Insurance! (Insert full eyeball roll here. That’s why I inserted the big eyeball for you!)

An October, 2021 survey by Embroker stated that just 22% fully read through their insurance policy, 56% admit to not knowing the cost of their insurance program, 34% carry a cyber policy, 20% admitted to not knowing how their insurance is handled, and 30% allow their policies to renew without making any changes.

Let’s change that starting right now!

If you don’t understand your insurance, then reach out to a consultant or your insurance broker and ask for a complete review of your coverage.  Understand what insurance you have, what the limits are, and importantly, what policies you do not have.  Here is a thumbnail:

Garage Policy:  This is your main policy which you would turn to cover dealership operations.  Automobile liability, premises liability, product/completed operations liability, customer’s cars.   The type of coverage and the limits matter.

Property:  This covers your buildings and business interruption, should you have one.

Worker’s Comp:  This policy handles worker injuries on the job.

Dealer’s Open Lot:  Your vehicles are covered separately under this policy. This can be covered and included in the Garage policy except in high hazard/catastrophe prone areas.

Cyber: If you have a breach of your data or if the bad guys ransom you.

Pollution:  Covers your waste (used oil, antifreeze, tires, batteries etc.) and their disposal.  If your waste isn’t handled properly, you can be help personally liable for these problems.

Directors and Officers (D&O): Would step in for allegations of fraud and wrong-doing which protect the owners, officers, and employees. Directors and officers (D&O) liability insurance protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, regulators, or other parties, for actual or alleged wrongful acts in managing a company.

Crime:  Employee dishonesty.  Theft of corporate assets by an employee of the corporation.

Employment Practices Liability:  This policy handles problems which arise with employees, such as discrimination, harassment, wrongful termination etc.

You can protect yourself from most issues.  Here are some more unusual options:

  • Product Recall
  • Kidnap and Ransom
  • Active Assailant/Workplace Violence
  • Loss of Franchise
  • Communicable Disease Liability
  • Computer Systems Failure
  • Injunction Risk
  • Loss of Key Employee
  • Loss of Key Customer

It’s likely if you can think of it, you can insure it.

I try to learn every day and here’s one thing I learned this week:  parametric insurance.  So, we are going to learn about it and think anew together.

According to the National Association of Insurance Commissioners (NAIC) “the term parametric insurance describes a type of insurance contract that insures a policyholder against the occurrence of a specific event by paying a set amount based on the magnitude of the event, as opposed to the magnitude of the losses in a traditional indemnity policy. An example is a policy that pays $100,000 if an earthquake with magnitude 5.0 or greater occurs. The amount of payment, the parameter, and a third party responsible for verifying that the parameter was triggered must all be specified in the contract. The third party will usually be a government agency, for example earthquake magnitude could be determined by the measurement issued by the National Earthquake Information Center.”

Dealers who have significant weather-related concerns might benefit from this type of coverage.  One of the benefits of parametric insurance is claims are paid more quickly as once the outside entity verifies the event, the insurance company pays so the monies are deployed and in the hands of the business more quickly.

My hope for this article is getting you to consider the importance of your insurance program.  I say “program” as there should be a strategy involved and a monitoring and auditing component to it.

Please reach out if I can answer any questions.