Not long ago, I got an email from a gentleman wishing to set up a mobile oil change business in Florida. He was concerned about what sort of insurance he might need and was under the impression that a 1 million dollar commercial liability policy was needed up and beyond his work truck vehicle commercial auto policy. Okay so, let’s talk about this; is he correct?
It turns out that he most definitely is, you see commercial auto is not the same as completed operations or the potential liability while working. For instance, if a car catches on fire that you are working on, your commercial auto policy isn’t going to cover it. Do you see that point? So, this is the advice I explained to him;
You will need most likely want to get a commercial insurance policy; $1 million aggregate, 300K per occurrence general liability, with a “garage keeper’s liability” notation, and there will be some customers who may demand more, and also demand to be additionally insured, not just a certificate of insurance on file.
Commercial Auto Insurance is another need, but most commercial business policies will write them together as one. Find a good “commercial insurance broker” and have them scout out their sources, usually, the broker-agent knows the underwriters very well (as in speed-dial) and can get you a good rate and the underwriter will understand difference between mobile and fixed costs. Generally, commercial liability insurance is partly based on your estimated gross income.
Don’t overestimate or you will pay too much, and don’t underestimate or you may get audited by the insurance company or they might simple decide you are not a viable risk. Believe it or not, most commercial insurance policies do have a clause in their insurance contracts that they may audit you and by signing the policy you pre-agree to those audits. Thus, it’s unwise to falsify information or underestimate it. If you find that you may have underestimated you need to call your agent-broker and explain that, sometimes they will add to the premium, sometimes up the next year’s estimates for gross sales.
Now then, Florida is a great market for mobile oil changes, however, let’s not forget there is some competition there, some long-standing 25+ years in fact and so, insurance is only one aspect or piece of information which one needs to consider before starting a business of this type. Please consider all this and think about it, and develop a strong business plan.