At your business, cars don’t only sit on the lot or the lift, they also get driven by customers and employees. Different risks can exist for your business depending on who is driving, who owns the vehicle and the purpose of the drive.

Understanding these risks and managing them appropriately is important when you’re an aftermarket business. Here’s what to know and how to manage your risk for three very common situations.

Service and Repair Loaner Cars

If you run a service or repair shop that does a lot of business or performs more complex work, it may make sense to offer loaner cars as a courtesy to your customers. A loaner car program has a lot of pros. It can:

  • Increase your local market share
  • Expand your geographic footprint
  • Result in higher average repair orders
  • Increase customer satisfaction

At the same time, a loaner car program introduces new risks to your business, such as theft, property damage, inventory damage and legal liabilities.

Following these best practices can help minimize the risks and increase the chances of a successful program:

  • Decide on eligibility—Most shops will draw up a list of eligibility requirements that must be met by the customer to borrow a loaner car, such as a minimum age, a valid driver’s license, proof of insurance, intended vehicle use and a service or repair above a set cost or time duration.
  • Use written agreements—Risks can be better controlled with a written loaner agreement designed to transfer liability to the personal auto insurance of the customer. Make sure to get help from an attorney when creating your agreement.
  • Document inspections—Walk-around inspections before and after loaning cars protects you and the customer from disputes over damages. Make sure to keep a vehicle log for each loaner car to track damages, mileage, maintenance and more.
  • Educate on policies—Discuss loaner car policies with your customers ahead of time. Go over your policies for gas tank refills, allowable mileage and area radius, driving privileges limited to the customer and usage for personal transportation only.

Pre-Sale Test Drives

If your business offers vehicles for sale, customers will obviously want to drive them before they buy. However, a pre-sale test drive is also important for businesses. The test drive will:

  • Help the customer understand the car’s features and functionality
  • Help move the customer from consideration to the buying stage

But with the customer behind the wheel, there’s always the risk of an accident and the damages, injuries and liability that may result.

Following these best practices for customer test drives can significantly reduce the risk:

  • Create test drive criteria—Require drivers to meet certain criteria before a test drive, such as a minimum age, valid driver’s license, proof of insurance and placing a credit card on file. Have an employee accompany the customer on every test drive.
  • Establish a safe route—The right test drive route can save time, give customers a complete picture of the vehicle and reduce the chance of an accident. Include a variety of roads and speed limits. Avoid congested areas and any left-hand turns, which can increase the risk of an accident. Limit test drives to a max of 30 minutes.
  • Require seat belts—Remind customers and employees to wear their seat belts at all times. It can also help to place a permanent seat belt reminder sign at your parking lot exit to further cut down on injury risks.

Post-Repair Test Drives

If your business offers tune-up or repair services, a post-repair test drive performed by a technician is a must. These test drives need to be done for two main reasons:

  • Confirm the service or repair was completed successfully
  • Ensure the car is safe to drive after the service or repair

Like other test drives, accidents are possible that can result in damages, injuries or liability, but new technologies and their liabilities also add to the potential risks for businesses. With advanced driver assistance systems, a quick spin around the block is not sufficient to fully test and calibrate all the sensors and components, and longer test drives mean higher risks.

These best practices can minimize these risks:

  • Set expectations—Preparing the customer for what to expect can help avoid surprises and conflicts. Let them know the battery may be disconnected, some factory settings may be restored and an extensive test drive and calibration may be required in certain cases.
  • Follow OEM procedures—OEM repair procedures, owner’s manual and other authoritative resources will generally dictate what has to be done after a repair. It varies which source lists the tests for a specific system, so some research and route planning may be necessary.
  • Document the drive—With complex repairs and extensive testing, it’s a good idea to document the test drive. In some cases, a check list may suffice. In others, you may need to take video, narrate the drive and bring along another employee to assist the driver with testing and calibration.
  • Compile a report—A full test drive report can reassure the customer that a thorough and high quality service or repair was performed. These reports can often be extensive, listing vehicle and tester information, time logs, speed data, mileage, route map and systems tested and passed.

Lockton Affinity Aftermarket offers customized insurance policies to help protect your business from these and other risks. Visit LocktonAffinityAftermarket.com to learn more.