David Willett is co-founder and chief underwriting officer for Spark Underwriters, an insurance company that specializes in protecting businesses in the auto industry.
If a storm, fire, or other occurrence damages a quick lube owner’s property, it’s the job of the Spark team to help get the location up and running again as quickly and painlessly as possible.
There’s a reason why Willett and his colleagues are especially passionate about this job: because they know it well.
“Our representatives are I-CAR trained and come from the industry. So, we could literally work in these shops,” he says.
The Backstory
In the 1990s, Willett went to work for Universal Underwriters, a company founded by Henry Ford, founder of Ford Motor Co., 150 years earlier. Ford started the company because he couldn’t get anybody to underwrite his business.
Willett’s role when he joined was from the actuarial side, analyzing the past losses of businesses and projecting them into the future to figure out the amount of reserves the insurer would need and what rates they should charge.
Another facet of his job was underwriting—which is the process an insurer uses to determine if they’ll insure a business or an individual and how much they’ll charge.
“I was tasked with doing a business plan in 1993 (to launch the company’s aftermarket coverage) and I’ve been insuring shops ever since,” he says.
During his time at Universal Underwriters, he honed a passion for alleviating business interruption to auto shops and quick lubes when disaster strikes physical property.
The Challenge
In the quick lube industry, every owner knows it is paramount to keep a steady flow of business through a reliable and sustainable car count. And while a repair shop might be able to move to another location and keep doing business in the event of a disastrous interruption, if a quick lube building is damaged or destroyed it’s highly unlikely that another building could accommodate its specialized design requirements.
“As a result, in quick service you need to be back working as fast as possible, with full utilities. And (in the process there will likely) be expenses for purchasing a generator for electric and internet after a storm or fire loss,” explains Willett.
When a disaster strikes, quick lubes do sometimes have an advantage working in their favor, however.
As Willett notes, “Many people who own quick lubes own multiple ones.” And this fact lessens the opportunity for a total business shutdown, because the odds are slim that all the locations would be hit by a business-interrupting event of some kind.
The Takeaway
Accidents happen. Ironically, they sometimes happen to the very businesses designed to help keep motorists’ vehicles performing safely and at top efficiency. So, business interruption insurance can be a quick lube owner’s savior if a disaster—either natural or manmade—befalls their building or geographic location.
“Even a day can mean a lot,” Willett says of a quick lube’s business interruption. “How quickly can you identify what’s going on and get it fixed?”
The scenarios causing a business interruption can be so varied. “If it happened on the roof, you can have that worked on and it wouldn’t have to preclude you from getting business to go on as much as possible,” Willett realizes. “We understand this by being trained ourselves.”
From this auto-business-trained perspective, Willett also suggests that company owners consider their coverage from many different angles.
“Pay attention to your waiting period (the amount of time the insured must wait before some of all of their coverage begins). Is it 72 hours? And is there a limitation on ordinary payroll?”
He continues, “Are there limits on the policy?” For example, in weather-prone storm areas of the country there are oftentimes limits on that type of coverage.
Claim expertise is another factor owners should consider when choosing an insurer and a policy. An owner is likely to want people familiar with their industry who understand what they truly need.
Another consideration: Who will the insurer send out to identify what’s going on with a quick lube that’s experiencing a business disruption? Or as Willett articulates it, “Do they have someone in-house to send to you who knows your industry?”
And still another thing to consider is the owner’s own time and how much it will be disrupted when some type of damage happens to their business. Beyond the original loss you’re concerned with, is the rest of the loss going to be a distraction too?
As Willett finds, “You can’t spend all your time filing an insurance claim and then still run your business. Your building must be written properly, as well as all the contents inside of it. If you have adequate coverage for all the lift bays and equipment, for instance, it’s easier to get through the claims process.”
The benefits of having a properly written policy from the get-go, insured to value, are priceless.
“That way you don’t have to figure it all up (if your business is damaged and your work disrupted) and fight for what you need in terms of coverage,” Willett explains.
The Aftermath
The quick lube industry is a tighter-knit group than most in the automotive industry, in that owners largely have consistency in the design and function of their buildings. That said, the usual variables of quick lubes can make a big difference in their insurance needs.
“If you have four bays versus two bays, then you have much more exposure to business income loss. Payroll is probably higher, you have more equipment, a greater volume of business, and so exposures vary for each store based on these things,” Willett notes.
Due to the foresight of Henry Ford, perhaps, quick lube owners have many business insurance options today. And when well-written according to each business’s distinct needs, these programs can help jumpstart and even save a business hit with an unexpected disruption.
