Understanding Your Dealership Insurance Program Northwood University October 2013

Presenters Today Steven P. Gibson President Dealer Risk Services

Garage Insurance Critical Components Bodily Injury/Property Damage Auto Liability Other than Auto Premise Liability Products/Completed Operations Other Liability Coverages Advertising Liability Employee Benefit Errors and Omissions

Garage Insurance Garagekeepers Coverage Professional Coverages Care, Custody and Control Professional Coverages Truth in Lending/Leasing Odometer and Prior Damage Disclosure Statute and Title Errors and Omissions Insurance Agents Errors and Omissions

Garage Insurance Property Coverage Insuring to Value Physical Damage Building Coverage Business Personal Property Business Interruption Insuring to Value Coinsurance Clauses Physical Damage Perils and Limits

Garage Insurance Crime Coverage EPLI Coverage EIL/Environmental Coverage Security and Privacy Coverage Directors and Officers/Minority Partner Liability Coverage

Claims versus Premiums Where have we been…Where are we going…take a historical perspective. What Insurers Look for: - Frequency in Losses - Severity in Losses - Management Response

Understanding Your Claims Map out your Loss Experience by Line Look for trends in types of claims and location. Auto Accidents Premise Slip & Fall Garagekeepers Claims F & I Related Claims Document all claims over $10K with Management Response to control future claims.

Claims Strategies Initiate Quarterly Claims Reviews Consult with Counsel In House Outside Firm Review with Insurer Claims Manager & Adjusters Review Settlements & Options Open Claims & Reserves

Risk Management Strategies Develop Specific Strategies Initiate Risk Management Techniques Assign a Risk Management & Safety Committee Analyze Claims for “How & Why” Develop Internal Reviews & Responses Incident Reports Preventive Measures

Risk Management Specifics Operations & Procedures Loaner Vehicles Demos Test Drives Inventory Control Spot Deliveries F & I Office Audit & Review

Risk Management Specifics Motor Vehicle Records Annually Quarterly for Drivers with “issues’’ New Hires Accident Reviews & Disciplinary Action Employment Practices Hiring/Termination Annual Reviews

Risk Management Specifics Review All Forms In House Counsel State and National Associations Demo Agreements Loaner Agreements Buyers Documents & Agreements Employment Agreements

Risk Management Specifics Develop Disaster & Crisis Management Procedures Natural Disasters Hurricanes Tornados Fires Man Made Crises Disgruntled Customers Employee Problems

Risk Management Specifics

Risk Management Specifics

Risk Management Specifics In Miami, a customer was unhappy with the deal he got at a Ford Dealership. He drove his car into the dealership…INTO THE DEALERSHIP…got out, doused the car with a flammable…lit the match…and went outside and sat on the curb… Car burned…dealership burned…Customers and Employees were shocked and running…1M in damage to the Dealership. BE PREPARED…PROTECT YOUR PEOPLE, PROPERTY & REPUTATION.

How Much Risk to Assume? Understand your own tolerance Evaluating loss trends and loss projections. Determine economics of Deductibles and Retentions.

Identifying the Market Identify and Understand the Garage Insurance marketplace: Who are the Players/Insurers Direct Writers National Carriers Regional Carriers

Developing Specifications Begin the process 120 days prior to renewal Develop an RFP for the marketplace. Update Building and BPP Values Verify with Contractor Update Business Interruption Values Include all forms and documents Demo Agreement Loaner Agreement Employee Handbook

Keys to Effective Bid Specifications Offer an organized specification with consistent data. Include currently valued Loss History with analysis.

Keys to an Effective Bid Process Approach both direct writers & agents/brokers to see the whole market. Include a framework of coverage & deductibles desired. Develop an internal spreadsheet to analyze offerings. Negotiate Premiums Deductibles Coverage issues.

Explore Alternative Premium Options Captives and Alternative Risk Programs Group Captives Cell Captives Single Parent Captives Large Deductible and Retro Plans

Coverage Outside the Box Just because your Insurer/Agent doesn’t offer a coverage, does not mean it is not available in the Marketplace. Insurance Industry has a very broad scope of products.

Coverage Outside the Box Deductible and Aggregate Buy Back Programs Property/Windstorm Deductibles Inventory Weather Aggregates DIC Coverage Business Interruption from Flood

Coverage Outside the Box Stand Alone Professional Coverage Customized policy verbiage Broad Coverage Trigger Security & Privacy Protection Increasing area of Exposure Cost of Notification & Crisis Management Directors & Officers Protection Minority Partners Suits

Summary Understand the current Dealership Insurance Market. Be aware of your losses. Keep track of expenses & reserve changes to old losses. Explain large losses & new loss control measures. Use “best practices” to ensure a long-term positive effect on losses.

Summary Premium Options – Look carefully at your loss experience & analyze the economics of the risk you are assuming Think outside the box for unique coverage that meets your special needs.

Questions?

Thank You!