11 Common Mistakes in Insurance for Limousines YesEnsure

11 Common Mistakes in Insurance for Limousines

There are many small and large mistakes that can be made in insurance for limousines. Since we have not yet compiled an exhaustive list, we will start with some of the most common mistakes we see:

1)  Assuming the Business Owner’s Policy (BOP) is adequate

Many people believe that since they have a BOP it will cover their business and any vehicles included. Unfortunately, this is not always how it works. A BOP does provide broad coverage for many types of accidents such as fires, theft, employee injuries and such; however, there are some exclusions that can come into play when we are dealing with vehicle accidents. The three most common of these exclusions are:

There is typically no coverage for damage to your own car, even if you used it for business purposes (such as a limousine service).

The coverage may be limited to $0.50 – $1.00 per pound of your car’s weight if the damage was not caused by a collision with another car or object (such as hitting a tree).

If you are found to be at fault for an accident then you will likely lose the entire BOP protection and your insurer can deny claims for your employees and clients.

A better choice in insurance for limousines is a commercial auto policy, such as our E & O-C (Employers and Occupiers Liability and General Liability Combined). The same business can be covered on one policy for $4000 – $8000 per year.

2)  Failing to update your insurance when you add or replace a vehicle

It can be easy to assume that just because you have insurance for one limo that it will cover the next one. Unfortunately, this is not usually how it works. Vehicles are typically covered under their own discrete policy and must be listed on the contract to be covered. If they are not listed they are not covered. In fact, some carriers will require a separate physical on the new or replacement vehicle before they will allow it to be listed as covered under your policy.  

3)  Failing to list every single driver

Since many states now mandate that you must have primary coverage for each chauffeur’s own protection, there is no way to list just one or two drivers on the policy. It is important that each driver are listed individually with full driving records to get the proper coverage for each person.

4)  Letting your insurance lapse

One of the most common mistakes in insurance for limousines is letting your coverage expire. Some people will change carriers every couple of years in an attempt to get a “newer” policy or one with lower premiums. The insurance industry has rules that they must follow, just like any other business. When you purchase an auto policy it becomes effective on the date the contract is signed by the insured and cannot be changed without prior written notice to both you and your carrier. Often times if a policy is not renewed within a certain timeframe, the carrier will terminate it and you must begin the process again with a new contract.

5)  Listing your personal car as an “extra” vehicle

It may seem like a good idea to list one of your personal cars as an additional or extra limousine so you can take it with you when your company vehicle is out of service. However, doing so will likely increase your premium due to the risk associated with an unlisted and uninsurable vehicle. A much better way to accomplish this would be to list one of your insured chauffeurs as a driver on two vehicles (the business and personal car).

6)  Failing to list your livery-for-hire license number

New York is one of the few states that requires carriers to list a livery-for-hire license number. You should ask your insurance agent if they do the same in other states where you conduct business. That way you won’t have any trouble when you need to make a claim and the carrier contacts your state to verify your coverage.

7)  Protesting every accident with the insurance company

Limousines typically get in more accidents than other vehicles due to their constant exposure to traffic and they tend to be larger and heavier; however, this does not mean that every claim is valid. As a general business practice it is always best to make every effort possible to resolve the issue with the other driver or their insurance company before filing an accident claim with your own carrier. One way to do this is by taking pictures at the scene of the accident and getting sworn statements from passengers, co-workers and witnesses. Failing to document a claim can result in a denied claim if you do not have proof to substantiate your position.

8)  Failing to list miscellaneous equipment on the policy

In order to properly protect yourself as a business owner, all of your motor-driven equipment must be listed on your insurance contract. This includes any and all tools necessary for limousine maintenance and cleaning. Otherwise, if you report an accident and the carrier discovers that these items were not listed they will deny your claim.

9)  Failing to inspect equipment as recommended by the manufacturer

Almost all motor-driven equipment comes with a recommended servicing schedule as set forth by the manufacturer. If it is found that you have failed to adhere to the schedule, your carrier will likely deny any claim made because you have not properly maintained or inspected your equipment.

10)  Failing to list the five-year replacement cost

Limousines typically get in more accidents than other vehicles due to their constant exposure to traffic and they tend to be larger and heavier; however, this does not mean that every claim is valid. As a general business practice it is always best to make every effort possible to resolve the issue with the other driver or their insurance company before filing an accident claim with your own carrier. One way to do this is by taking pictures at the scene of the accident and getting sworn statements from passengers, co-workers and witnesses. Failing to document a claim can result in a denied claim if you do not have proof to substantiate your position.

11)  Failing to list the deductible for each vehicle listed on coverage

In most states, policies are written with deductibles that apply per vehicle for specific coverages. This means that if you have a $1,000 deductible on collision and another one on comprehensive, then it is likely that each vehicle will have its own dedicated deductible for each of these coverages. In order to get the most from your policy be sure that all vehicles are listed with their own individual deductibles.

What is the difference between sub-limousine, stretch limousine and super-stretch limousine?

Each type of vehicle has commonalities that set them apart from each other. All three are motor vehicles designed for transportation of persons rather than goods.

However, Sub-Limousines are typically categorized as “station wagons” with an extended rear cargo area.

Stretch limousines are typically categorized as having extra space added to the wheelbase of a standard length car.

Super-stretch limousines are vehicles that have been elongated through major frame modifications or even adding another axle/set of wheels in order to accommodate more passengers inside the vehicle while still maintaining a street-legal design.

I have been renting a limousine from another business but just bought my own vehicle. Does it need to be added to my current policy?

In many cases, when you purchase a new vehicle, it will need to be added onto your existing policy in order for your coverage to remain valid. When applying for or renewing your general business auto insurance policy, speak with your agent about adding the new limousine onto the plan.

What types of insurance does a limousine business need?

There are four main areas of coverage when it comes to general liability and business auto insurance, collision, comprehensive and uninsured/underinsured motorist. The first two are mandatory coverage while the latter two are optional types of insurance that can be added to your policy if you choose.

I’m leasing a limousine; what do I need to know about insurance?

When leasing or renting any type of motor vehicle it is vital that you read the fine print in the contract. This information may include state-required minimum levels of liability coverage, which may be less than what is actually needed for your business. You may also want to verify if the cost is included in your monthly lease rate or if you are responsible for a separate payment.

So It Seems

We hope that this post has helped you see the importance of having a good insurance policy for limousines. When it comes to protecting your investment, do not take any chances with these 11 common mistakes in insurance for limousines. Do you have any thoughts about what we said? Let us know by leaving a comment below!

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