Crime Coverage: How You Can Protect Your Dealership Against Crime
Employee dishonesty, embezzlement, theft, and property damage can happen to a business of any size, including your dealership. Since auto dealers regularly manage large financial transactions, there is also an elevated risk for forgery, fraud, data breaches, and hacking. The consequences of these crimes can be financially devastating and lead to severe reputational harm.
Ordinarily, these types of claims do not register on most dealers’ daily radars. It is only when the loss occurs that dealers become alerted to factors such as limits, deductibles, and coverage forms. If your dealership has faced any of these difficulties, Commercial Crime Coverage can provide financial protection from crime-related losses and help achieve long-term success.
Identifying Your Crime Coverage Exposure
Crime coverage seemingly is straightforward. It deals with the limitations of other policies and extends protection against a variety of offenses committed by employees or third parties. However, it can be much more complicated. Purchasing a substantial limit within a garage policy may not always provide the coverage needed or expected. Therefore, identifying and understanding the crime exposures and policies is essential before binding coverage.
Spotting Employee Dishonesty in the Accounting Office
Inside jobs can happen, and unfortunately, dealers discover the loss only after it occurs. For example, a dealership employed a trusted controller who had been with the company for more than twenty years, regularly worked late, rarely asked for help, and never took a vacation. After a forensic accounting investigation, the dealership discovered this employee embezzled $400,000 over ten years. Fortunately, the dealer purchased employee dishonesty coverage inside the garage policy.
While nothing can eliminate the possibility of employee dishonesty, performing thorough screening processes and full criminal background checks for all staff and contractors at your dealership will reduce your risk.
Stealing Vehicles from the Lot
With inventory worth millions of dollars, dealerships face exposure to the possibility of vehicle theft. Today, organized crime rings and tech-savvy criminals target dealerships that are easy to infiltrate. Often, criminals lure employees to assist them with the crime. So, what measures can dealers take to reduce theft when cars are lined-up for the taking?
The days of quickly hotwiring a car are gone. Now, criminals can easily break into the window-mounted lockbox that stores the key with a metal cutter. If there is no signal-blocking shield, the thief can intercept the fob signal without even opening the lockbox. Therefore, placing the key with the vehicle, even in a secure lockbox, is unsafe and unreliable. Consider placing the keys behind locked doors in an electronic key control system that only authorized employees have access to and can retrieve for test drives.
Additionally, the lack of lighting and fencing is an open invitation for criminals who lurk in the shadows. Illuminate the lot with bright tower lights and utilize fences to serve as a deterrent.
By implementing these tactics, your dealership becomes a less attractive target for criminals and may lower insurance costs.
Combatting Cybercrime
Today’s cybercriminals are notorious opportunists, technically sophisticated, and well-equipped. It is not a matter of if a dealership will experience a cyberattack, but when it will happen. The threat of forgery, fraud, data breach, or hack is higher than ever because dealerships are treasure troves of personal and financial information. If a cyberattack occurs, auto dealers must act swiftly to avoid reputational damage and costly lawsuits due to compromised information and business interruptions.
The F&I office represents the most vulnerable and attractive target for cybercriminals because it collects, processes, and stores massive quantities of customer data for finance applications and payments. Name? Check. Address? Check. Social Security Number? Check. Credit Card Number? Check. Also, most dealerships run on outsourced technology platforms that may be susceptible to this type of threat. For example, a dealership may allow 20 vendors access to their internal systems. Imagine how quickly things can go pear-shaped if even just one employee becomes compromised.
To combat these potential threats and manage the risks, auto dealers should create a cyberattack response team that includes senior leaders, IT specialists, the legal department, and possibly a public relations company and law enforcement contacts. The cyberattack response team can examine organizational practices, update outdated computer systems, conduct email phishing tests, train employees to recognize the warning signs, and check commercial credit reports and bank accounts for anomalies. Additionally, cyber liability insurance can offset financial losses that result from data breaches, hacking, malware, viruses, and more.
Protecting Your Dealership from Becoming Vulnerable
Because criminals’ methods change and new vulnerabilities crop up every day, the lack of safeguards and crime coverage leaves dealers exposed. For your dealership to be successful, it is critical to have the proper protection and fill in any risky gaps. Understanding the coverage nuances will put you in the driver’s seat with your dealership insurance program for years to come. Now is the time to review your crime coverage and act!
