Garage liability packages are an industry norm, but a careful, thorough and candid review will often reveal that the coverage offered is not as robust as it should be – and, in certain instances, limits are severely lacking. Sadly, far too many auto dealers don’t learn this until a claim is made, the same point at which they become aware of the significant impact this coverage gap can have on profit margins and their balance sheet.
The more clients look at their garage liability policy, the more gaps or holes they often find. And without proper counseling, the right advisor may not know that there are a variety of stand-alone solutions that can very easily supplement key coverage components in a garage package policy. This delicate balance is an important reminder for auto dealership owners who need to have a complete understanding of their current program so they can recognize the gaps and potential liabilities that may exist before it’s too late.
Errors & Omissions (E&O)
Employment Practices LiabilityThe coverage offered in most packages is particularly basic relative to the auto dealer’s third-party exposure, the definition of employee, the definition of loss and wage/hour (only available in certain states).
Directors & Officers Liability (D&O)Very few (if any) package policies provide this coverage, and while most auto dealers do not realize they have a D&O exposure, protecting against this exposure could prove to be critical in securing balance sheets in the event the dealer is involved in M&A, raising additional capital or using debt.
Cyber/Network SecurityThe coverage offered in most forms is rudimentary at best, and, with an uptick in the number of cyber-related claims hitting the news, it’s a matter of when, not if, a significant claim hits the auto industry. The sheer volume of transactions that auto dealers make in any given year is significant and the fact that few of these are securely held (in as much as most auto dealers still deal with hard copies of sales/Finance & Insurance-related documents) means the exposure exists. Notification costs and regulatory coverage are two essential coverage items the open market offers that the garage package does not.
CrimeWhile some forms provide coverage, it is extremely simplistic compared to what’s available in the open market. Coverage can be enhanced in a number of areas specific to auto dealers’ crime exposure, but particularly for losses stemming from temporary employees and independent contractors, as one example.
PollutionFrom first-party and third-party perspective, pollution coverage can save policyholders plenty of time, headaches and cash. With ever-increasing tort liabilities and scrutiny from state and federal governments, as well as environmental protection agencies, a pollution policy is definitely something to consider. This has become an ever-significant issue, particularly as more and more dealerships undergo facelifts to keep pace with their brands’ new design styles. Issues can range from contaminated soils located on a new dealership site to asbestos and mold remediation required during the interior remodeling of showrooms at existing locations. Available pollution policies can cover these exposures via a Contractors Pollution Liability (CPL) and an Environmental Impairment Liability (EIL) policy.
Property – Excess WindWith insureds continuing to grow their footprint and increase their overall exposure, consider the non-admitted marketplace for high excess Wind Only or Named Wind Only options above admitted carrier limits provided for All Risk. There is reasonable pricing available for large excess limits.
Deductible Buy Down Programs for WindstormAdmitted markets continue to push higher primary per auto deductibles, typically with no minimum. The in-house facility at AmWINS has had success in buying down the insured’s maximum deductible and fixing the insured’s costs on a per-occurrence basis. As with other buy down quotes from this in-house facility, the policy is on a “Follow Up” form basis and follows the primary definitions.
This article was authored by Richard Minor, a financial services broker with AmWINS Brokerage of Georgia.