Dealership Insurance Coverage You Need in the Current World
The insurance coverage you needed 20 years ago…even 5 years ago…may not be appropriate today to protect you from financial loss.
There are truly some areas of concern that were not on our radar just a few years ago:
Cyber Security Directors and Officers Kidnap and Ransom
Active Shooter Coverage Terrorism Coverage
All of those areas mentioned above go far beyond the coverage provided in the normal Garage policy.
Let’s take a look at each, briefly.
Cyber Security has truly come of age. With breaches at large corporate entities there is a heightened awareness of the need to safeguard PII (Personal Identifiable Information). And, most Dealers have taken heed with improvements in the IT and Data Security area. But, truth is, the thieves are smart, and it only takes once!
The part of the scenario often overlooked is the cost of a breach. Not just in the required response/notification (which experts tell us is between $ 36 and $ 65 per individual), but in the entire Crisis Management process. This includes Forensics, Notification, Remediation/Preventative Measures, and Public Relations. The last portion, Public Relations, is one of the most essential parts of the ‘’damage control’’ involved in a security breach.
Today, the insurance industry has a stable of carriers with solid programs with well connected Crisis Management Teams at your disposal.
Directors and Officers Liability is a coverage so often overlooked in the industry. The answer we most often get is, “We are a privately held company…and we’ve never needed D & O coverage.” Correct answer is, you’ve never purchased Directors and Officers coverage. Any company where the owners/stockholders/officers enter into contracts can be sued with allegations that fall outside the Garage policy. This would certainly be true for entities making purchases or divestitures of dealerships and/or franchises.
Also, purchasing the D & O coverage alongside the EPLI policy is an excellent safeguard for allegations against officers/directors that may get denied due to exclusions found in the EPLI policy. Remember, the key to insurance coverage is matching the allegation against the policy verbiage. D & O is relatively inexpensive and a good idea to ‘’round out’’ the Management Liability protection.
The last 3 items: Kidnap and Ransom, Active Shooter, and Terrorism coverage are, unfortunately, a sign of our times. We’ll deal with them separately and collectively.
Dealers travel all over the world…with Manufacturer trips, and with Family. God forbid, should something terrible happen and the Dealer or family member was taken hostage. In these scenarios, time is so very critical and the best opportunity for a positive outcome is immediate response. The insurance industry has numerous K & R carriers with solid Kidnap/Hostage teams. These include seasoned negotiators…the type of people you need in these situations.
Terrorism and Active Shooter programs go ‘’hand in hand.’’ On September 11, 2001, the world changed. That day did not mark the ‘’first’’ Terrorism event…but, it was the most notable for the citizens of the United States. The insurance industry responded in concert with our Government to supplement coverage for Terrorism. However, as recent events have shown at schools/universities, movie theatres, night clubs, concerts and a variety of workplaces and other venues, terrible events are not always caused by terrorists. Bad people cause them, for sure, but these people do not always fit the definition of Terrorism as defined in the Property and Liability policies. Herein can lie the insurance problem.
While we feel that most Liability policies will respond to an Active Shooter/Hostage scenario at an insured location, the problem is the extent and the scope of the response.
Our recommendation is to enhance both the Property and Liability policies with coverage platforms that provide the broadest definition in these areas. Look for definitions of Terrorism, Assault, Weapons, Hostage Crisis and Insured Person.
Remember, the keys to all insurance policies lie in the Insuring Agreement, the Definitions, and the Exclusions.
From the classic Bob Dylan song lyrics “for the times, they are a changing”…and, we have to deal with it. Get your insurance portfolio in order by looking at the coverages you never thought you would need!
Watch for our next info blast…Insurance Solutions for Vehicle Inventory!
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