Insurance -- I Can Save You Big Bucks...Maybe

March, 2004

Insurance ... Give me a bit of kibble and a walk twice a day, what do I need with insurance? Unless I happen to own or run a parking garage -- then watch out.
I have heard stories that make my tail look like a pig's.
Consider the operator that neglected to collect all the monthly parking at a location. It was just a minor error in administration. Seems all the cards were turned on and a check of the printouts said that 1,000 cards were being used, 900 were paid for. The monthly rate was $275. The records went back three years. Do the math, quick! It's $10K shy of $1 million. And the judge said pay. Fortunately, his insurance covered most of it.
Or that little bit of grease that the attendant hadn't gotten around to wiping up. The little slip and fall was worth $100,000.
Then there's the loop detector that got out of tune and the gate came down on a pedestrian. Of course he was walking where he shouldn't have been. And there were signs everywhere saying stay out of the lane. That was fortunate and kept the finding down to only $75,000. Oh, no, the pedestrian got a lot more, from the building owner, and the manufacturer and installer of the gate. The $75K was the operator's piece.
Of course the state requires that you have workers' compensation insurance, and if you have a valet operation, then you suddenly take responsibility for the vehicle and its contents. Wow. It adds up pretty fast. The premiums can go into the hundreds of thousands per year per location.
In most garages, the insurance costs are the No. 2 expenses behind payroll.
The garage keeper's liability and workers' comp are typically carried by the operator and charged back to the owner. In some cases, the operator is self-insured, and charges the owner a fee for the service. In other cases, the operator purchases insurance and charges it back to the owner, at a markup. There are often charges for handling each claim. It really begins to add up.
In any case, it seems reasonable that the operator should be compensated for the costs of doing business in your garage. The company must be protected against loss and liability charges, or it couldn't stay in business.
But wait, says you the owner. I already have an umbrella liability policy that covers me in the event of loss in the facility, including the garage. Why do I need to be covered twice?
But you aren't covered twice, says I. The other policy is to cover the OPERATOR.
I have done some investigating and have found that an owner can expand his policy to include garage keeper's liability and name the operator as an additional insured. The cost of this policy add-on is usually considerably less than the costs the operator charges you.
Wow, says you. What a great idea. I can simply expand my existing policy a bit and all is well.
Wait -- there is a hitch.
Remember that when the operator is carrying the policy, it is also his responsibility to handle all the claims and deal with the claimant. That means rejecting the claim. Then working with the claimant to get his or her car fixed, or to provide some other option that reduces the sting of the loss and hopefully making it go away.
If you work it right, the deductible is such that most claims are handled by you directly. The operators often have complete departments that do nothing but handle insurance claims. Do you? Some large owners might have such a department, and if so, perhaps should look into the possibility of carrying the insurance for the
operator.
Who knows, you might save a buck or two.
Woof!