Understanding Your Dealership Insurance Program

1. Understanding Your Dealership Insurance Program Northwood University October 2013

2. Presenters Today Steven P. Gibson President Dealer Risk Services

3. 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

4. Garage Insurance • Garagekeepers Coverage • 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

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

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

7. 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

8. 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.

9. 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

10. 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

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

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

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

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

15. Risk Management Specifics

16. Risk Management Specifics

17. 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.

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

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

20. 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 • Includeall forms and documents • Demo Agreement • Loaner Agreement • Employee Handbook

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

22. 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.

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

24. 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.

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

26. 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

27. 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.

28. 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 meetsyour special needs.

29. Questions?

30. Thank You!