Last year, America got a raise. According to a US Census Bureau report released last month, median household income rose by 5.2%, from $53,700 to $56,500 – the largest increase ever recorded.
The jump in disposable income should mean a return to recreation, which is good news for insurance agents working on these rewarding accounts. Motorcycle and powersport dealerships are promising accounts in particular, with a 3.8% increase in total unit sales last year, according to the American Motorcycle Association.
Working with franchises in this space is much like working with other commercial accounts, though there are some important considerations that must be made.
“Garage is a unique policy and it can be complicated for brokers who are not familiar with it,” said Lita Mello, senior vice president over recreation with managing general underwriter K&K Insurance. “That’s the case with most brokers, who have one dealership account with us and typically work in other areas.”
MGUs like K&K can assist agents with these garage/auto-driven accounts, which include franchises working in motorcycles, ATVs, snowmobiles and watercraft, among others.
The garage piece can include several exposures unique to motorcycle and powersport franchises, including demo liability, hired and non-owned auto liability, drive-away collision, and transit and temporary locations.
One of the biggest exposures is products and completed operations, or the repair and service of the vehicle or craft. That’s why it’s simpler for inexperienced agents to work with franchises, says Mello.
“With a franchise, a product defect will lay at the door of the manufacturer,” she said. “In the early 80s, there was suit after suit relating to three-wheeled ATVs, and manufacturers – not franchises – were the ones to take those claims.”
Franchises that offer in-house financing will also need to consider coverage for these special exposures, including agent and title E&O. Through the K&K program, these coverages are provided under the garage policy.
Finally, property insurance for motorcycle and powersport dealerships should address equipment breakdown, property enhancement endorsements and business income as well as general building and business personal property exposures.