Liability Insurance Crisis Threatens Dealers

© 2003 Door & Access Systems
Publish Date: Winter 2003
Author: Tom Wadsworth
Pages 36-38

Liability Insurance Crisis Threatens Dealers

In some areas, liability insurance premiums are spiraling, threatening the survival of some garage door dealers. The crisis has forced many dealers to increase their prices, while other dealers have been forced to shut down parts of their business.

“Our last increase was horrific,” says Art Becker of Raynor Garage Doors of Mineola, N.Y., whose rates leaped from $28,000 to $42,000. “The scariest part is, our insurance broker could find only one person to quote it. If we can't get liability insurance, we can't stay in business.” Becker adds that he's never had a liability insurance claim.

Bill Wallis of Action Door Service, Rancho Cordova, Calif., was stunned this year when he learned that his rates were going to jump from $5,000 a year to a shocking $100,000 a year. After extensive searching, he eventually found a policy for $15,000, but it carried less coverage, and it forced him to stop doing tract work.

Across town at National Garage Door, Bill Woolsey has also been forced to stop selling and installing doors for tract work. “And we've never had a claim,” he explains. “Fortunately, tract work was only 10 percent of our total business. But now it's zero.”

According to a November 2003 survey by Door & Access Systems, 52 percent of responding door dealers say their liability insurance costs are “a growing concern.” However, 30 percent say the costs “a significant problem,” while 11 percent declare the costs “a major problem affecting the profitability of my company.”

It's Not Everywhere

Fortunately, it appears that these horror stories are not common. According to our new survey, 42 percent of door dealers say their liability insurance doubled, tripled, or more than tripled in the last two years. However, 58 percent say their premiums are “more, but not double what they were two years ago.”

For example, the umbrella commercial insurance rates for Mary Schuh of Genie of Clearwater, Fla., have risen only 15 percent in the last two years. And that policy covers all business insurance, including her vehicles, general liability, and worker's compensation.

Our survey revealed that the liability insurance problems are more noticeable in specific regions. Survey respondents from certain states on the East and West Coasts, for example, reported much higher increases in their insurance premiums.