The Official Legalities of Detailing Thread

[Greg]

Ok- many people want to start detailing for money. This is totally understandable as well as lucrative for many individuals. You must think, however, that it not as easy as whipping out the PC, cashing the check and happy day. What happens if you pick up a customer's car and get in a wreck? What happens if you drop your buffer on the hood and dent it. What happens if you spray wheel cleaner instead of leather conditioner on a Ferrari's leather interior and it ruined it? (Not to worry- hasn't happened- just hypothetical)

So now the point of the thread- what measures have all the pro's/side money makers taken to cover their tails for the unforseen future. I personally am setting up a Limited Liability Corporation (LLC) and running a separate insurance through the LLC, so that when I pick up a customer's car, they cannot go after my personal assets if damage were to happen. This is not a cheap venture- especially for a graduated high school student going to college in 3 months, but is worth it because my bread and butter is going to business parks- picking up and delivering their cars.

So everybody chime in, how is your business set up- both financially and legally?

[NY detailer]

Dont think because you are a LLC they can not come after you. There are loop holes in LLC & corperations.

You just need to make sure you have enough insurance. If you crash the car into another car that has 8 people in it, all 8 people can sue your company and if the company does not have enough insurance and they have a good lawyer they can come after you.

Besides if something like that happened to me and the person did not have insurance I would come after him, and i mean come after him! I would make him pay me out of his own pocket.

NYD

[Greg]

Well basically what I do is have them sign a waiver that I am protected under their insurance before I take the car. Then I have excess coverage of my own through the LLC and if something were to happen, their insurance would cover all that it is protected, then my excess insurance covers the rest. So if I wreck a BMW by rear ending a Bentley and the total bill is $130,000, and the BMW's coverage is $100,000, then I am still insured under my excess coverage.

[NY detailer]

Originally posted by Greg
Well basically what I do is have them sign a waiver that I am protected under their insurance before I take the car. Then I have excess coverage of my own through the LLC and if something were to happen, their insurance would cover all that it is protected, then my excess insurance covers the rest. So if I wreck a BMW by rear ending a Bentley and the total bill is $130,000, and the BMW's coverage is $100,000, then I am still insured under my excess coverage.

That waiver will not work, the customer has no right signing off on who can be covered under the insurance. The insurance company will fight that and win as they have a signed contract between the customer & them.
I know this very well as i am a full time insurance rep and field adjuster.

The insurance can make payment to the customer for the 100,000 but they will then come after you. It is called subrogation. They will submit the estimate & bill to your insurance company.

All the above also depends on state & local laws
NYD

[Greg]

I really don't know what to say. My attorney is drafting up the waiver and says that is it sufficient along with excess insurance. How are you set up?

[Smoker]

Originally posted by NY detailer

I know this very well as i am a full time insurance rep and field adjuster.

NYD

And heres us thinking yer a full time detailer.

Hmmm.

Could be worse, ya coulda been a traffic warden.

[Jngrbrdman]

Any contract can be fought and voided in a court room. Their insurance isn't going to want to pay for any damage you do so they are going to fight that contract to the death. I've done contract law work and I've seen the most air tight contract shot down in flames by good attorneys.

The way I get around the insurance question is by trying not to drive their cars. I work 8 miles from my house so that is as far as I ever need to drive when I take someone's car at work to be done. The rest of the time I do it onsite or have them make arrangements to leave it at my place till they can pick it up. The liability is to high to risk some bonehead running a red light and sideswiping me in someone else's car. Or having their car throw a rod or just stop working while I'm in it. I'd rather they be responsible for that kind of thing.

If I were detiling full time for a living then I would make sure I looked into what the insurance deal is for someone in this industry. We are liable everytime we touch their car. Even if you aren't driving it bad things can happen. You could have your pad fly off your polisher and you could gouge their paint with the backing plate. Your garage could catch fire and the car could go up with it. Your garage door could malfuction and drop on the hood of the car. You could accidently open the door and hit your snow shovel hanging on the wall and chip off 3 inches of paint along the door (I actually did that once. It was my car and it was a piece of junk so I didn't really care.). A million things could go wrong so you should look at insurance in more of a broad perspective. Its not just driving the car that you are at risk of damaging it. Lots could go wrong so you need more comprehensive insurance than just your basic extention of your own auto insurance. That is just my long winded thought on the subject. I'm neglegent in this area myself as I don't have any insurance for something like this. For as many cars as I've been doing this year I should be scared out of my mind that something could go wrong but I've got that stupid "that will never happen to me" crap going on in my mind and I'll probably have to learn the hard way. For some reason I must enjoy learning my lessons that way...

[NY detailer]

Originally posted by Smoker
And heres us thinking yer a full time detailer.

Hmmm.

Could be worse, ya coulda been a traffic warden.

I am a full time detailer as well. Two full time jobs.
hard to do, but i enjoy it

[NY detailer]

The best thing to do is speak with your insurance agent and he can set up your liabilty policy with what you need.

As for the way I am set up, i dont reveal info on my business. Nothing against you, but somethings needs to be lept within the business.
Insurance is not cheap by the way, it cost me over 500.00 a year just for liabilty policy.

[Masterfinish]

Greg;
You are on the right track by setting up an LLC. The idea behind setting up any legal entity is to direct possible problems away from your personal assets. If the insurance coverage is set up correctly and the company was registered properly with the state, then you have a sort of firewall to protect you. Notwithstanding a lawsuit trying to make a statement and having a personal vendetta, you should be fairly well covered. If you worry to much about lawsuits and have all sorts of releases drawn up it starts to look like your more concerned with saving your behind than giving your customer a feeling of confidence. Accidents happen no matter what you do to prevent it. As long as you were not being unsafe or purposely careless than you should not have to pay out any more than a deductible if needed. I just sold my detailing business after 20 years of owning a stand alone 6 bay shop and have 32 years experience. I used my insurance 4 times in that period and was never sued. I was threatened by an angry customer with a lawsuit when his motor got wet, but diffused the situation quickly by reminding him that we post huge signs on the wall and on our counters that there are no great ways to clean engines without using water in the process and that we cannot be held responsible for some small electrical connection that may have no longer been waterproof. As with most water related engine problems it dried by the next day and was fine.
Any business that is legitimate and going to be your main source of income should be set up with the advice of an attorney and get your questions answered regarding personal liability. It is better to loose the company than your home. Yea any contract can be hacked by an attorney but if you do not give them a reason to come after you your chances are better they won't. I stayed safe and put out quality work even with over 150 employees over the years. My risks were extremely high but we put many safeguards in place. Some as easy as a weekly bull session on safety and concerns where all employees put in their two cents and we worked to answer every concern. Your attitude and professional is what matter the most. How you present your self to your clients usually directs how they respond. If we screwed up a leather seat or a piece of trim flew off we called the customer immediately, stated the problem and told them what we would do to correct the problem. Open and honest communication was the key. Never hiding a problem or attempting to put the blame eleswhere gave us customer for life. I actually had an employee steal a customers brand new Mustang Cobra, get drunk and go joy riding in his car. He was pulled over close to his home. This happened during an evening shift and I was unaware of what happened till the next morning. I opened the shop and in walking around to see what progress had been made suddenly realized the car was not there. I tried to call my employee first to see if he had finished and the customer pick it up. When I could not reach him I called the customer and asked him if he had picked up his car when he said no I almost died. I told him the car was gone and that I would call the authorities and contact him immediately with any news. Luckily it only took a few calls and I found out what happened and where the car was. I contacted the customer picked him up and took him to the impound where it was so we could check for damage. I was more worried about a careless tow truck operator damaging the car. It was perfect and I paid the impound fee. Luckily the detail job had been completed and the car looked great. As crazy and scary as this story is the customer has come back with the same car 4 times since this happened several years ago. Point made, communication, professionalism, insurance, and a legal corporation was all in place to handle and emergency. Not all was used or needed in this situation but it was in place to cover my bases. Just cover your bases.
There are many of you out there that prefer to take the chance and may get lucky, but it only takes one mistake to take all your hard work away. Think carefully about what you or even your family could loose.
Good luck
Tom

[Clinton]

One time I had had an employee who did not lock the tip of the pressure washer properly and it blasted into the windsheild of a brand new Lambo, luckily I had the correct insurance. NYC is correct in what he says about LLC and insurance being expensive. I run a Mobile company and with only 3 trucks i pay over $7500 a year. But you need it, simple as that.

Clint

[bet993]

Greg,

Stick with the LLC, wavier, work contract and other actions. Listen to and follow the advice of your attorney. Each state has different laws with regard to contracts, insurance, liability, corporations, and the ability to "pierce the corporate veil” to get after your personal assets . Also, get insurance. Ask your attorney to advise so that you don’t get into a piercing situation. Contrary to some people’s beliefs, when corporations and LLC are set up properly, maintained properly and the business run within the scope of the this frame work it is difficult to get at the owners personal assets. The advice of your personal attorney is much more valuable and accurate than anyone’s advice on this forum. He/she will know the laws of your state and how they apply to your situation. He/she should also be able to set up with the proper type of insurance. Ask your attorney about all these possible situations and what to do to minimize the risk. He/she should be able to advise you. If not seek out the advice of another attorney. You are correct legal services are not cheap. However we have a saying in the legal community… “You can pay me now or pay me later.” Usually the money spent on the front end will save you thousands on the back end.

BTW, I do this for a living.

Disclaimer: This post is intended solely as an informational source and its content should not be construed as legal advice. Readers should not act upon the information presented without professional counsel.