Helping Businesses in the Automotive Repair Industry Navigate Coverage for Water and Flood Damage

11/8/2022 (Permalink)

Blog Summary: SERVPRO® of Waxahachie/Midlothian outlines strategies for securing insurance coverage that sufficiently safeguards an auto body shop.

The commercial water damage restoration professionals at SERVPRO of Waxahachie/Midlothian understand the pressures that water and flood damage can put on a business, including auto body shops. Damaged equipment, lost time, and lost profits can take a toll on an automotive repair business, potentially causing it to close down. When water damage occurs, comprehensive insurance coverage can make the difference between a rapid recovery or a sudden shuttering of operations.

Determining the business’s flood zone

Water damage caused by storm-related flooding is not covered in the same way as water damage from a burst pipe. If the auto body shop is located in a flood zone or in an area that commonly experiences water damage from floodwaters, the owner will need to acquire a separate flood insurance policy to ensure that the business is protected against the costs of flood damage restoration. The National Flood Insurance Program (NFIP) “provides flood insurance to property owners, renters, and businesses, and having this coverage helps them recover faster when floodwaters recede.”

Insuring equipment for an automotive repair business

When adding endorsements to an insurance policy, consider the following items for which coverage could be advantageous:

• Company vehicles and customer vehicles

Multiple forms of vehicle insurance will likely be needed for an auto body shop. The first type of insurance is for vehicles owned and used by the company. A comprehensive commercial auto insurance policy will provide broad coverage that includes protection from events other than automobile collisions. The second type of insurance, called garage keeper’s liability insurance, protects customers’ vehicles that are kept on-site for tune-ups or repairs.

• Industry-specific machinery and tools

The policy limit is the cap on what insurance will cover when it comes to damaged property and equipment. If it is anticipated that the cost of machinery used in the auto body shop is higher than the policy limit, the business owner should consider increasing coverage or obtaining separate deductibles for each individual piece of equipment. Sufficient coverage will enable the auto repair business to replace its essential machinery and tools, such as hydraulic vehicle lifts, air compressors, engine hoists, floor jacks, transmission jacks, oil caddies, battery chargers, brake lathes, strut compressors, air conditioning recovery machines, and hydraulic presses.

• Electronics and electrical systems

Water is highly destructive when it comes into contact with electronics, and computers, security cameras, shop lights, and other equipment are vulnerable to being destroyed by flood damage. In addition to replacing damaged electronics, insurance may also pay to rewire water-damaged areas of the facility.

Other situations to consider

• Building code requirements

Often, a water damage disaster involves structural damage that requires reconstruction services in addition to water damage cleanup and restoration services. However, when reconstruction is needed, complexities arise. A Texas insurance claim attorney explains, “Once a structure has been damaged, the law requires that new construction will have to conform to current building codes. If your location was built over a decade ago, increased costs may include widening doorways or rewiring circuits—costs that are not covered under standard policies. Ordinance and law coverage can provide the payment you need for plumbing upgrades, increased costs of construction, and the expense of meeting new building regulations.”

• Business interruptions

In severe cases of water damage, the rebuilding process could take an extended period of time: weeks or even months. If the auto body shop has to temporarily shut down while repairs are made, the owner loses much-needed income. Business interruption insurance helps mitigate that loss. According to insurance provider Nationwide, “business interruption insurance helps you pay bills, replace the lost income, and cover payroll when a covered event forces your business to close temporarily.”

• Catastrophic property damage

Unfortunately, some water or flood damage events are so severe that the most cost-effective response to the disaster is for the auto body shop to close down permanently. However, if the business owner invested in total loss coverage, compensation would cover the value of the unsalvageable building and equipment, enabling the owner to have a fresh start.

Choosing a restoration company that handles the insurance claims process

At SERVPRO of Waxahachie/Midlothian, the team works with the client’s insurance company and helps manage the paperwork in order to provide a stress-free insurance claims process. SERVPRO staff ensures that the insurance company is informed about which items are salvageable and which items will need to be replaced. Also, technicians deliver a detailed estimate that is thoroughly documented and includes both images and video. This estimate prevents surprises and is a valuable asset in the claims process.

To learn more about commercial flood damage restoration, call SERVPRO® of Waxahachie/Midlothian at (972) 935-0827. The office can also be reached by email at acarey@SERVPRO10932.com.