Salvage yards buy old cars and other vehicles, remove functioning parts, and sell them as used auto parts. Some parts may even be overhauled to be sold at retail stores. The remaining unusable vehicles and parts are compressed and sold to scrap dealers.
Salvage yard owners must not only know what to do with the cars they buy, and how to sell the used parts at a profit, but must also protect their business and any customers on their premises from a variety of dangers.
If you own a salvage yard, you need customized, reliable business insurance to help you protect your business from the many things that can go wrong. A local independent insurance agent has access to numerous insurance markets, and can help you find a carrier that specializes in businesses like yours.
Why Do You Need Salvage Yard Insurance?
Salvage yards are dangerous places and in most cases there is no way around that fact. Insurance for salvage yards is often considered hard to place, which is why it’s important to understand your risks, take steps to minimize the safety hazards that are present on your premises, and find insurance that helps you recover when something goes wrong.
If you own a salvage yard you may have:
- Heavy scraps lying around
- Customers/general public on the premises, perhaps even dismantling cars on the premises
- Dangerous crushing operations
- Parts, cars, and scrap recycling operations
Anyone who is on your premises, from employees to customers, vendors, and suppliers, is susceptible to injuries. Cuts, trips and falls, and crushing injuries can happen at any time from simply walking past a protruding engine or a sharp edge. Disorganized parts can lead to trips and falls. And any crushing or scrap operations come with a whole different set of dangers for you, your customers, and your employees.
You probably operate on a sizable property. Any of that property, from your office space or any indoor warehouse space to all of the contents of your yard, can be damaged by fire or severe weather. What’s more, thieves and vandals may see your yard as an attractive target.
You may also have toxic and combustible solvents, batteries, and used tires on the property, as well as dangerous welding operations that can trigger explosions because of the presence of gasoline and other inflammable materials. Your business insurance must address your pollution liability exposures, as well.
Business insurance is just one way to protect your business from these and other dangerous and costly problems. It’s important to be aware that In order to be eligible for most salvage yard business insurance programs, salvage yards often have to meet minimum safety requirements.
What Does Salvage Yard Insurance Cover?
Salvage yard insurance isn’t a single policy. It’s a package of business insurance policies designed to cover your unique and specific property and liability risks.
Your salvage yard insurance package might include the following types of policies and coverage, at a minimum.
- Commercial general liability (CGL) insurance is critical. It protects you from costs related to bodily injury or property damage that you or your employees cause to third parties. CGL policies also cover your defense costs, court costs, and court-ordered judgments that you must pay.
- Commercial property insurance is essential for proprietors who own their buildings or whose business handles a large volume of expensive inventory. Business property insurance protects you if a fire, vandalism, smoke, theft, or other type of event damages your property. It provides coverage for lost inventory, office equipment, computers, and more.
- Commercial property insurance policies usually include business interruption coverage, or business income coverage, which protects your earnings if your business is unable to operate because of damage caused by some type of disruption (fire, hail, wind, equipment breakdown).
- Commercial auto insurance covers any vehicles that your business owns. In addition, you need non-owned auto insurance if you have any employees who drive their personal vehicles for business purposes.
- Employee theft and crime coverage can protect your businesses from the costs of theft, dishonesty, and fraudulent acts committed by an individual employee or a group of employees. A basic stand-alone employee theft and crime policy provides coverage for forgery, alteration, theft, unauthorized electronic funds transfers, credit card fraud, computer fraud, money order fraud, and counterfeit fraud. You can also add endorsements for additional coverage.
- Being a salvage yard owner exposes you to a number of excessive liability risks. While a general liability policy will protect you in a wide variety of situations, the costs of a single lawsuit can easily exceed the limits of your CGL policy. If you exhaust your underlying general liability limits, a commercial umbrella policy kicks in with excess liability coverage, helping to pay additional legal fees and court-awarded damages.
- Equipment breakdown insurance, often referred to as boiler and machinery coverage, supplements your business property insurance. It covers certain costs associated with accidental breakdown of machinery or equipment and the resulting property damage or loss. Equipment breakdown coverage typically covers breakdowns due to power surges, motor burnout, boiler malfunction, and even operator error.
- Pollution liability insurance covers the costs of liability claims stemming from damage caused by hazardous waste.
- Workers’ compensation insurance provides insurance coverage when accidents happen in the workplace. It ensures that the injured worker gets medical care and income protection while unable to work, regardless of who is at fault for their injury. And it will provide death benefits for a worker’s dependents if the worker is killed. Be aware that workers’ compensation insurance can be costly and difficult to obtain for salvage yards because of the excess degree of danger that is inherent in the workplace.
What Other Insurance Coverage Do Salvage Yards Need?
You might need several other types of business insurance policies or coverage in order to protect your salvage yard from business disruptions, lawsuits, and property losses. Talk to an independent insurance agent to determine if you need any of the following:
- Auto dealer physical damage coverage/dealer’s open lot coverage: covers your inventory, or vehicles held for sale, if applicable.
- False pretenses coverage: protects your business if you are tricked into releasing a vehicle to someone under false pretenses.
- Professional liability/errors and omissions insurance: for odometer, truth in lending, and title related claims
- Garagekeepers liability coverage: covers customers’ vehicles in your care, custody, and control
- Inland marine coverage: for tools, equipment and supplies in transit
- Product liability coverage: for losses or injuries to a user, buyer, or bystander caused by a defect or malfunction of the product. In some instances, product liability insurance may also cover the manufacturer or seller of the product for defective design and “failure to warn.”
How Much Does Salvage Yard Insurance Cost?
If you want to own a salvage yard, you already understand that you need business insurance. You should also understand that salvage yard insurance is difficult to get, and it is not cheap.
Part of obtaining coverage at all—let alone affordable coverage—will be ensuring that your salvage yard operates under a set of extreme and tangible safety standards. In order to provide a quote and offer coverage, an insurance company will want you to quantify your efforts to protect the safety of your customers, employees, and the general public.
When you do receive a quote for salvage yard insurance, it will be based on a variety of factors, including:
- Size and location of your property
- Number of employees
- The specific activities you do (e.g., recycling, crushing, dismantling, onsite sales, etc.)
- Whether or not the general public is allowed on or present on your property
- The types and amounts of coverage that you need
It’s important that you understand what is and is not covered, and how to best mitigate all of your risks.
Find and Compare Quotes
An independent agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Insurance Agent
Independent insurance agents simplify the search process for finding the right salvage yard insurance. They’ll walk you through some handpicked policy options and explain the details.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get—but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.