equipment is huge,” says Tschippert.
“There may be some resistance in repairing or replacing equipment in a down economy, but it goes back to management involvement and making sure every employee knows it’s his or her job to create a safe operation.
“Do you want your people using tools that are held together with duct tape? Are all the safety guards in place? Sometimes it’s a basic thing. Look at your extension cords: have they been spliced? Are they being held together with tape?”
Equipment inspection checklists go a long way toward ensuring that tools are safe and in top working order. “If you walk through your checklist once a week, not only will you know what’s going on but your employees will see that management is actively concerned about their working environment.”
The key to keeping garage liability claims down is involvement on the part of management, says Tschippert. “What we don’t want is a customer who thinks about insurance once a year, when it comes time for renewal. We want to see someone who shows proper support for risk management. It’s an on-going process.”