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Tire Retreading

Reviewed : Wednesday, August 07, 2013


BEST'S HAZARD INDEX
Line
Best's Hazard
Index
Underwriting Comments
Automobile Liability 5 Higher if insured performs roadside repairs.
Automobile Physical Damage 4 ------
General Liability: Premises and Operations 3
If tours are conducted, this exposure will be
increased.
Product Liability and Completed Operations 7
Defective retreads could lead to serious road
accidents.
Workers' Compensation 5 ------
Crime 3 ------
Fire and E.C.: Property 6 Tire fires are difficult to extinguish.
Business Interruption 5 ------
Inland Marine 5
Casings in the insured's care, custody, and
control.
Low 1-3, Medium 4-6, High 7-9, Very High 10
SIC CODES AND CLASSIFICATIONS
7534 Tire Retreading and Repair Shops
NAICS CODES AND CLASSIFICATIONS
326212 Tire Retreading
811198 All Other Automotive Repair and Maintenance
RELATED CLASSIFICATIONS
Automobile Repair Shops and Oil Change Centers
Tire Dealers - Retail
Tire Manufacturing
Towing and Recovery Services
RISK DESCRIPTION
Tire retreading has evolved over the years from small "mom and pop" shops to today's large, franchised companies that
use highly sophisticated machines to retread millions of tires a year. Retreaded tires save money because it costs far less to
retread tires than buy new ones each time the treads wear out. For companies that own fleets of tractor-trailers and other
heavy-duty trucks, retreading provides a safe, economic way of getting a better return on tire investments. In 2003,
approximately 20 million retreaded tires were sold in the United States and Canada. Depending on the use of a tire, it may
be retread two to three times or more.
Without retreading, millions of tires would be scrapped to landfills. Tire retreading is complete recycling since even
byproducts of the production are used for other purposes. For example, rubber dust that is generated during buffing (i.e.,
texturizing) procedures is used for the manufacture of rubber asphalt highways and rubber mats.
Tire retreading began in the early 1900s, when a rubber company strapped leather onto some worn-out tires. These new
"treads" were designed to give owners a longer tire life and more miles for their money. A few years later, molds were
invented to cure raw rubber onto an old casing (i.e., the tire without the tread). Tires were buffed by hand, cement was
Page 1 Copyright 2014 A.M. Best Company. All Rights Reserved. Source: Best's Underwriting Guide, Version 2014
added, and new rubber was fixed in place. The casing was placed in a metal mold and heated over a charcoal fire. The
process was slow and only one-third of the casing could be retreaded at a time. Full-circle molding (i.e., curing the entire
tire at one time) was not developed until 1925. In 1957, an Iowa businessman, Roy Carver, came across "precured" retreads
being built in Germany. Precured meant that the rubber tread was molded separately from the casing. The precured tread
could then be applied and bonded to casings at a later time at a different location. Carver brought this new system to the
United States and established Bandag, Inc., a company that is one of the major retread manufacturers and franchisers today.
New tire companies followed the trend, and now, Michelin, Goodyear, and other tire manufacturers are among the large
corporations that manufacture retreading materials and also franchise retreading companies.
In the United States, most retreading is done for large trucks, (e.g., tractor-trailers, tilt-bed, dump, etc.), off-road
vehicles, and aircraft. Aircraft retreading is a specialized procedure (there are only five certified airline retreaders in the
United States)and will not be discussed in this write-up. Retreading passenger cars is no longer cost effective, since many
tires can be bought inexpensively. In Germany and other European countries, however, passenger car retreads are becoming
more popular. Retreads for light trucks is gaining acceptance in the United States. In 1993, President Bill Clinton signed
Executive Order 12873 and subsequent Executive Orders that require the use of retreaded tires on all government vehicles.
Retreaders pick up and deliver tires to their customers in large heavy-duty trucks. Each tire is identified by a bar code,
which is displayed on the tire. This enables the customer and retreader to keep a history of each tire, noting important
information regarding repairs and the number of times the tire has been retreaded. Other worn tires are imported from Japan,
where retreaded tires are not accepted. These tires, called caps and casings, are retreaded and warehoused. They are sold to
replace old, worn-out retreaded tires. Retreaders are usually new tire dealers as well.
While each retread manufacturer has its own proprietary system, all retreading is done in a few basic steps: initial
inspection, buffing, nondestructive inspection, casing preparation or repair, building or tread application, curing, and in
some cases, painting.
Before casings are inspected, they must be categorized. Casings will be separated according to size, brand, belt
construction and plies, aspect ratio, and whether the casing is American or foreign made. Once categorized, casings are
separated into one of three groups - acceptable, unacceptable, or in need of repair - and then kept in lots. Only acceptable
casings will be retreaded; unacceptable tires will be taken to landfills or recycled. Casings in need of repair will be labeled
and repaired during the retreading process.
An experienced inspector visually examines each casing to see if any nails, glass, or other impediments are present.
These can be repaired at a later point in the process. He or she also determines whether the casing should be retreaded or
rejected. If it is rejected, it is bar coded as RAR - "returned as received." In some cases, damaged casings can be retreaded
and used for less-stressful service, such as a trailer position on the truck.
Using a mechanical spreader and a drop light to make the inside of the tire visible to the inspector, the tire is further
scrutinized for defects. As the tire rotates, the inspector checks inside and outside the tire with his/her hands and eyes. Using
probes, long-nose pliers, and a marking crayon, the inspector identifies any defects that can be repaired without jeopardizing
the integrity of the casing and then sends the casing on to the next station. Casings are transported via a monorail system
that has been set up throughout the premises. Thus, no lifting is required to move the casings from one station to the next.
Truck tires will be rejected for one of 12 conditions: cuts and snags; torque cracking; inner liner cracking; torn beads -
mount/dismount damage; weathering, equipment damage; sidewall separation; stone drilling; run flat; repair failure; tread
separation; and impact breaks. These problems are usually identified in the initial visual inspection.
The entire process of retreading is chronicled by input on computer. At each station, the technician is able to "call up"
the casing's history by inputting its bar code into a computer at the workstation. Those that need overhaul are marked for the
type of repair needed. The information is keyed into the computer before the casing goes to the repair station.
Accepted bias tires (tires with an overlapping ply design at a 45-degree angle) may be vented to release any air trapped
between the inner liner and the outside of the casing as a result of the curing process. The venting process is done by
puncturing the outer skin of the tire until the outermost cord body is reached. This is done approximately four to six times
on each side of a bias tire, depending on the size. It is normally done just above the bead and just below the shoulder area on
both sides; a normal vent is about the size of a pinhole. Steel radial tires should not be vented because of the potential for
moisture penetration to the steel cord.
The next step in the retreading process involves buffing, which is the process of removing the previous tread material
and shaping, sizing, and texturing the casing surface to receive the new tread. The tire technician uses a tire facts manual to
determine the exact specifications for the tire and inputs those measurements into a computerized buffing machine. The
buffing machine then removes the tread to those specifications.
After buffing, the casing is inspected with a shearography machine that uses ultrasound to detect flaws inside the
casing. The machine takes 36 "pictures" using specialized cameras to photograph all dimensions and sections of the casing.
These sophisticated machines can detect the smallest pinhole leaks, separations, and other damage not seen with visual
inspection.
Tire casings are then measured to assure that sizing, shaping, and buffed surface texturing requirements have been met
for the casing. All casings must fit exactly in the tread design matrix so that new tread stock (i.e., the applied rubber that
will be molded into the new tread) will be firmly bonded to the casing.
Any injuries to the casing are then repaired. This involves "skiving" or "buzz out" of the damaged area with a powered
rasp - a tool with a small wheel attached that grinds out the damaged material. Repairing casings requires highly skilled
Page 2 Copyright 2014 A.M. Best Company. All Rights Reserved. Source: Best's Underwriting Guide, Version 2014
Best's Underwriting Guide Tire Retreading
workers to remove, fill, and reinforce the damaged area.
The cementing process is next. In precure operations, cushion gum is used to provide a tacky surface to hold the new
rubber to the buffed surface before curing. The gum becomes part of the bond between the buffed surface and the new tread
rubber. Employees will apply this bonding layer by machine.
The buffed and bonded casing will then be inspected to assure that the casing is ready for the tread application step.
After selecting the proper tread material, the tire is placed on an extruder, and the tread rubber stock (which looks like
licorice) will be applied. Once the tread is on, the ends of the tread are spliced together, temporarily stapled to hold them in
place during curing, and then the tread is "stitched" to the casing to eliminate trapped air.
The casings are then covered with a flexible rubber envelope fitted with an air exhaust valve and a curing ring. The tire
is inflated and placed in a bonding chamber for curing (also known as vulcanization). Time, pressure, and temperature all
work together in completing a proper cure. Any fluctuation of the three will result in an improper cure and a faulty retread.
Curing machines can process 22 tires at a time. After curing 3 to 4 hours at 210 F(98.8 C), the tread becomes bonded to
the casing.
In the mold-cure process, uncured tread rubber is applied to the casing after it has been buffed and then placed into a
mold that has the proper tread. The molding machine then pressurizes the tire, shaping the uncured rubber tread to the mold,
which forms the tread design. Heat is then applied for a specified period of time to complete the vulcanization process.
Once the tire is cured, a final inspection is made while the tire is hot, since flaws are easier to see then. The tire is
trimmed of "flashing" (i.e., excess rubber overflow), staples are removed, the tire is painted, and then it is tagged for
delivery.
The layout of a typical tire retreading company consists of offices for administrative personnel and managers, a
production area, a loading dock, a curing area, storage rooms for tires, an employee lounge or lunch room, a repair area for
trucks, and restrooms. The production area is a large, open, warehouse-type building divided into workstations with a
materials-handling monorail system running through it. Most insureds have a warehouse on site where caps and casings are
stored.
Hours of operation will vary from one insured to the other. Because the retreading process involves a great deal of heat
due to the curing process, many insureds will operate from 4 a.m. to noon during the warm-weather months. Others will
have air conditioning and may operate two or more shifts. The peak season is typically during warm-weather months, when
a greater amount of trucking takes place.
Since the retreading process is almost fully automated, this is no longer a labor-intensive industry. Workers will
number about 7 employees for a small business, to 30 or more for a large plant. Part-time workers may also be employed
during busier times. Many retreaders offer 24-hour emergency roadside service, and so one or two service technicians are
on call round the clock.
Depending on the size of the operation, a typical retreading company will have an office manager, a plant manager,
inspectors, buffers, warehouse personnel, salespeople (who also pick up and deliver the retreads to customers), and an office
staff. Many shops also have on-site service technicians to repair the insured's trucks. For larger insureds, a general manager
who oversees the service trucks and new tire sales, and an assistant plant manager will also be hired. Due to the
configuration of the production area, workers can handle more than one workstation. For example, buffers may also handle
simple repairs, since these stations are located near each other. Loading dock or warehouse personnel may also operate the
painting machine, which is the last step before storing or delivering the product.
In addition to training on the job, employees also receive extensive instruction in the entire retreading process through
the franchiser, which is either a retread or tire manufacturer. Industry associations, such as the Tire Industry Association,
also offer workshops and training in various aspects of retreading as well as certification.
The majority of retreaders are independently owned franchises. This is a recession-proof industry (i.e., in bad economic
times, more new customers decide to retread their tires instead of buy new ones and in a good economy, more trucks are on
the road to wear out tires more frequently).
There are hundreds of tread designs to meet the ongoing needs of truckers. Custom tread design for specific
applications is becoming a trend in this industry. For example, a tread for a truck hauling feathers on a straight highway will
have different tread requirements than one transporting lumber through a mountainous route, or a garbage truck that makes
frequent stops and turns through residential areas. Chemists are also developing more durable rubber for treads that will
lengthen the life of treads under many climactic conditions.
The trade association for US tire retreadersis the Tire Retread and Repair Information Bureau (TRIB, which may be
reached at www.retread.org).
TheRetread Tire Association (RTA, which may be reached at www.retreadtire.org),represents the industry in the US,
Canada, Australia, and other countries.
Organizations for this industry in other countries include the Retread Manufacturers Association in England (RMA,
which may be reached at www.retreaders.org.uk) and the European Tyre Recycling Association in Belgium (which may be
reached at http://www.etra-eu.org/).
Additionally, the Tire Industry Association (TIA, which may be reached at www.tia.org) isan international trade
organization representing all segments of the tire industry, with more than 6,000 members worldwide.
MATERIALS AND EQUIPMENT
Page 3 Copyright 2014 A.M. Best Company. All Rights Reserved. Source: Best's Underwriting Guide, Version 2014
Best's Underwriting Guide Tire Retreading
Casings (worn tires), new tires.
Retreading machinery: buffers, shearography machines, section repair machines, case analyzers, skiving/filling machines,
extruders, tire builders, envelope spreaders, curing chambers.
Paint machines.
Buffing collection system.
Handheld tools and repair kits: rasp kits, extrusion guns, pliers, cement glue brushes, tread base rulers, inspection tool kits;
nail hole repair kits; final inspection tool kits, tire repair kits, tire identification equipment, tire inflation warning labels;
brushes, gouges, tracing template, screwdrivers.
Wheel and rim refinishing system.
Cement glues; paint.
Retreading materials: procured treads, tread rubber stock, rubber envelopes.
Storage racks, workbenches.
Monorail.
Office furniture and equipment.
NARRATIVE LINES OF LIABILITY
Automobile Liability
The Automobile Liability exposure for tire retreaders is moderate. The insured may travel to pick up and deliver tires;
other supplies will usually be delivered. Usually, the insured will designate certain employees as drivers, who will also call
on new customers while en route to current ones. Insureds that provide road service will have a slightly higher exposure.
What are the number, type, age, and condition of all vehicles owned by the insured? Most retreaders will own several
delivery and service trucks, though small firms may own only one or two vehicles. Flatbed trucks with cages and pickup
trucks are the typical delivery vehicles used by retreaders. Large pickup trucks equipped with generators and tire-mounting
equipment will be used for road service. Are these vehicles owned or leased? Determine if the insured owns a fleet of
trucks. Cars may be used for a variety of tasks, such as running errands or attending conferences. Do employees ever use
their own vehicles for business purposes? If so, a nonowned vehicle exposure will exist. Determine if drivers who use their
vehicles for business have personal insurance at acceptable limits.
Whatare the insured's frequency of travel and radius of operations? Retreaders will pick up casings from their contract
customers (i.e., trucking firms, municipalities) and deliver the finished retreads to them. The number of deliveries per day
and per week will vary. Most insureds will operate within a 100-mile (160.934-kilometer) radius. Insureds that provide
emergency roadside service may travel farther and at various times of the day or night. For insureds that have more than one
location, managers may travel between offices several times a week. How far apart are the insured's facilities from one
another? Estimate the average and maximum distances that district managers would be expected to travel in a single day.
What are the hazards of typical routes? Drivers who pick up and deliver casings will experience such hazards as
inclement weather, poor road conditions, and traffic congestion. When traveling in inclement weather, are drivers instructed
to turn on their vehicles' headlights and use extra caution? All company-owned vehicles should be outfitted with snow tires
during the winter months in areas where weather conditions warrant such precautions. Does the insured operate in a part of
the country that may be prone to certain hazardous weather conditions, such as flash floods, tornadoes, or hurricanes?
The insured will likely provide roadside tire repair services, such as fixing flats or mounting new retreads for trucks or
off-road equipment. Operators will not drive regular routes, since calls can come from anywhere within their prescribed
radius of operations. However, insureds are usually familiar with the numerous routes in their area since they travel them on
a frequent basis. Determine the number of roadside assistance calls the insured receives on an average day. Does this
number increase significantly during its peak season and/or during periods of inclement weather? Drivers may experience
fatigue and therefore increase the risk of accidents, since they may be required to drive during late-night or early-morning
hours.
Is the insured located in an urban, suburban, or ruralarea? For insureds that are located in urban areas, service
operators will be subject to heavy traffic and narrow streets.Insureds operating in rural areas may drive on unpaved or
poorly maintained roads where four-wheel drive is necessary. Most insureds willdrive frequently on interstate highways,
where traffic is often heavy and fast; highway constructionmay becommon, with single or narrowed lanes and/or the
presence of construction equipment. Are drivers thoroughly trained in the safe operation of these vehicles, even under such
extreme circumstances?
If employees are allowed to takecompany vehicles home when they are off duty, a family member may drive the
vehicle. What is the insured's policy about allowing employees to drive company-owned vehicles home during non-working
hours?
Some very large insureds may own tractor-trailer trucks to deliver retreaded tires. All drivers of trucks in the USthat
are designed to carry at least 26,000 pounds (11.793 metric tons), which includes most tractor-trailers as well as bigger
straight trucks, are required to obtain a special Commercial Driver's License (CDL) from the state in which they live. Do the
insured's drivers operate such trucks? A national data bank permanently records all driving violations incurred by persons
Page 4 Copyright 2014 A.M. Best Company. All Rights Reserved. Source: Best's Underwriting Guide, Version 2014
Best's Underwriting Guide Tire Retreading
who hold CDLs, so a driver whose license is suspended or revoked in one state may not be issued a new one in another
state. A less experienced driver should be paired with a more experienced one until an acceptable level of competence has
been reached.Are delivery and service trucks operated only by trained, experienced employees who hold the proper drivers'
licenses?
Shifting of loaded cargo could cause drivers to lose control of the delivery vehicles. Improperly secured tires could fall
off trucks and cause accidents or damage other vehicles. What kind of training have drivers received about properly
securing tires before transporting them? A loaded delivery truck could respond sluggishly or handle awkwardly due to the
weight of the tires. Are the insured's trucks equipped with flashing yellow warning lights as a precaution to other motorists?
Today's vehicles have many electronic distractions, such as navigational and communications devices. These tools may
be factory-installed or brought into the vehicle by the driver, but they all have the potential to create distractions that could
lead to a motor vehicle accident. What types of electronic distractions are present in the insured's vehicles?
Some of the insured's vehicles will be equipped with two-way communications systems, such as cellular/satellite
telephone that permits drivers to remain in contact with theoffice. Do the insured's vehicles have a two-way communication
system? Insureds could be held liable for damages that occur as a result of drivers using cell phones while driving. Whatis
the insured's cell phone policy? Are driver safety courses offered that include cell phone safety tips for drivers that do a lot
of driving? Throughout the US, individual states and the District of Columbia have enacted cell phone and texting while
driving restrictions. Depending on the state, some laws are restrictive (i.e., they ban cell phone use and texting while driving
and require the use of hands-free devices) while others place no limits on cell phone use. Often, states'
driving-while-distracted laws and regulations will restrict the use of cell phones according to age or experience of the driver
(e.g., 18 or under, student, or probationary) or the occupation of the driver (e.g., school bus operators, truck drivers).
Canadian distracted driving laws are similar to those in the United States, and depend on the Canadian province or territory.
Elsewhere, distracted driving laws are just as varied. Japan prohibits all mobile phone use while driving, including the use
of hands-free devices. Between 2009 and 2010, both Australia and New Zealand enacted bans on the use of mobile phones
and text messaging while driving; both currently permit the use of hands-free devices. All EU nations, with the exception of
Sweden, ban handheld cell phone use while driving but permit the use of hands-free devices. Ten of the 27 EU member
states specifically prohibit texting. In the UK, distracted driving laws prohibit the use of handheld mobile phones and
currently permit the use of hands-free mobile devices.
How often do the insured's drivers go to new or unfamiliar locations? If drivers must venture into unfamiliar territory,
what kind of navigational assistance does the insured provide maps or GPS devices? Are any of the insured's fleet vehicles
equipped with built-in or portable GPS units? If so, this is a positive underwriting sign. Even though the use of GPS units
has obvious benefits, unfortunately, one drawback to them is that they can cause drivers to become distracted when they are
operating a company vehicle for business purposes, thus making the insured liable. Whether factory-installed or portable,
GPS devices momentarily require the drivers' attention and many will call attention to themselves simply as an inherent part
of their usage and design. If the company uses GPS in its vehicles, has it selected models that are designed to be minimally
distracting? Units that are dash-mounted should be positioned in such a way that they do not block the vehicle operator's
view or access to any other gauges or controls. In addition, the mounting unit must be sturdy and hold the GPS unit steady.
Since the most obvious source of distraction when using the GPS is inputting route information, the insured should instruct
its drivers to always do this before engaging the vehicle. Do the GPS units used by the insured have screens and text that are
clearly legible, as well as audio commands that are easily understood?
Determine the number, ages, training, and experience levels of the insured's drivers. Does the insured employ any
drivers under the age of 25? If so, a youthful operator exposure will exist. Obtain MVRs on all drivers. Since the Fair Credit
Reporting Act requires written permission from the driver to obtain MVRs, the insured should make obtaining this
permission part of the hiring process.
A planned schedule of regular maintenance and inspection should be in place for all vehicles. Some insureds will have
truck repair bays on site as part of their setup. Does the insured have its own mechanics on staff? If so, what is their level of
training and experience? Are any of them certified in Automotive Service Excellence (ASE)? All repair work and routine
vehicle maintenance procedures should be performed by qualified mechanics only; therefore, insureds that do not have their
own repair facilities or mechanics should contract out all such work to a reputable outfit. Are all nonqualified
employeesprohibited from attempting to repair malfunctioning vehicles on their own?
Automobile Physical Damage
Tire retreaders will face a minor Automobile Physical Damage exposure. The same factors that affect Automobile
Liability will also affect Automobile Physical Damage. Typical exposures will include driving in inclement weather,
traveling on congested roadways, improper securing of loads,traveling during hours of darkness,and vandalism.
What are the number, type, age, and condition of the insured's trucks? Flatbed trucks with cages and pickup trucks are
the typical delivery vehicles used by retreaders. Large pickup trucks equipped with generators and tire-mounting equipment
will be used for road service. Are these vehicles owned or leased? Determine if the insured owns a fleet of trucks.
Determine the insured's frequency of travel and radius of operations. Retreaders will pick up casings from their contract
customers (i.e., trucking firms, municipalities, etc.) and deliver the finished retreads to them. The number of deliveries per
day and per week will vary. Most insureds will operate within a 100-mile radius. Insureds that provide emergency roadside
Page 5 Copyright 2014 A.M. Best Company. All Rights Reserved. Source: Best's Underwriting Guide, Version 2014
Best's Underwriting Guide Tire Retreading
service may travel farther and at various times of the day or night.
What are the hazards faced by the insured's drivers? Drivers who pick up and deliver casings will experience such
hazards as inclement weather, poor road conditions, and traffic congestion. When traveling in inclement weather, are drivers
instructed to turn on their vehicle's headlights and use extra caution? All company-owned trucks should be outfitted with
snow tires during the winter months in areas where weather conditions warrant such precautions. Does the insured operate
in a part of the country that may be prone to certain hazardous weather conditions, such as flash floods, tornadoes, or
hurricanes?
The insured will likely provide roadside tire repair services, such as fixing flats or mounting new retreads for trucks or
off-road equipment. Operators will not drive regular routes, since calls can come from anywhere within their prescribed
radius of operations. However, insureds are usually familiar with the numerous routes in their area since they travel them on
a frequent basis. Determine the number of roadside assistance calls the insured receives on an average day. Does this
number increase significantly during its peak season and/or during periods of inclement weather? Drivers may experience
fatigue and therefore increase the risk of accidents, since they may be required to drive during late-night or early-morning
hours. For insureds that are located in urban areas, service operators will be subject to heavy traffic and narrow streets. Most
insureds will also drive frequently on interstate highways, where traffic is often heavy and fast; highway construction is not
uncommon, with single or narrowed lanes and/or the presence of construction equipment.
In attempting to reach disabled vehicles, service truck drivers may have to navigate under severe weather conditions,
drive along the shoulder of a highway, or maneuver their way through bumper-to-bumper traffic jams. How much
experience do the insured's drivers have at driving under such hazardous road conditions? Are all trucks equipped with
flashing yellow lights? Refer to the AutomobilePhysical Damagesection of the Towing and Recovery Servicesreport for a
more detailed description of hazards and loss control measures that are appropriate to roadside assistance procedures.
Shifting of loaded cargo could cause drivers to lose control of the delivery vehicles. Are delivery and service trucks
operated only by trained, experienced employees? What kind of training have drivers received about properly securing tires
on deliverytrucks before transporting them? Have all drivers received instruction about how to load their vehicles so they
will be evenly weighted and therefore less likely to roll or tip in the event of sudden braking or sharp turns? A less
experienced driver should be paired with a more experienced one until an acceptable level of competence has been reached.
A loaded delivery truck could respond sluggishly or handle awkwardly due to the weight of the tires. Are the insured's
trucks equipped with flashing yellow warning lights as a precaution to other motorists?
Parking a service truck along highways or busy thoroughfares while changing a tire on a customer's truck poses its own
hazards. Cars could crash into the service vehicle, causing extensive damage. Are flares and traffic cones strategically
placed along the roadway, alerting other drivers of roadside work? Does the driver park the service truck completely off the
road to avoid collisions? What is the insured's practice?
Does the insured have a vehicle maintenance program in place? All trucks should be kept in good condition, repaired
promptly as needed and inspected regularly. Are vehicles maintained on a regular basis to ensure peak operation and safe
performance? Does the insured ever contract out vehicle inspection and maintenance services? What are the reputation and
experience levels of the insured's mechanics? Areany of them certified in Automobile Service Excellence (ASE)? Unless
they are licensed mechanics themselves, employees should not be allowed to repair or assist in the repair of any
company-owned vehicles.
Auto theft and vandalism may pose a problem for insureds. Vandals may paint graffiti on the insured's vehicles, break
windows, slash tires, or tamper with engines. What measures have been taken to protect company vehicles from potential
vandalism? Vehicles should be kept locked when left unattended. Where does the insured store its vehicles when not in use?
Some insureds store their vehicles in a locked garage, while others may have a designated parking area on the premises.
Many insureds will have fenced-in outdoor parking areas for storage of delivery and service trucks. Outdoor surveillance
cameras, outdoor floodlights, and "No Trespassing" signs at the home office are all positive underwriting signs. Are all
trucks equipped with anti-theft alarms and permanently etched with a second set of concealed identification numbers?In the
US, these numbers should be registered with the National Crime Prevention Association.
General Liability: Premises and Operations
Overall, the General Liability: Premises and Operations exposure for tire retreading companies will be slight, as there
will be few visitors to the premises. Visitors will face the possibility of slips, trips, and falls. If the insured conducts tours of
the plant, then this exposure will be increased.
What is the layout of the insured's premises? The layout of a tire retreading company generally consists of offices for
administrative personnel and managers, a production area, a loading dock, storage rooms for tires, an employee lounge or
lunch room, a repair area for the insured's trucks, and restrooms. The production area is a large, open, warehouse-type
building divided into workstations with a materials-handling monorail system running throughout. Most insureds have a
warehouse on site where additional caps and casings are stored.
What are the insured's hours of operation? Hours of operation usually very from one insured to another. Because the
retreading process involves a great deal of heat from the curing process, many insureds will operate from 4 a.m. to noon
during the warm-weather months. Others will have air conditioning and may operate two or more shifts. This is a
recession-proof industry (i.e., in bad economic times, more new customers decide to retread their tires instead of buy new
Page 6 Copyright 2014 A.M. Best Company. All Rights Reserved. Source: Best's Underwriting Guide, Version 2014
Best's Underwriting Guide Tire Retreading
ones, and in a good economy, an increased number of trucks are on the road, which wears out tires more frequently), and so,
business rarely slows. However, the peak season is typically during warm-weather months, which coincides with increased
trucking.
What are the average and maximum number of visitors to the premises daily? Most insureds will have few visitors to
the premises since customers are usually corporate accounts. Thosewho do frequent the premises will include
representatives from the franchiser (if the insured is part of a franchise), tire jobbers, vendors, inspectors (e.g., Department
of Transportation, fire), and family and friends of the insured's employees.
The main hazard faced by visitors to a tire retreading plant will be slips, trips, and falls. Good housekeeping is essential
to help avoid this exposure. All areas that are accessible to the public should be kept free of debris and clutter. Trash should
be removed from the premises on a daily basis. Electrical wires and telephone cords should not be stretched across aisles or
walkways. What is the condition of the insured's flooring? Floors should be mopped, swept, or vacuumed daily. Worn, torn,
or loose floor coverings should be repaired or replaced promptly.
Some insureds will offer tours of the plant to community members and school children. Does the insured conduct tours
of the plant? Visitors should be restricted from walking about the insured's production area unless accompanied by an
experienced worker. Are signs stating "Employees Only" posted prominently around restricted areas? The shop should be
well lit, and floors should be clean and free of debris. Aisle space between machines should be wide enough to allow safe
passage, and there should be no objects jutting into aisles. How are visitors supervised? Are they provided with the same
personal protective equipment as employees (e.g., gloves, goggles, hearing and respiratory protection, hard hats)?
Improperly stacked tires may tip and collapse if visitors bump into them. Tires are heavy and could cause serious
injury. Tire stacks should be sturdy and away from all aisles. How high are tires stacked? What measures does the insured
take to keep tires from falling?
Although rare, visitors could sustain burns or electrical shocks from machinery. This exposure could be avoided if each
piece of machinery is equipped with a safety mat that is connected to the machine. The mat should be strategically situated
so that anyone getting close to the machinery will step on the mat. When stepped upon, the mat triggers the shut-off switch
on the machine, and the machinery stops. Does the insured have such safety mats for all machinery?
The insured may stock surplus tires outside the building. This could be an attractive nuisance since children could play
on these tires and be injured. If the insured stocks surplus tires outside the building, how is the area secured? The area
should be fenced and locked. If the insured has a warehouse for storing tires, is it locked after business hours?
Service trucks and other specialized vehicles parked in the storage yards may also be considered an attractive nuisance.
Children or teenagers may enter the premises to play in and around these vehicles. A serious injury could occur if a child
falls. Is the yard fenced in with lockable gates and well lit at night? Are "No Trespassing" signs displayed on all perimeter
fencing?
Most insureds will have a loading dock where tire jobbers will unload tires. A safe, well-organized loading dock can
help minimize the potential for injuries to delivery personnel. The dock should be clean, free of clutter and debris, and well
lit. Have traffic patterns been established and clearly marked in all loading docks? Are speed limit and warning signs (e.g.,
"Proceed with Caution" or "Keep Clear of Aisles") posted where necessary? Convex mirrors should be placed at the ends of
aisles and at all blind corners. Truck drivers should be discouraged from walking downloading dockaisles. Drivers should
wait in a separate area so they will not be injured by loading or unloading operations. Are truck wheels required to be
chocked during loading and unloading procedures?
Delivery personnel at loading docks could be injured by forklifts. What are the number, ages, type, and condition of the
insured's forklifts? Are all forklifts equipped with backup alarms? What are the training and experience levelsof the
insured's forklift operators? Are they properly certified? Thorough training in the safe operation of forklifts is essential to
help minimize the risk of injury.
Some outfits maintain their own supply of fuel. In such cases, an Environmental Impairment Liability exposure may
also exist. Does the insured have above- or underground fuel storage tanks on the premises? Refer to the Environmental
Impairment Liability section of the Gasoline Stations - Full-Service and Self-Service reportfor additional information.
Parking lots and sidewalks should be free of debris and trash and well lit. What provisions has the insured made for the
prompt removal of ice and snow from the parking lot and sidewalks?
Product Liability and Completed Operations
For tire retreaders, there will be a substantial Product Liability and Completed Operations exposure. If a retread is
defective or fails in service, it could cause the customer to lose control of the truck. Improper buffing, shoddy repairs, and
under- or overcuring are some reasons for tire failure. However, a study from the trucking industry has cited the majority of
retread failures in service is due to improper maintenance or from abuse by the user of the tire rather than any defects in tire
retreading. For insureds that provide roadside assistance and mount tires, improper tire installation on trucks could cause the
tires to malfunction and cause accidents.
Other than retreads, what other products does the insured sell? Most tire retread plants will also sell new tires to replace
worn tires that cannot be retreaded.
Many tire retreading companies provide roadside assistance to truckers in need of a replacement tire. If that is the case,
improper installation of a tire could result in a wheel falling off a vehicle as it is being driven. Technicians must be properly
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trained in installing tires on wheels, using proper procedures. The Tire Industry Association (TIA) offers programs in tire
mounting and demounting (i.e., removing the tire from the rim) and installation, and certification in tire service. It also has a
video entitled "Keeping the Wheels On," which is an in-depth study on wheel torque (i.e., the measurement used to
determine how tight the lug nut should be when installing a tire on a vehicle). Have the insured's employees received
training from the TIA in mounting and installing tires on vehicles? Are any of them certified commercial tire service
technicians?
Improper buffing, shoddy repairs, and under- or overcuring are some reasons for tire failure. Quality control is vital. A
strict program must be implemented to maintain product integrity and safety. Proper documentation throughout the entire
retreading process should help provide a defense against claims. What quality control measures does the insured have in
place? Are tires thoroughly inspected after each step in the retreading process?
Most retreading is performed using computerized equipment, which must be maintained in order to produce a retread
that meets exact specifications. Does the insured have wall charts or other references near buffing machines that identify the
specifications for each type of tire? Are all machines routinely checked and calibrated? How often are machines serviced?
Determine the qualifications of the service technicians.
The majority of retreads fail in service because of improper maintenance or from abuse by the user of the tire (e.g.,
underinflation, overloading, or mismatching of dual tires). The primary reason for tire failure is underinflation, which
results in the tread separating from the casing. According to a 2001 article in Heavy Duty Trucking magazine, a study on
tire road debris (called "road alligators" or "gators") was conducted by the trucking industry in 1998. The task force
surveyed tire debris at 13 locations around the country, inspecting thousands of gators. It was determined that 90% of all tire
failures, whether they were retreads or new tires, were caused by underinflation of the tire. This was particularly true for
tractor-trailer tires, where truckers neglected to inspect their tires' air pressure using a tire gauge. To help alleviate the
problem of tire failure, does the insured supply tire maintenance instructions to customers (i.e., instructions not to overload,
under inflate, mismatch, or curb the tire) ?
Raw materials, such as rubber tread, adhesives, and glues, have a certain shelf life, and manufacturers imprint a date
code or expiration date on these items. Fresh materials will render a better tread since dried-out glues or rubber will not
adhere properly. Are the insured's raw materials current as to the manufacturer's date code? Is the insured using any expired
products? Where are raw materials and repair products stored? Rubber tread, glues, and adhesives should be stored in a
cool, dry place.
Since the majority of tire retreaders are independently owned franchises, most materials are supplied by the franchiser.
Other supplies, such as cement, may be bought from outside merchants. What are the reputations and loss histories of the
insured's suppliers? Does the insured impose strict quality standards on all suppliers? It is critical that the insured establish
explicit specifications with suppliers and ensure that all materials meet those standards.
Tire retreaders in the USare subject to Department of Transportation (DOT) regulations. The National Highway
Traffic Safety Administration (NHTSA), an arm of the DOT, requires that all tires be labeled with specific information. The
revised "Tire Identification and Recordkeeping Regulation" of 2000 states that a 4-digit date code must be placed on all new
and retreaded tires to designate when the tire was produced. The first2 symbols must identify the full week of the year by
using "01", the second week as "02," and so on. The last two symbols must identify the year. For example, a tire labeled
"0101" was manufactured the first full week of 2001, or the week of January 7-13, 2001. Does the US-basedinsured follow
all DOT and NHTSA guidelines?
How are customers' complaints handled? Most insureds will offer warranties on its retreaded tires. Generally,
warranties will be for a specific depth of the tread (e.g., if the tire fails within 1/32 worth of tread). Does the insured offer
any guarantees or warranties on its work? If so, what warranties does the insured provide? Determine the shop's history and
reputation for honoring its warranties. Some insureds that are part of a franchise or chain provide warranties that are meant
to be honored at any other affiliated location. For insureds where this situation applies, are warranties that have been issued
by an alternate chain or franchise location consistently honored?
Well-trained, experienced tire technicians are less likely to make serious mistakes during the retreading process. What
are the training and experience of the insured's production workers? Are employees trained in the proper usage of
equipment? New employees should be paired with more experienced workers until they achieve a level of competency in
their position. What is the level of supervision of new employees? Who is responsible for the workers' training and
supervision? In addition to training on the job, employees also receive extensive instruction in the entire retreading process
through the franchiser, which is either a retread or tire manufacturer. Industry associations also offer workshops and training
in various aspects of retreading, as well as certification.
Customers frequently rely on the retreader and its employees to recommend types of tread. Typically, a tire retreader's
employee and the customer will discuss the tire requirements for the customer's fleet (i.e., the type of terrain the trucks will
be traveling, weather conditions that most trucks will encounter, etc.) and then make recommendations for a particular tread.
These recommendations will include two or three types of tread. The customer then chooses the tread from that selection. In
these instances, the insured may be held liable for the actions and recommendations of its employees; for example, an
employee could recommend the wrong type of tread for certain trucks. If a customer were injured because he or she
followed the advice of the insured or one of its employees, the insured would be liable. Do employees ever demonstrate or
display retreads in a way that suggests something other than their intended use? Does the insured instruct all its employees
to never make inflated claims about a product's performance or recommend a product for anything other than its intended
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purpose? Does the insured provide a selection of treads?
Workers' Compensation
Overall, the Workers' Compensation exposure for tire retreaders will be moderate. This industry has evolved from
being labor intensive to becoming almost fully automated and computerized; consequently, exposures to hazardous
situations have been reduced. Workers could still experience slips, trips, and falls, suffer from back strains from improper
lifting, and cuts and lacerations from sharp hand tools. Although rare, employees could contract respiratory illnesses from
inhaling dust generated by the buffing process. Workers in office areas will face standard office environment exposures,
such as slips, trips and falls, electrical shocks, and repetitive motion injuries (RMIs).
How many workers does the insured employ, and what are their ages, experience levels, and duties? Since the
retreading process is almost fully automated, this is no longer a labor-intensive industry. Workers will number about 7
employees for small businesses to 30 or more for large insureds. Part-time workers may also be employed during busier
times. Determine the number of full-time and part-time workers.
Depending on the size of the operation, a typical retreading company will have an office manager, a plant manager,
inspectors, buffers, warehouse personnel, sales people, who also pick up and deliver the retreads to customers, and an office
staff. Most offer 24-hour emergency roadside service, and so,1 or2 service technicians are on call round the clock. Many
shops also have onsite service technicians to repair the insured's trucks. For larger insureds, a general manager who oversees
the service trucks and new tire sales, and an assistant plant manager will also be hired. Due to the configuration of the
production area, workers can handle more than one workstation. For example, buffers may also handle simple repairs, since
these stations are located near each other. Loading dock or warehouse personnel may also operate the painting machine,
which is the last step before storing or delivering the product.
In the US, insureds that have more than 10 employees are required to post Occupational Safety and Health
Administration (OSHA) Form 300A from February 1 to April 30. This form is a summary of all work-related accidents that
have occurred within the past year. It is a positive underwriting sign if the insured employs a safety officer(s) or a manager
of safety to monitor all manufacturing and production sites and to report on whether standards are being met and guidelines
followed. Also, the safety officer should oversee the work and safety practices of all projects in operation and provide safety
education classes, as well as general on-the-job safety meetings. Regular meetings to discuss safety promotions, hazards,
andinjury and illness records are highly recommended. The safety officer should be someone who can quickly understand
and identify potential safety problems and be able to recommend and implement procedural or equipment changes that
would improve overall employee safety. Does the insured employ a safety officer/manager?
The majority of retreaders are independently owned franchises, and so employees will receive extensive training from
the franchiser, which is either a retread or tire manufacturer, in addition to on-the-job training. Industry associations, such as
the Tire Industry Association (TIA), also offer workshops and training in various aspects of retreading, as well as
certification.
What is the layout of the insured's facilities? The layout of a tire retreading company usually consists of offices for
administrative personnel and managers, a production area, a curing area, a loading dock, storage rooms for tires, an
employee lounge or lunch room, a repair area for trucks, and restrooms. The production area is a large, open,
warehouse-type building divided into workstations with a materials-handling monorail system running throughout. Most
insureds have a warehouse on site where additional caps and casings are stored.
What are the insured's hours of operation? The hours in which the insured is open for business usually depend on the
location and size of the plant. Because tire retreading involves a great deal of heat from the curing process, many insureds
will operate Monday through Friday, from 4 a.m. to noon during the warm-weather months. Others will have air
conditioning and may operate two or more shifts. Office hours usually run from 8 a.m. to 5 p.m. on weekdays. The peak
season is typically during warm-weather months when more trucking takes place.
The primary hazard for workers in a retreading factory is back sprains from improper lifting. Truck tires are heavy, and
lifting them could cause serious back injuries. Most insureds have a monorail or lift system that transports tires from one
workstation to the next, which helps alleviate this exposure. Some lifting may still be required when loading and unloading
tires from delivery trucks. Are employees trained in proper lifting techniques and supplied with sufficient
materials-handling equipment (e.g., lift trucks, hoists, etc.) for loading and unloading tires? Is the US-based insured in
compliance with OSHA standard 1910.176, Handling Materials? Workers could also be injured by tires that fall off the
monorail or lift. This is extremely unlikely, however, since most lifts or monorails will have a locking device to hold the tire
in place during transport. What is the condition of the insured's lift system?
Slips, trips, and falls will be a Workers' Compensation exposure in both the business office and production area. These
hazards may be reduced with proper housekeeping measures. Floors should be swept and vacuumed daily. Spills should be
cleaned up as soon as possible, and "Caution - Wet Floor" signs placed over the affected areas. Worn, torn, or loose floor
coverings should be replaced. Hallways, aisles, and reception areas should be well maintained and kept free of debris and
clutter. Electrical and telephone cords should not be stretched across walkways. Furniture in the insured's reception areas
should be in good condition and repaired or replaced as needed.
Personal protective equipment will vary from task to task. All employees in the production area and on loading docks
should wear steel-toed, heavy-soled construction boots. Workers should wear safety goggles or a face shield when
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conducting retreading operations in order to prevent injuries. Leather gloves may reduce the risk of hand injuries. Loose,
torn, or frayed clothing should not be worn while operating equipment that has moving parts. If located in the US, is the
insured in compliance with OSHA standards 1910.132, Personal Protective Equipment, and 1910.136, Occupational Foot
Protection?
Injuries could be sustained if a piece of equipment malfunctions, or if an employee's extremities came into contact with
moving parts.What are the number, ages, types, and conditionof the insured's machines?All machinery should have proper
nip point guards and drive mechanism interlocks. Although most machines used are automatic,some accidents occur when
workers attempt to clean, repair, or remove damaged stock from the machine while it is in operation. One protective
measure involves safety mats that are connected to the shut-off button on each machine. A safety mat is placed in front of a
machine so that no one can enter the unsafe area around the machine without stepping on the mat. When stepped upon, the
mat triggers a signal, which shuts off the machine. Does the insured have safety mats that shut off machines automatically
when stepped upon? Additional safeguards should include the use of long-handled brushes rather than rags for reaching in
and cleaning; providing extension devices where parts require lubricating so that there is no need to remove guards to
service machines; and posting warning signs cautioning workers to wait until machinery has come to a complete halt before
reaching into any opening, since even after power has been cut, the momentum of a machine can keep it moving for a short
period of time. Are all of the insured's machines properly guarded? Where feasible, operations should be fully enclosed and
guarding mechanisms electrically or mechanically interlocked so that a machine shuts down or fails to start if guards or
clean-out doors are removed, opened, or not replaced properly after cleaning or repair work has been completed. An
electrical interlock system should be installed on all machines to prevent their operation if guards are removed. It is a
positive underwriting sign if all automated machinery is fully enclosed. Does the US-basedinsured comply with OSHA
standard 1910.212, General Requirements for All Machines?
Proper machine maintenance is an important loss control measure in avoiding machine malfunctions. Is all equipment
inspected regularly and maintained carefully? Do the insured's employees perform any maintenance work on the production
machines, or is such work contracted out? Power should be shut down and machines should be locked and tagged out before
any inspection, maintenance, or repair work commences. Also, objects should not be used to unjam machines because as
such an action could result in a fatality. For instance, if a worker attempts to unjam a machine by using an object to pry it
from the machine, the object can strike and kill the employee. What are the training and experience levelsof the individuals
who maintain the insured's machinery? Assess the age and condition of machinery and the adequacy of the insured's
maintenance program. Are daily routine inspections of all machinery performed that include checks on guarding
mechanisms, interlocking safeguards and other critical control devices? Are written records kept on machine maintenance
and repairs? Is there a procedure to ensure that repairs are made only by properly trained technicians and only after
supervisory authorization has been obtained? Is the US-domiciled insured in compliance with OSHA standard 1910.147,
The Control of Hazardous Energy (Lockout/Tagout)?
Electrical shocks are possible because of the use of electrical equipment and machinery. Wires may fray or crack and
cause machinery to malfunction. Is all electrical equipment properly grounded and NRTL-listed? All machinery should be
equipped with circuit breakers.
Tires that are to be retreaded usually arrive at the retreading plant still mounted on the wheel rims. Demounting (i.e.,
removing the tire from the rim) must be done by qualified personnel in order to avoid injuries, such as back strains. In
addition, when a tire is inflated, other hazards may exist. For example, the tire could explode if proper inflation techniques
are not followed, and the worker could be seriously injured or killed. Whatare the experience levels of the insured's
mounting/demounting workers? The insured should have mounting/demounting procedures and rim wheel matching charts
prominently displayed for employee reference. If located in the US, these should meet with OSHA approval. Is the insured
compliant with OSHA standard 1910.177, Servicing Multi-piece and Single-piece Rim Wheels?
The cement used in repairs may be sprayed or brushed on and is typically stored in five-gallon drums. Cement that is
sprayed on should be applied in a ventilated booth. Employees could become ill from inhaling cement vapors. It is
recommended that a pressure limit safety valve be placed in the air line before the entrance to the cement tank. Are
employees required to wear respiratory protection when using rubber cement? Is the American insured in compliance with
OSHA standard 1910.134, Respiratory Protection?
Although now rare, inhalation of rubber dust from buffing could cause respiratory illnesses. In the past, this was a
major concern because buffing was done by hand, and workers were exposed to the dust. Today, most retreaders have a dust
ventilation system which is attached to the buffing machines. A nozzle is located directly above the tire being buffed so that
dust and fumes that are produced are immediately vacuumed out of the area into a holding tank outside the facility. Does the
insured have an adequate ventilation system in place to eliminate rubber dust and fumes from the buffing process? If the
insured is located in the US, is it in compliance with OSHA standard 1910.94, Ventilation?
Buffing operations may be loud, and the underwriter should investigate the noise level in the plant. Workers exposed to
a time-weighted average (TWA) of 85 decibels (dB) of noise must be provided withhearing protection devices (which, in
the US, should be NIOSH approved)if they request them. If the noise level exceeds a TWA of90 dB, exposed workers
must be provided with and required to wear personal hearing protection.Unprotected exposure to noise above this level may
result in a compensable hearing loss. Are pre-employment audiometric tests given against which future annual audiometric
tests can be compared to ascertain whether on-the-job hearing loss has occurred? Is the US-domiciledinsured in compliance
with OSHA standard 1910.95, Occupational Noise Exposure?
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During the tread application process, employees operating the tire-building machine (extruder) may injure their fingers
or hands when attempting to straighten the tread stock. Employees could also cut themselves when coming in contact with
the revolving screw or the cut-off knife. The stock may be hot enough to burn workers. Are workers provided with gloves,
goggles, and respiratory protection?
Paint technicians will face exposure to volatile organic compounds (VOCs) that can be found in tire paints.
Unprotected exposure to these substances can lead to workers experiencing skin irritations, eye irritation, and respiratory
problems. Havesafety data sheets (SDSs) been posted in plain view of all workers? If located in the US, the insured should
comply with OSHA standard 1910.1200, Hazard Communication. OSHA is revising its Hazard Communication Standard
(HCS) to align with the United Nations' Globally Harmonized System of Classification and Labeling of Chemicals, and will
require new hazard classification, labels, and uniform 16-sectionSDSs as of June 1, 2015. Employees must be trained in
these changes by Dec. 1, 2013. Have the US insured's workers been trained to understand SDSs and the new hazard labels?
A VOC content of less than 5 lbs. [2.268 kg.]per gallon is considered to be "low" and is preferable to those that are
"high" (i.e., 5 lbs. [2.269 kg.] per gallon or more. Does the insured use only low VOC products? High volume, low pressure
(HVLP) spray painting guns are recommended over conventional gravity or siphon-feed spray guns since they can cut the
amount of overspray (i.e., the amount of paint particulate that remains in the air after spraying) concentrations in half. Paint
booths should be equipped with downdraft ventilation (instead of cross-draft or semi-downdraft) because it helps promote
lower concentrations of overspray. Are shop areas equipped with emergency hand- and eye-wash stations?
While the use of HVLP spray painting guns and downdraft ventilation can both help to reduce the concentration of
paint overspray, nothing can eliminate it completely. Therefore, the use of personal protective equipment is essential for
paint technicians. The US National Institute for Occupational Safety and Health (NIOSH) has exclusive authority for testing
and certification of respirators that are used in the automotive industry. Whether a technician chooses to use a half-face
piece or full-face piece will depend on the level of protection needed for a particular job. Also, the shop should have a
formal, written respirator program in place that ensures proper maintenance and care of this equipment. Does the insured
provide respiration protection (which, in the US, shouldmeet with NIOSH approval)for those workers responsible for
painting tires? Do respirator masks adequately fit the technicians who are using them, and are they equipped with the
correct type of filters?
Adequate lighting is also critical. Not only will inadequate lighting affect an employee's ability to perform certain tasks
properly (such as inspecting tires for defects), but it can lead to eyestrain. The presence of skylights and/or bright,
fluorescent overhead lighting in inspection and repair areas is a positive underwriting sign. Office areas should also be well
lit, particularly at workstations where computers are frequently used.
For insureds that employ their own truck repair technicians to service their fleet of trucks, other hazards may be
present. In the course of their duties, truck technicians will be exposed to a variety of automotive fluids and related
substances. Some of these substances (e.g., motor oil, adhesives) can cause eye or skin irritations, while others (e.g.,
antifreeze/coolant) are known to be toxic. The insured may wish to establish a policy that requires technicians to wear
appropriate hand protection (e.g., latex gloves) and/or goggles whenever they are performing tasks where they could be
exposed to potential eye or skin irritants. Are workers encouraged to wear appropriate hand protection and engage in
frequent hand washing? The insured should provide an appropriate strength, waterless hand cleaner so that workers will not
overscrub hands that may already be irritated and thereby increase their risk of skin infections. Are repair areas equipped
with at least one emergency hand- and eye-wash station? If it is domiciled in the United States, does the insured comply
with OSHA standards 1910.133, Eye and Face Protection, and 1910.138, Hand Protection? For more information on this
exposure, refer to the Workers' Compensation section of theAutomobile Repair Shops and Oil Change Centers report.
What are the number, ages, types, and condition of the tools the insured's employees use? All tools should be in good
condition, and worn tools should be replaced as soon as possible. Repair personnel can trip over tools and equipment left
lying around in the repair area. Are employees instructed to return all tools to their proper places when they are finished
with them?
Employees who perform roadside service may be injured while making repairs. Roadside repairs may range from
fixing a flat to replacing a wheel or tire. Jacks could fail, and the vehicle could collapse on the employee. Employees should
be outfitted with the proper equipment, such as jacks rated for the vehicle's weight, jack stands, and chocks. All three safety
devices should be used together; if the jack fails, jack stands will support the truck, and chocks will keep the truck from
rolling. Are roadside repair people equipped with the proper safety devices? Since roadside service can occur at night,
employees should be equipped with blaze orange vests and flares to alert drivers to their presence. Drivers may also be
injured in vehicle accidents. For more information on loss control measures for roadway exposures, refer to the Workers'
Compensation section of the Towing and Recovery Services report.
Aisles between storage shelves on the work floor and in the office areashould be kept clear, and they should also be
free of trash, debris, or clutter. Are all storage areas well lit and exits clearly marked? The warehouse should be laid out in a
logical, easy-to-understand plan with no mazes or "dead ends." In multi-story facilities, maximum floor load capacities must
be taken into account to minimize the risk of floors collapsing beneath the weight of loads that are heavier than they can
structurally bear. All exits should be equipped with emergency egress hardware, and tires should never be stacked in such a
way that it blocks an exit. Aisles between storage shelvesshould be of sufficient width to accommodate the maneuverings
of whatever types of forklifts may be used there.
At the insured's loading dock, employees could be hit by moving forklifts, possibly resulting in serious injuries. A safe,
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well-organized dock will effectively help reduce this exposure. Have traffic patterns been established and clearly marked in
all loading docks? Convex mirrors should be placed at the ends of aisles and at all blind corners. Are loading docks well lit
and kept free of trash and debris? Employees who work on loading docksshould be required to wearreflective, orange vests
(which,in the US, should be OSHA approved)to increase their visibility to delivery truck drivers and forklift operators.
What are the number, ages, types, and conditionof forklifts used by the insured? Are forklifts equipped with backup
alarms?Is the rated load capacity clearly marked on all forklifts, and have employees been instructed not to exceed it under
any circumstances? All forklifts should be equipped with overhead protection, such as a roll cage.If gasoline or propane
forklifts are used, proper ventilation during refueling is required. Because explosive gases may escape from a forklift battery
during recharging, this procedure should take place outdoors and away from ignition sources. When forklifts are unattended,
control levers should be placed in neutral, emergency brakes set, forks lowered, and power cut. If the lift is parked on an
incline, chocks must be placed in front of or behind wheels to prevent rolling. Is the Americaninsured in compliance with
OSHA standard 1910.178, Powered Industrial Trucks?
Improper operation of forklifts could result in the operator or other workers being injured by toppling loads or the
vehicle overturning. What are the training and experience of the insured's forklift operators? Thorough training in the safe
operation of forklifts is essential. Prior to their operation, do the insured's forklift operators use a written checklist to assess
the condition of their vehicles?
Office employees may experience repetitive motion injuries (RMIs), such as carpal tunnel syndrome, from extensive
use of computers. Employers should follow standard ANSI/HFES 100-2007, which provides ergonomic design guidelines
for visual displays, keyboards, and workstations. Are office workers encouraged to look away from their computer monitors
and refocus on distant objects from time to time to avoid eye strain? Employees who work on computers a great deal should
be encouraged to take a 15-minute break every 3 hours.
What is the availability of emergency medical care and first aid on the insured's premises? Have any employees
undergone basic first aid training? It is a positive underwriting sign if the insured employs at least one full-time worker who
is certified in CPR and first aid. Some US states require that at least one employee at vehicle repair shops must be certified
in basic first aid. Are first aid kits located throughout all repair areas, and are workers aware of their location? Is the
US-situated insured in compliance with OSHA standard 1910.151, Medical Services and First Aid?
Crime
Overall, the Crime exposure for tire retreaders will be slight. Large amounts of cash generally will not be present, since
customers are corporate accounts and usually pay for services by check, credit card, or electronic funds transfer (EFT). The
insured will have an employee dishonesty exposure, in the form of embezzlement of funds, however. The insured's tools
and equipment will be covered under Inland Marine.
What are the average and maximum amounts of cash on the premises daily? Some petty cashis oftenon hand at the
home office to cover incidental expenses, but otherwise, little cash is kept on the premises. What forms of payment does the
insured accept? Payments are generally made by check, credit card, or electronic funds transfers (EFTs), since the insured's
customers are all corporate accounts. Cash, credit card receipts,and checks should be kept in a torch-, tool-, and
explosive-resistant, NRTL-listed, time-delayed safe until they can be deposited. Are checks marked "For Deposit Only"
immediately upon receipt? How often are bank deposits made? If possible, the insured should make deposits daily at
staggered times, using different routes to avoid suggesting a pattern.
Roadside service employeesmay be responsible for charging customers who have broken down on the road.These
charges may be paid by corporate credit card at the time of service. Are roadside service employees permitted to collect
payments at the time of service or are charges billed? If credit or debitcards are accepted on the spot, are employees trained
in proper credit-card verification procedures?
An employee dishonesty exposure may exist in the form of embezzlement. Who carries out the insured's check
disbursement and bank statement reconciliation functions? Different people should handle these functions if possible. Are
accounting functions performed by more than one employee? It is a positive underwriting sign if the insured makes
periodic, unannounced audits.
Are pre-employment references and backgrounds checked on all employees? Careful pre-employment screening for
every manager and full-time employee will help reduce this exposure as well.
What security measures have been taken to protect the insured's home office? Are all exit doors equipped with
double-cylinder, deadbolt locks and windows equipped with tamperproof locks? Home offices should be kept well lit at
night. Does the insured's home office utilize a central-station alarm monitoring system?
Determine the location and response time of the nearest police department.
Fire and E.C.: Property
The Fire and E.C.: Property exposure for tire retreaders will be significant. Possible ignition sources will include faulty
wiring, malfunctioning electrical equipment, smoking, and sparks from buffing steel-belted tires. There will be large
amounts of rubber on the premises in the form of tires and rubber tread stock, and extinguishing a fire will be extremely
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Best's Underwriting Guide Tire Retreading
difficult. In addition to tires, the fire load will consist of soiled rags, paper, trash, office furniture, fuel for mobile equipment,
rubber dust from the buffing process, solvents used to clean parts or equipment, office furnitureand office
equipment.Computers and computerizedequipment will be covered under this section.
What are the age, type, condition, and layout of the insured's building? Retreading plants are typically housed in
buildings of masonry construction. The layout generally consists of offices for administrative personnel and managers, a
production area, a curing area, a loading dock, storage rooms for tires, an employee lounge or lunch room, a repair area for
trucks, and restrooms. The production area is a large open warehouse-type building divided into workstations with a
materials-handling monorail system running throughout. Most insureds have a warehouse on site where additional caps and
casings are stored. Do firewalls separate the production area from office and storage areas?
What are the hazards posed by adjacent buildings? For the most part, tire retreaders will be housed in a freestanding
building. If the insured's premises is located in an industrial zone, what are the hazards posed by nearby facilities?
Ignition sources for tire retreaders will include faulty wiring, malfunctioning electrical equipment, sparks from buffing
steel-belted tires, and smoking. What is thecondition of the insured's wiring?Is all wiringdouble insulated and free of
cracks or fraying?Sparks from malfunctioning electrical machinery represent the main ignition source in the production
area. Is the electrical power supply adequate to meet the insured's needs? If the insured operates out of an older structure,
what, if any, rewiring has been done? All wiring should be regularly inspected by a qualified electrician. What is the
insured's practice?
What are the age, type, condition, and number of the insured's machinery? Are machines properly grounded and
NRTL-listed? The insured should have a regular machine inspection program in place, and the inspections should be
performed by trained personnel. Who performs the inspections, and what are their qualifications? Is theinsured in
compliance with NFPA 70B, Recommended Practice for Electrical Equipment Maintenance?
Sparks from buffing steel-belted tires represent a minor ignition source. Sparks may ignite rubber dust in the air and
cause an explosion. This exposure can be controlled with the use of a strong ventilation system and the proper buffing
techniques and equipment. Whatis the age, type, and condition of the insured'sventilation system?
What are the number, ages, types, and condition of the insured's electrically powered tools and equipment? Power tools
could overheat, spark, and/or catch fire if not properly maintained or regularly inspected. Does the insured designate an
employee to check all machinery and equipment prior to use and then monitor them throughout the day to ensure they are
functioning properly?
In the office, faulty wiring and malfunctioning electrical equipment will present the main fire exposures. What are the
number, age, type, and condition of all electrical wiring and equipment in the insured's office? Electrical equipment will
include computers, printers, and copiers. All office equipment should be inspected periodically by a professional, and all
wiring should be in compliance with NFPA 70, National Electrical Codeand examined regularly by a licensed electrician.
There should be a planned program of scheduled inspections and preventative maintenance by a qualified electrician in
place.
Some insureds may have an area where microwaves, coffee makers, or other such devices are present for employees to
use. Who inspects and maintains the insured's kitchen area equipment? Is one person designated to check that all appliances
are turned off at the end of the work day?
What is the insured's fire load? Tires and tread rubber stock represent the majority of the fire load. During slower
periods, the retreader will take the time to retread back stock, thus increasing the inventory level. Although rubber is not
easily ignited, rubber fires are extremely hot and very difficult to control due to the fire's intense heat and toxic particulates.
The heat and thick, acrid smoke will hamper firefighting efforts.The proper storage of tires that meets local storage
regulations is an important loss control measure. How and where are tires stored? Is the US-domiciledinsured in
compliance local and state tire storage codes as well as with NFPA 231D, Standard for Storage of Rubber Tires? Horizontal,
solid piles of tires with clear aisles are recommended for best storage. All piles and tread rubber stock (packaged in either
rolls or boxes) should be stored away from any possible ignition sources.
In addition to tires and rubber stock, the fire load will consist of solvents, rubber cements, paper, trash, fuel for mobile
equipment, rubber dust generated from buffing tires, and soiled rags from the production and vehicle service areas. What are
the types and amounts of chemicals stored on the insured's premises?Solvents and cements may be highly flammable;
determine the types and amounts of these chemicals. Cement may be brushed or sprayed on casings for repairs. If the
cement is sprayed on, the process may be performed in a spray booth. Solvent and cement vapors will also be present and
should be removed by an exhaust ventilation system. The machinery used for spraying should be grounded because a spark
could ignite the cement vapors. Storage containers for these chemicals should be checked periodically for corrosion or
leaks.
If the insured owns mobile equipment, tanks of fuel may also be stored on the premises. All flammable liquids should
be stored in separate, well-ventilated fire divisions away from ignition sources and in accordance with NFPA 30,
Flammable and Combustible Liquids Code. If gasoline or propane forklifts are ever used, proper ventilation during
refueling is essential. Ideally, it should be done outdoors. Because explosive gases may escape from a forklift battery during
recharging, this procedure should also take place outdoors and away from ignition sources.
Rubber dust is explosive. Deposits of dust on floors, machinery, and beams are subject to flash fires. Good
housekeeping and proper dust ventilation and collection will help reduce this exposure. All rubber dust should be removed
by exhaust ventilation systems to fire-resistant collectors located outside the building. All exhaust fans should be checked
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periodically for dust buildup and cleaned as necessary, particularly exhaust fans in the cement spraying booth. Who is
responsible for cleaning filters, fans, and ducts? How often is this operation performed? Isthe insuredin compliance with
NFPA 91, Blower and Exhaust Systems for Dust, Stock and Vapor Removal or Conveying?
Soiled rags will add to the fire load. Rags may be used to wipe up solvent or adhesive spills or rubber dust in the
production area and oil or gasoline in the vehicle repair area. Soiled rags should be disposed of in a self-closing,
fire-resistant container, and the container should be emptied frequently. What is the insured's practice?
"No Smoking" rules must be strictly enforced throughout the production and warehouse areas. Are "No Smoking" signs
posted throughout the facility? Does the insured have a designated smoking area with the appropriate receptacles?
Does the insured participate in any prefire planning? Employees should be aware of all emergency procedures should a
fire occur. How often is this plan practiced and updated? Are emergency phone numbers posted throughout the facility?
Certain chemicals used by the insured may emit toxic smoke or fumes during a fire. The local fire department, hospital,
public health officials, and police should be informed about thetypes of chemicals in the insured's storage buildings or other
areas. Signs with information about chemicals that are stored on the premises should be posted around the area, and, if
possible, fire department officials should be given a copy of the storage area's floor plan. Has the local fire department been
made aware of all chemical hazards, including tires?
What are the age, type, and condition of the insured's fire detection and suppression equipment? Smoke detectors
should be located throughout the production area, and the installation of an overhead sprinkler system is highly
recommended. Both the fire detection and suppression systems should be tested periodically. Are annually tagged, Class
ABC fire extinguishers strategically situated throughout the facility? All employees should be made aware of the location of
fire extinguishers and be properly trained in their use.
Determine the response time and location of the nearest fire department.
Tire retreading companies will rely on computers and computerized equipment for their day-to-day operations. What
are the number, age, type, and condition of the insured's computers? Are computers etched with identification numbers? For
insureds located in the US, are these numbers registeredwith the National CrimeInformation Center(NCIC)to aid
inrecovery of the computers in the event they are stolen or lost?It is a positive underwriting sign if the backup copies of all
important software and computer records are stored off the premises in an NRTL-listed, fire-resistant safe.
Business Interruption
For tire retreaders, the Business Interruption exposure will be moderate. Finding a suitable replacement location may
be difficult, although supplies and equipment should be easily replaced. However, the installation of such machinery could
take weeks to accomplish due to the sophistication of the equipment.
Are the premises owned or leased? Most retreading plants are independently owned franchises. In such cases, the
property may either be owned by the franchisee or by the franchising company, which in turn leases the property to the
independent franchise operator.
Is the insured more dependent on its location or reputation for business? Tire retreading companies rely on repeat
clientele, and so, reputation is key to a business' continued success. Most insureds will operate in freestanding buildings that
are built for the specific purpose of retreading tires. In the event of a loss, insureds may choose to rebuild on the same site,
or relocate nearby. Providing warehouse space for tires may prove difficult since local codes and regulations regarding tire
storage must be followed.
How long would it take for the insured to rebuild? The layout and design of the equipment and machinery may be
custom tailored to fit the insured's particular facility. This can increase the rebuilding time by several months. Determine the
time needed to rebuild or replace the plant facilities.
How quickly could essential equipment and machinery be replaced? Since most retreading plants are franchised
operations, equipment and parts could be replaced through the franchising company, although replacing such equipment
would be quite costly (e.g., a buffing machine costs US$300,000). Installation time may be lengthy, due to the
sophistication of the computerized machinery. However, office supplies and equipment can be replaced with relative ease.
Does the insured experience a peak season? Although this is a recession-proof business, and tire retreaders are busy
year round, the peak season is usually during the warm-weather months when more trucks are on the road and more tires
tend to wear out. What impact would a business interruption have on the insured's annual revenue if it were to occur during
its peak season?
Inland Marine
Tire retreading companies will experience a moderate Inland Marine exposure. The main areas of concern for this line
will include customers' tires in the care, custody, and control of the insured and goods in transit.An Equipment Floater and
a Mobile Equipment Floater are recommended. Valuable Papers and Records may also be needed.
A Bailee exposure will exist, since customers' tires are in the care, custody, and control of the insured during the
retreading process. Most insureds keep detailed accounts of all tires and retreads.Does the insured keep detailed records of
its tires and retreads? For insureds domiciled in the United States,all tires must have a Department of Transportation
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identification code on the sidewall of each tire. What measures are taken to ensure that all retreads are returned to their
proper owner?
Valuable Papers and Records coverage will likely be necessary. What records does the insured keep filed in hard copy,
as opposed to on computer disks or hard drives? Contracts with customers, vendors, and suppliers; franchise agreements;
vehicle repair orders; and payroll information are documents common to most insureds. Are duplicates of all essential
documents stored in a secure, fire-resistant location off site?
The insured will also require an Equipment Floater to help protect the many handheld tools (e.g., drills, rasps, pliers,
etc.) that are used throughout the production process. Tools used for roadside service, such as jacks and wrenches, will also
be covered. What measures are in place to monitor the use of handheld tools in the production plant? The insured should
have a sign-in/sign-out sheet that workers must use when they are issued various tools on the job. Who is in charge of the
insured's tool crib? Aretools permanently etched with identification numbers to help aid in their recovery if lost or stolen?
If located in the US, has the insured registered these identification numbers with the National Crime Information Center
(NCIC)?
A Mobile Equipment Floater will be needed to protect the insured's forklifts that are used to move tires from the
warehouse to production areas. What are the age, type, and condition of the insured's forklifts? Have forklifts been
permanently etched with identification numbers? What security measures does the insured employ to protect its mobile
equipment? Determine where the insured's mobile equipment is stored when not in use. Is it kept in a fenced-in lot, a gated
section of the facility, or a locked garage with access restricted to designated employees?
If the insured delivers finished retreads to customers, then Transit coverage will be essential. Most insureds use owned
vehicles to transport tires, and the underwriter should determine the average and maximum values of shipments. How often
are shipments made? A truck full of tires may have thousands of dollars' worth of product. Though tires most likely will not
be damaged in a vehicular accident, they are prone to theft during shipment. How are trucks secured against theft during
transit? Delivery vehicles should not be left unattended while transporting tires. If this is not possible, trucks should be
locked when left unattended.
UNDERWRITER'S CHECKLIST
What typesof tires does the insured retread? Is the insured part of a franchise? Does the insured conduct facility tours?
If so, how often are tours conducted? What method of retreading does the insured use - the pre-cure or mold-cure process?
How does the insured obtain tires? Does the insured offer round-the-clock roadside service? What type of warranty does the
insured offer on its retreads? Are all manufacturers' date codes on raw materials (e.g., tread rubber, glues) up to date and
current? Does the insured have wall charts or other references near buffing machines that identify the specifications for each
type of tire? What kind of quality controls does the insured have in place? If the insured has a vehicle storage lot on its
premises, is the lot fenced in and well lit? Are safety mats that automatically shut off machines when someone steps upon
them installed by each machine? How are tires stored? Does the insured have a warehouse for tires? Is the insured in
compliance with NFPA 231D, Standard for Storage of Rubber Tires? Has the local fire department been notified as to the
location of tires and rubber stock in the insured's building or on its property? How does the insured track tires so that they
are returned to the proper owner?
ACKNOWLEDGEMENTS
We wish to thank the following individuals for their valuable assistance:
Harvey Brodsky
Managing Director
Tire Retread Information Bureau
www.retread.org
E-mail: info@retread.org
Phone: 888-473-8732
Walter Dealtrey
Chief Operating Officer
and
Edward Betz
Vice President
Service Tire Truck Centers
2255 Avenue A
Bethlehem, PA 18017
Phone: 610-954-8473
Page 15 Copyright 2014 A.M. Best Company. All Rights Reserved. Source: Best's Underwriting Guide, Version 2014
Best's Underwriting Guide Tire Retreading