Owning and operating an automobile dealership can be an extremely rewarding experience. However, auto dealers must contend with a number of exposures on a daily basis in order to successfully run their business.
Companies across all industries deal with risk exposure – managing on-the-job hazards is just part of running an enterprise. However, in addition to risks that are common to every industry (i.e. theft and natural disasters), auto dealers face unique risks due to test driving, vehicle repairs, loaning of vehicles to customers, and the presence of toxic and flammable chemicals. The list below will help you identify the potential blind spots in your risk management and insurance programs.
Significant property exposures are evident in auto dealerships due to the presence of toxic or flammable chemicals and welding materials used for repairs, as well as the constant moving of vehicles around the property. Day-to-day operations place vehicles, tools and equipment, office supplies and the building itself at risk of being damaged.
Auto dealerships are at risk from errors and omissions exposures, which could come from customers who feel that there was a problem with a purchase, vehicle repair, or other dealership service. Customers may claim that they were misled by an advertisement or lied to about the condition of a purchased vehicle. There is also the potential for a claim that an employee made an error on customer loan or lease papers. Additionally, customers may allege that the odometer was rolled back for a sale or rolled forward after maintenance.
Crime can be of particular concern to auto dealers. They often keep vehicles outdoors which may be valuable on their own or contain parts that are of significant value. Dealers are also at risk of computer fraud, forgery or alteration, cash embezzlement, and employee dishonesty. In some cases, a dealer’s location and the type of vehicles they sell can increase their crime exposures.
You may not realize it, but inland marine exposures for auto dealers are vast. In fact, any property that is unique or valuable, in transit, in your temporary care, stored at fixed (but movable) locations, or used to transfer information does represent an exposure. Following an incident that leads to property damage, vehicles held for sale, accounts receivable, computer equipment, vehicles stored in off-site lots, and data and records related to vehicle manufacturers/customers represent potential losses for your business.
Exposures at automobile dealerships can directly affect customer safety. When injuries occur at your business, you as the owner could be held responsible. Accidents related to slips, trips, and falls are definitely a source of concern. Slippery or uneven surfaces, under-lit exteriors, and poorly inspected vehicles can lead to unwanted accidents.
Due to the presence of fuel tanks and toxic or flammable chemicals such as oil, grease, hydraulic fluid, and other substances, auto dealerships must withstand the possibility of environmental liability in the event of a spill, fire, or an incident of similar nature. Environmental incidents are particularly concerning for auto dealers because they can harm the surrounding community. Not to mention, they may involve costly cleanup, and often cause irrevocable damage to a business’s reputation. Businesses that harm the environment also risk incurring fines that can exceed hundreds of thousands of dollars. Yikes!
Continuity is critical in business. There are few things more important than consistent revenue and cash flow, particularly for small to medium-sized organizations. In fact, just one brief business interruption can be incredibly costly for a company, often leading to serious reputational damages or long-term closures. Common interruptions for automobile dealers can include natural disasters, fires, vehicle recalls, cyber events, staff shortages, and problems with vehicle manufacturers.
Because auto dealers transport vehicles between dealerships, lend vehicles to customers, and allow customers to test-drive vehicles, automobile exposures are abundant. While vital for operation, the improper vehicle can lead to potential property damage, bodily injury, and other liabilities.
While proper risk management can reduce exposure, no system is 100 percent effective in ensuring an incident-free workplace. It is imperative to work with a qualified insurance broker to assess your exposures and secure the appropriate coverage. To learn more, contact Camargo Insurance Agency today.