Pub. 13 2014-2015 Issue 4

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 13 new jersey auto retailer W W W . N J C A R . O R G 3. Truth-in-Lending E&O 4. Truth-in-Leasing E&O 5. Insurance Agents E&O 6. Employee Benefits Liability E&O 7. Title E&O 8. Customer Complaint Defense Q Since Super Storm Sandy, cov- erage for vehicle inventory has gotten more expensive and difficult to get depending on flood exposure. What can I do? A Since the storm, many carri- ers offering this coverage now use f lood restrictions ranging f rom exclud i ng f lood a ltoget he r to high per-car deductibles, with either a high aggregate or none at all.Oftentimes, with a comprehensive and effective flood evacuation plan, the carriers can ease their restrictions. An evacuation plan would require you to relocate inventory in the event of an impending storm/flood to ei- ther other owned locations or non-owned locations outside of a flood zone. Q HowmuchcoveragedoIneedto protect my dealership against suits brought by employees for discrimination, wrongful termination or harassment? A Due to the legal environment in the Northeast, particularly New Jersey and New York, many carri- ers have either pulled out from the Employ- ment Practices Liabilitymarket or are raising prices and deductibles considerably. The loss experience for this line of coverage overall is poor, and evenmore so for auto dealers in the New Jersey/New York area. Make sure you are protected: 1. Limits should be at least $1,000,000 in damages. 2. Defense expense shouldbe “inaddition to.” 3. Third Party coverage for suits brought by non-employees should be included. 4. If on a “claims made” form, be sure that both retroactive coverage and extended reporting period (tail coverage) are avail- able. Be sure to consult with your agent/ broker on this, particularlywhen changing brokers or carriers. Many times this cover- age can go from “claims made” to “occur- rence” coverage depending on the carrier. Your broker can identify what steps need to be taken to avoid gaps in this coverage. In the event of a claim, in order to poten- tially reduce damages and legal costs, an employee manual should be in place outlin- ing management’s position on harassment. Consistency in employee procedures is crucial in the judicial process. Q I have no underground tanks. Do I still need pollution cover- age? A Yes. Pollution policies cover more than just underground tanks.The correct typeof policy for adealership also gives you coverage in the following areas: 1. Releases and cleanup for above ground storage tanks 2. Non-tank related pollution clean-up for covered locations 3. ThirdPartyBodily Injury/PropertyDam- age for pollution migrating off premises. 4. Defense Expense 5. Transportation Liability 6. Non-owned waste disposal locations Many carriers structure these coverages and limits differently. Ask your agent/broker to compare several products in order to identify what’s best for you. Q What about Information Security and Data Breach? A Many times, carriers include a small amount of coverage within their standard policies for Infor- mation Security, Identity Theft, and the like. The coverage offered in the standard policies is often inadequate. There are several carriers now offering this coverage on separate poli- cies with higher limits and broader coverage. Protection is relatively inexpensive and de- ductibles are generally low ($2,500-$5,000). Premium is based on gross sales by depart- ment, number of units sold and IT controls and procedures that are in place. Given the cost and availability of this coverage, it should be seriously considered if youdonot currently have it in place. In summary, insurance expense is the second largest expense for adealershipnext topayroll. Recognizing that, it is important not to com- promise coverages in the key areasmentioned above. Doing this may cost you more in the long run, should a claim occur that is not covered properly, or worse, not at all. (NOTE: This is only an outline of certain coverages. Refer to your policy for specific coverages and exclusions. The discussion set forth above is only an insurance/risk management perspective and is NOT legal advice. We do not provide legal advice, and I recommend that you seek the advice of legal counsel in order to become fully apprised of the legal implications related to these issues.) John Birofka is Area Executive Vice President of Gal- lagher Bollinger. He can be reached at 732.837.9130 or via email at john_birofka@ajg.com . . It is important not to compromise coverages in the key areas mentioned above. Doing this may cost you more in the long run, should a claim occur that is not covered properly, or worse, not at all.