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Equipment Dealers and Insurance Decisions: How to Avoid Blind Spots (Part 1)

By Seth Hird | Posted on October 17, 2022

Equipment Industry| Construction Industry| General Insurance Education


If you want a quick guide to evaluating the health of your equipment dealership’s business insurance, this article is for you. We want to give you some tangible ideas and resources to help you decode the business insurance mess. Making healthier insurance decisions will help secure you and your company’s legacy.

Don’t have time to read? Take the brief self-evaluation questionnaire at the end of Equipment Dealers and Insurance Decisions: Part 2

The Traditional Approach

How Does Your Dealership Tackle Insurance Decisions?

“It’s too hard.”

“I don’t have the time.”

“It’s too frustrating.”

Have you ever thought these things at renewal time? Have you ever renewed your policy without evaluating it to avoid feeling any of the emotions above? If so, this is an opportunity for growth, which is good! Dealerships that don’t feel confident about insurance give us the feedback above.

Over the last 20+ years, we have worked with countless dealerships to get their business coverage in order. Prior to partnering with them, we found that most of them employ a heuristic (proceeding to a solution by trial and error or by rules that are only loosely defined) method when tackling insurance decisions.

Similar to movers shoving a huge couch through a doorway that they didn’t measure, people use heuristic methods when we want to solve a problem without putting in the proper time or effort it takes to complete a job excellently.

Therefore, we do not advocate for heuristic methods. Instead, we want dealers to find skilled people with quality experience to help them in areas that might need improvement. This process starts with finding people that are not only skilled and experienced but also highly objective.

Objectivity Is Critical (Miracle on 34th Street)

In the timeless classic “Miracle on 34th Street”, the character playing the role of Kris Kringle gets hired as a Macy’s store Santa Clause. When a mother approached him asking for a specific toy, he sent her to a competing store to buy it because Macy’s didn’t have it in stock. His employers reprimanded him because they lost a sale and their competitor gained one. This action, however, had an effect that Macy’s did not expect. Their customers began to trust Macy’s more because they valued the customer over profits.

This story depicts the power of objectivity and the tendency of some to prioritize profits over customers.

The core principle of objectivity is “Using facts to solve problems without personal bias.” The most successful equipment dealers pursue internal and external objectivity as they grow their business. How does this approach help dealers be successful? How does it relate to insurance?

Internal Objectivity:

insurance decisions

While an internal employee may have filed taxes or reviewed contracts in the past, they often do not have the expertise to make the best decisions. Therefore, they rely on gut instincts and personal bias to guide their decision-making.

Wise dealers will hire a CPA to complete their taxes and a lawyer to review their contracts. Why? Because they are external specialists who rely on facts and experience to guide their decisions and actions.

External Objectivity:

When sourcing insurance coverages for your business, you must navigate external objectivity.

Insurance agents have the industry knowledge and experience that you need. However, they are limited to the products their company offers. Direct writers also have industry knowledge and expertise but are even more limited because they only have one product to offer and are incentivized by higher premiums. Finally, independent agents often have the most access to carriers and programs but usually only work with one or two carriers that hold their book of business.

Insurance agents, direct writers, and independent agents are all viable options. However, they are all limited in some way and have a bias when offering you coverages and premiums. Are you knowledgeable enough about insurance to decipher all these options, verifying that your dealership is appropriately protected?


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