Damage Claim Disaster - Five Ways to Protect Yourself
By Anthony Analetto
Bad things come to those who wait. Especially when it comes to keeping your security cameras up to date.
No matter how careful you are about operating your car wash safely and efficiently or how well you maintain equipment, accidents can and will happen. And even though your employees are trained to direct your customers through the wash, there are just too many opportunities for driver error to factor into accidental damage — to vehicles, other customers, your equipment, or staff.
It’s customers’ responsibility to be in control of their vehicles as they traverse your car wash tunnel but distractions like text messages, phone calls, or children in rear seats can lead to a driver inadvertently putting their foot on the brake and causing an accident.
I spoke to an owner recently about a collision between two customer vehicles that occurred within the tunnel. One customer rear-ended the vehicle in front of them, midway in the tunnel, resulting in the other customer claiming physical injury.
No liability has been established, but there are multiple lawsuits from both customers. At least one is seeking the maximum amount allowable under the insurance policy — $1 million.
So here begins my cautionary tale about how to take preemptive measures to protect yourself against damage claims — real or imagined — regardless of liability.
1. Keep Your Security System up to Date
I can’t stress enough how valuable a good security camera system is to your wash.
When video from the owner’s five-year old camera system was reviewed, the footage appeared murky making it difficult to determine the extent of damage incurred or whether there was any preexisting damage. Choppy video made it hard to tell if the car in front broke down or intentionally braked to cause an accident to defraud the owner and other driver.
If it’s been a while since your last security-camera-system upgrade, you may want to start shopping around. Today’s digital systems employ high-resolution cameras capable of operating in extreme weather and capturing fine details of customer vehicles. Weeks or even months of footage can be saved depending on the recording format you use and storage capacity of the system you choose. Most security footage is overwritten at some point, but you could pay to have it archived if you think it’s worthwhile.
A good security system should identify the customer in the driver’s seat and any vehicle damage present before entering the tunnel. It wouldn’t be overkill to set up a system covering your entire site to document theft, vandalism, or slip and fall accidents. It may cost you more upfront but you could drastically reduce paying out bogus claims by proving true liability.
2. Train as if It’s Game Day
Do you provide your employees with incident report training? If not, now would be a good time to start. Any contact between two vehicles on the property needs to be documented as do accidents in customer waiting areas or those involving employees.
You would think this is a no-brainer, but a lot of incidents go undocumented because employees think they are too minor, forget, or just aren’t properly trained. Another reason is the employee may be at fault and doesn’t document it for fear of being disciplined or fired.
Make sure to train your employees to complete an internal report for any incident no matter how trivial it may seem. Car wash reports — unlike police reports — are for internal use only. Details of these reports are typically not divulged to customers.
Train your employees how to decline requests for internal reports tactfully.
You may also want to look into the reporting system you use. For example, if you’re relying on hardcopy paper on a clipboard, look into a software platform for better record keeping.
No official police report was taken from drivers involved in the tunnel accident described above, and they were not asked if they required immediate medical attention. Remember, one customer is claiming physical injury. Refusing medical attention doesn’t necessarily mean absence of an injury, but it could be useful to insurance company attorneys if it’s documented that medical attention was refused at the time the accident occurred.
Never allow customers to view or re-record wash camera footage unless directed by court order. This is a biggie because video footage can be manipulated using basic editing software. In this case, the customer who was hit from behind was allowed to view the surveillance video and re-record it on their smartphone.
3. Don’t Skimp on Signage
Most car wash owners are very good at having instructional signage at the tunnel entrance where attendants are trained to point to the sign making sure customers see it: “Hands off the Wheel,” “Foot off the Brake,” and so forth.
Still, who hasn’t been guilty of fiddling around with a phone while behind the wheel? I know I have. Because of this, I’m seeing more owners placing signs at the pay station advising customers not to use cell phones going forward or the driver will be liable for any damage they cause.
Accidents resulting from inadequate signage that instruct drivers how to proceed through the tunnel should not occur at any car wash. That’s just inviting more trouble regarding negligence claims.
When was the last time you walked around your wash taking notes? Pilots do an inspection before every flight looking for obvious leaks or damage. I’m not suggesting you do a walk around every day but periodically check to see if signage on your property is clean and legible — especially signage at the tunnel entrance instructing customers how to enter and follow safety measures.
4. Have Sufficient Insurance to Cover Liabilities
The whole idea of having insurance is to transfer risk from your wash to the insurance company, ensuring you’ll stay in business following a loss. The types to consider having are: • General liability insurance — protects your wash from lawsuits arising from injuries or negligence • Property insurance — protects your building from fires, vandalism, or other damage • Umbrella policy — provides protection from claims above the limits of your other policies.
Experts recommend you carry at least $1 million in general liability coverage. If you own multiple locations, those should be covered similarly. Set your deductibles up based on your business needs. For example, some owners like to carry a high deductible, which lowers monthly premiums whereas others prefer a lower deductible, which results in less cash out of pocket per claim.
5. Avoid Being Your Own Advocate
It’s best practice to not respond to letters from attorneys directly. You might inadvertently say the wrong thing and tip the balance in the plaintiff’s favor.
Forward copies of letters you receive to the insurance company that handles your claim. After all, that’s what you are paying them for. Likewise, don’t engage your customer directly. Again, that’s what insurance company attorneys are there for.
The owner in this example was able to win his case because it was proven that both drivers were using their cell phones at the time of the accident. Keep a force field up around your business by taking advantage of the multiplying effect of good training, quality surveillance, and an ironclad insurance policy.
Good luck, and good washing.
Anthony Analetto has over 35 years’ experience in the car wash business and is a partner at SONNY’S The Car Wash Factory. Before coming to SONNY’S, Anthony was the director of operations for a 74-location national car wash chain. Anthony can be reached at (800) 327-8723 x 104 or at AAnaletto@SonnysDirect.com.