We are a couple months into learning what the “new normal” is in this country with the unprecedented shutdowns and protocols put into place in response to COVID-19. Every state has a different idea of how far to take things, and it has had our lives and the economy effectively closed. Every industry has been affected whether yours is deemed necessary like towing or not. The guys in the repo towing sector have been shut down completely since in some states, the courts have not been open to sign off on replevin orders. Additionally, many banks have voluntarily worked with borrowers to keep them from defaulting in the first place. Those doing typical motor clubs and police rotation calls are still functioning. However, with stay-at-home orders, schools closed, and people working from home, it is slim pickings since traffic is almost non-existent.
So, what happens to owners who are faced with anywhere from 50 to 100% reduction in revenue? Their bills still demand payment, their employees must be dealt with, and the show must go on! There have been a great many business sectors that have stepped up to help. Most of you guys have truck payments to make whether the wheels are turning or not. Fortunately, many of your lenders have offered payment deferments and waived late fees to try to help you weather the storm. Between the state and federal governments, unemployment is taking such good care of the employees you had to lay off that they may not want to come back anytime soon. One of your biggest expenditures is your insurance. That bill keeps coming every month too, and that one is mandated to be able to operate at all. What can I do about that? Every industry in this country is interconnected with every other in some way. The insurance industry is no exception. It has been greatly affected by COVID-19 too.
All the COVID-19 government restrictions have greatly reduced the number of cars on the roads during morning and afternoon commute times because obviously hardly anyone is commuting right now. This reduces the number of broken-down vehicles needing road service, and the number of car crashes needing your services to clean up. This has negatively impacted your business, but those events are usually paid for by insurance companies. The insurance industry business has been positively impacted by the shutdowns. Claims handling is down significantly in the auto sector which translates to increased profits. Now you are thinking, “Let me get this straight- I’m struggling trying to keep my doors open, and those insurance companies are raking it in?!” It does not seem fair does it? Well the insurance industry did not think so either. Most all the major companies have refigured their rates retroactively for the affected months based on much lower mileage. They have then issued refund checks to their customers. This is not just limited to personal lines drivers. Many companies have also done the same for their commercial auto accounts too!
If you are a lucky recipient of one of these refund checks on your wrecker insurance, you were probably happy for about a nanosecond and then realized it is a drop in the bucket compared to the monthly insurance bill for 20 wreckers when you have 10 of them parked and their drivers
out on an “unemployment vacation.” You are between a rock and a hard place because the state and federal regulators say you must keep your insurance in force to be on the roadway at all. What can you do? Is there any help for you? The answer to that is “probably.” If you are struggling to make the insurance payment or have one coming up you know you cannot make, CALL YOUR AGENT! The insurance industry does not want mass cancelations of policies. It cost them a lot of money to process all the paperwork to get a policy issued. They really do not want to lose that investment. Plus, they need revenue coming in just like every other business, and they have bills to pay too. Most carriers are offering some help.
In most states, the repossession sector of towing has been hit the hardest. Many of the people that have office jobs have simply transitioned to doing that job at home on their dining room table sitting next to their sixth grader that is trying to figure out math without a teacher. These lucky people have not seen a hiccup in their income, and paying their bills is business as usual. However, people in the hands-on service fields (like restaurant workers that are traditionally on the income margins as it is and people like hair stylists and nail care workers) have been sent home with no income. Some qualify for unemployment benefits, but that is not always a cash cow. With this situation, you would think repo business would be booming–not so. Some states flat out put a moratorium on repossessions and foreclosures. Banks have been bending over backwards to help people not default on loans. The insurance companies that insure repossession towing companies understand this, and there are many tools in their box to help. Since many repo companies have parked most or all their fleet, some companies are allowing the furloughed trucks to be reclassified as “service.” This greatly decreases the rate on the affected trucks thus reducing the monthly premiums. Some carriers are also removing the “on-hook” from the trucks which will further reduce premium.
You guys doing regular non-repo towing probably want to know what help there is for you. I know a lot of companies have laid off drivers and parked most of their fleet too. With no one on the roads, there is not much call for tow trucks. Well, your insurance carrier may have some tools to help reduce your bill and keep you insured. Some insurance companies are allowing the temporary down grade in the rating from “towing” to “service” of the parked trucks just like the previous paragraph mentioned.
In some cases, “on-hook” can be removed too. Another possibility is removing collision coverage from the parked units. That can be a significant decrease in premium. This only works if the vehicle does not have a loan on it. Otherwise, you can be in violation of your finance contract, and they can put coverage of their own on it, and you really will not like that price tag! I know some of you guys out there are saying “why can’t I just take off the parked trucks entirely?” Well, the answer to that is complicated. First and most important is if you have state or federal filings, you cannot take trucks off liability coverage. That could jeopardize you with your state or FMCSA. You could get your authority suspended. If your trucks are financed through a lease situation, you cannot take liability off that vehicle, or you would be in default on the contract. The same holds true for comprehensive and collision coverage whether it is a lease or conventional loan. A word of caution here is warranted. If you take advantage of any of these downgrades to coverage, it is imperative that you inform your agent immediately when you put these units back on the road. The last thing you want is to have a claim and find out that truck has NO coverage on it because you forgot to make a call to your agent.
For you guys that do not fall into any of the previous help areas there is still help out there. In some states, their Departments of Insurance have put temporary rules in place preventing your commercial auto insurance from canceling for non-payment. Now, that is not a “forever” ban. It usually only adds another 30 days. Many insurance companies and premium finance companies are stepping up in all states, regardless of state mandate, and working with customers. I have seen finance companies allow customers to run 30 days behind with no fear of cancelation. Many are waiving late fees. In many cases, owners can make their payments. They just need a little more time because their cash flow is down to a trickle, and many are being slow paid by companies that they do business with. Help is there for the asking.
Whether you buy into this whole COVID-19 hype or not, we are all affected in some major way. I talk to owners on a regular basis because we insure many towing companies in our agency, and we are very active in our state’s towing association. You guys are an independent bunch and try to solve problems on your own. Most are no strangers to lean times. However, this in not that. This is unprecedented. Help is out there for you. All you need to do to get relief is CALL YOUR AGENT! If you are with the right agent and the right agency, that person will already know what options are available for you and how to get you the help you need to weather the storm. Be forewarned though. Downgrades to coverage and premium reductions will impact your agent financially too. Just not in a good way. If you are with the wrong agent, he may duck your calls or drag his feet getting you help or possibly tell you “my hands are tied here.” If that is happening to you, you need to start looking for another agent immediately. If you and your agent have the type of partnership you should have, he should be willing to share in the short-term financial pain with you with a focus on long-term survival and prosperity. His prosperity is directly tied to yours! If you have questions, need advice, or possibly a new agent, drop me a line at scott@kresseragency.com or my boss Hal Kresser at hal@kresseragency.com
