You asked for it and we listened. In this column, we ask operators of all sizes and from all walks of the industry a question about their business and report their answers so you can assess how your own company compares to your peers. If you would like to participate, please email Rob Smentek at email@example.com for next issue’s question.
TOPIC: Since the pandemic, what actions have you taken to reduce your insurance costs? Have you sidelined vehicles, changed coverage, switched providers, or something else?
Since the pandemic, we have kept only our best chauffeurs with the cleanest driving records, along with reinforcing our current defensive driving training program. Our carrier is Northland and they were gracious enough to reduce our policy for a short period due to limited use. Come this spring when it's time to renew my policy, I am assuming my rates will increase—even without any incidents over the past 5 years. But by how much?
Kirk Bagger, Owner
Captains Car Service in Cleveland, Ohio
In mid-March, we contacted National Interstate (after just renewing on March 1) to inquire about reductions for vehicles that would not be on the road earning revenue, as most of our vehicles were sitting idle immediately following shutdowns, travel bans, etc. National Interstate was quick to reduce non-revenue-earning vehicles to 25 percent. We managed to offload some of our sedans and SUVs that were already near end of life for more than we expected due to the used car market conditions.
Nick Boccio, General Manager
Buffalo Limousine in Buffalo, N.Y.
When the pandemic started, it was shocking, but we initially thought that would be a quickly solved issue. So, we decided not to sell any of our vehicles. We realized that COVID was here to stay after a few short weeks. The approach we had back in May was to keep only five vehicles on the road with full policy coverage and the rest of the fleet intentionally frozen. This was authorized and managed by a great team operated by Roy Edri at CIA insurance. Freezing unused vehicles was a tremendous relief to our bottom line.
Fernando Carlison Jr., Co-founder/CEO
Mundi Limousine in Deerfield Beach, Fla
After our policies became terminated by ALL of the insurance companies in The Netherlands due to accidents over the last 5 years (which most often involved unexperienced Uber drivers who were responsible), we have, in collaboration with our industry colleagues, started our own insurance collective.
Our first active year saw positive results, with each member getting refunds on the insurance costs. The budget for 2021 remains at the same quarter cost level compared to 2019. No increases for us so far.
However, due to COVID we ended up sidelining vehicles and put them in parking lots. There was nothing more that could be done to reduce our costs. Some of our ICs suspended their full coverage and only kept the liability insurance.
Richard de Krijger, General Manager
DMC Limousines Worldwide in Amsterdam, Netherlands
Second only to depreciation, insurance is an expense that must be controlled. Prior to the pandemic, we had already switched from traditional insurance into a captive insurance company. This allowed us to take advantage of our experienced and well-trained drivers through a partial self-insured mechanism and, as a group, retain the profits an insurance company would normally take. Captives reward you for having fewer accidents/claims than industry averages. With the pandemic and corresponding sharp decline in sales revenue, we deactivated vehicles from our fleet that were seeing little use. By doing so, we were able to eliminate liability coverage by retaining only property damage. We also adjusted the amount of liability coverage reducing to $2M for sedans/SUVs and $5M for most buses. These changes saved us many thousands of dollars of expense, but the cost is still brutal unfortunately.
Craig Gardner, CFO
Windy City Limousine & Bus in Chicago, Ill.
Our actions to reduce costs on insurance has been to sideline some of our bigger vehicles that are not seeing much use because of a state ban on large gatherings. Our insurance company has been working with us, which is why I am staying with National indemnity. The cost of insurance is a struggle for our industry as it is, let alone with the pandemic. But we are trying our best to stay afloat.
Salvatore Micelli, Owner
Royal Rides Limousine in Des Moines, Iowa
Insurance has been tough for everyone. The most important thing for us was to communicate directly with the insurance company and set up meetings to go over capability directly with the underwriters. It was important to explain the decrease in business so they understood what kind of help we needed. We cut auto liability coverage on all the vehicles we did not anticipate needing in April along with comprehensive coverage on all the vehicles that we owned outright. Needless to say, it was smarter to take the vehicles we owned out of service to get maximum discounts on insurance. In August, we decided it was in our best interest to sell off the vehicles that were no longer needed and losing value. This released the pressure from the insurance company and gave our team a number to work with for the budget. Moving forward I think operators should consider long-term relationships with insurance providers for the best discounts on the market. Renewal with the same provider is in our plan for the future.
Gus Ortis, CEO
Executive Transportation in Minneapolis, Minn.
Insurance is our third largest monthly expenditure, so we looked at it right away. We are in a captive, so I know they can work differently than traditional insurance. Most, if not all of us in the captive reached out to them almost immediately and asked what we could do. They quickly came out with a great program for us to bring our out-of-service vehicles down to the very basic insurance coverage, knowing that the vehicle(s) would not be in use. If we need to use them, we need to let the insurer know a date range, and we can bring the insurance back up on line and stay legal. I have to commend our captive in doing everything they can to help us succeed. If we fail, they do too, so they definitely have a vested interest in us surviving through this.
We pulled about 80 percent of our fleet out of service. We are slowly adding vehicles here and there as needed, but we’re still at only about 25 percent active. Also, we sold a couple vehicles, but they were already slated to be sold this year. Anything that is being sold is going at fair prices and according to plan.
Tracy Salinger, President & CEO
Unique Limousine in Harrisburg, Pa.
We have suspended about 70 percent of our fleet since March. Since we are a DOT company, we cannot legally remove the vehicles unless we sell them. So, we got comprehensive coverage and use the free GPS tracking from Philadelphia Insurance. That way, they are able to see that the cars are not moving. Even if the vehicles are not moving there is still coverage on them in case a tree falls on them or something similar happens.
While many commercial fleet industries like trucking and transportation services have been complaining that the rates are going up during the pandemic, we have gotten a risk assessment from a private company that has helped our broker keep the policy reasonable.
Jess Sandhu, Director of Operations
A&A Limousine and Bus Service in Seattle, Wash.
It was a wonderful gesture this summer when our provider, Philadelphia Insurance, allowed us to sideline vehicles temporarily. It made such a difference that when the grace period ended it was a very noticeable increase. We also took advantage of their free GPS service through Azuga, and saved some money on our renewal. Insurance costs are just plain awful, however we have enjoyed working with Philadelphia.
Quentin Shackelford, Owner
AllClassLimo.com in Wichita, Kansas
We initially took almost all our vehicles off the road. If the vehicles were free and clear, we just canceled the coverage. If they still had loans, we asked our broker to only insure them for comprehensive—no auto and no liability. We parked these vehicles securely and locked the keys in the safe to avoid accidental usage.
As things start getting better, we are selectively re-adding vehicles once we know we will have enough work to keep them rolling. We are constantly working with the banks and leasing companies for the vehicles that have loans. So far, most have been willing to do something, if not a full deferral then maybe interest-only payments for six months. Unfortunately, the premium finance companies for the auto insurance have not been as easy to deal with. Our monthly insurance premiums are nowhere near what they were in March, but the premium finance companies paid the insurance companies upfront. As a result, trying to get them to agree to a lower monthly payment has been a challenge.
Rick Versace Sr., President & CEO
A1A Airport & Limousine Service in Boca Raton, Fla.
We were able to sell some vehicles, kept a couple with full coverage for any pop-up business, and the rest of the fleet is covered except for liability, which we add as needed the day before the vehicles are to be on the road and removed when back in the garage. This has allowed us to save thousands of dollars. I would like to see the industry go to usage-based insurance as some of us own specialty vehicles that may only be on the road once a week, and some companies are seasonal; therefore, having usage-based insurance would be a great savings.
Barbara White, CFO & Co-owner
VIP Transportation Group in Orlando, Fla.
Currently, I have sidelined vehicles. In the future, I am looking at renting vehicles that I may not use much from another company, and add it under "non-owned auto" on my policy. This is much like one does when renting a car from Hertz or Enterprise.
Scott Woodruff, Owner
Majestic Limousine & Coach in Des Moines, Iowa
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