Management: Avoid the Million-Dollar Brake Job

Management: Avoid the Million-Dollar Brake Job

You may not want to believe that a simple tire rotation or brake job could cost your dealership or service and repair business in excess of one million dollars, but the fact is it can.

 “A customer brought their car into our service department for a brake job. This customer was a ‘waiter,’ so we pushed the job through pretty quick. The technician finished the job; the customer paid the cashier and drove off. That car was going over 60 mph when the wheel fell off, the vehicle went out of control and crashed. It was a terrible accident. Attorneys for the family contacted us the very next day.”

You may not want to believe that a simple tire rotation or brake job could cost your dealership or service and repair business in excess of one million dollars, but the fact is it can. These incidents happen every year and the stories are familiar. Are you a high-end import dealer? If a technician or someone in your “quick-lube” department forgets to put oil back into an engine, how much will it cost to replace it?
Does $10,000 sound close? It is important to protect yourself from both catastrophic and nuisance claims. Catastrophic claims can put you out of business and nuisance claims reduce profits. Both can tarnish a hard-earned good reputation that took years to build. Zurich offers the following suggestions to protect your dealership or service and repair business against completed operations and product liability exposures:

• Require all service and repair orders to be signed by the customer. This is especially critical if the service writer recommends preventive maintenance or manufacturer’s scheduled service and the customer declines to have it done.

• Establish a quality control program in the service department.
• Require third-party (service writer, QC manager) inspection upon completion of service work.

• Ensure the quality and safety of service work is thoroughly evaluated, especially when critical automotive safety components are involved.
• Require technicians to be qualified to perform assigned work, including completing factory and ASE training.

Don’t forget those subcontractors your business uses to modify vehicles.  Customizing vans and pick-up trucks, installing stereo systems, alarm systems or any other electrical devices are not a problem until something happens. If the customer’s car or house catches fire, they will come back to talk with your business first. If the subcontractor isn’t properly insured, guess who’s responsible?

Here are more tips to help protect your business when choosing business partners:

• Use subcontractors/vendors with extensive experience (years in business) in their field and a good track record.

• Require certificates of insurance for workers’ compensation, auto, general liability and product liability coverage.

• Policy limits for subcontractors and vendors should be similar to your own.

• Your business should be listed as an additional insured on subcontractors’ insurance policies.

• Never install, use or re-sell used parts or supplies, i.e. tires, airbags, steel, aluminum or other custom wheels, etc.
Dealers are not immune to product liability and completed operations claims. These losses can ruin a business quickly with a huge legal judgment, or more slowly with a bad reputation.

For more information, contact Zurich’s Risk Engineering Department at (800) 821-7803.

This Loss Prevention Bulletin is provided for informational purposes only. Please consult with qualified legal counsel to address your particular circumstances and needs. Zurich is not providing legal advice and assumes no liability concerning the information set forth above.

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